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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.
Previous Week's Issue ... April 20, 2015
OBAMA SIGNS $200 BILLION “DOC FIX” BILL -- Ending years of last-minute fixes, President Barack Obama on Thursday signed legislation permanently changing how Medicare pays doctors, a rare bipartisan achievement by Democrats and Republicans. The so-called “Doc Fix” overhauls a 1997 law that aimed to slow Medicare’s growth by limiting reimbursements to doctors. Instead, doctors threatened to leave the Medicare program, and that forced Congress repeatedly to block those reductions. Obama signed the $200 billion Medicare reform package Thursday in front of reporters and photographers, sitting alone and coatless in mild spring weather on the patio of the White House Rose Garden. The Senate passed the bill Tuesday; the House approved it in March. Obama praised Republican House Speaker John Boehner (R-OH) and House Democratic Leader Nancy Pelosi (D-CA) for negotiating the legislation. He said the new law helps Medicare by giving assurance to doctors about their payments. “It also improves it because it starts encouraging payments based on quality, not the number of tests that are provided or the number of procedures that are applied but whether or not people actually start feeling better,” Obama said. “It encourages us to continue to make the system better without denying service.”
The bill blocked a 21% cut in Medicare payments that was due to take effect this month. It also revamps how physicians will be paid in the future, by providing financial incentives for physicians to bill Medicare patients for their overall care, not individual office visits. Noting the unusual bipartisan nature of the bill, Obama said, “I hope this becomes a habit.” In Congress, Boehner praised Pelosi for “her indispensable leadership in helping tackle these challenging issues.” Paul B. Ginsburg, a health economist at the University of Southern California, and others expressed more skepticism about the component of the legislation that, beginning in 2019, would pay doctors based on how they perform on quality and other measures. Ultimately, the Department of Health and Human Services will decide those standards. Mr. Ginsburg said that doctors did not typically see enough patients to yield reliable data about how well they perform, or to adjust their scores for whether their patients are sicker than average.
JOHNSON & JOHNSON PROFIT BEATS FORECASTS -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, reported quarterly earnings that topped analysts’ estimates as new cancer and diabetes treatments helped push drug sales higher. First-quarter earnings, excluding one-time items, were $1.56 a share, compared with the $1.53 average estimate of analysts compiled by Bloomberg. Pharmaceutical sales climbed 3% to $7.7 billion. The results underscore the company’s push to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. An additional challenge comes from the strong dollar, since J&J gets about half its sales outside the U.S. The company cut its forecast for full-year earnings to a range of $6.04 to $6.19 a share, down from a prior prediction of $6.12 to $6.27, due to the currency fluctuations. Analysts had predicted $6.17. “If you look operationally--let’s take out foreign exchange--the numbers are actually fairly strong,” said Tony Butler, an analyst at Guggenheim Securities LLC. “They’re still growing the pharma business, mostly in immunology and oncology.” J&J won’t be alone in warning that the stronger dollar will continue to hurt earnings this year. Last quarter, the healthcare giant was the first of many drugmakers to report lower-than-expected guidance or sales declines due to the U.S. currency’s gain.
The currency changes hurt J&J’s earnings by 7.2% in the first quarter. Revenue fell 4.1% to $17.4 billion, the drugmaker said. Analysts had forecast $17.3 billion. Two newer drugs helped propel the growth of the pharmaceutical unit. Sales of diabetes medication Invokana almost tripled to $278 million. Cancer treatment Imbruvica, developed with Pharmacyclics Inc. (Sunnyvale CA) and approved by the Food and Drug Administration in 2013, had revenue of $116 million. Sales of the company’s top drug Remicade fell 0.6% to $1.6 billion, compared with the $1.77 billion forecast by RBC Capital Markets for the arthritis treatment. Olysio, which has been facing increased competition, sold $234 million, compared with the $160 million projected by RBC. J&J’s consumer unit, which makes over-the-counter products like Tylenol and Motrin, fell 4.7% to $3.4 billion. Revenue for the medical-device business, which has been under pressure from cost-cutting by insurers and hospitals, dropped 11.4% to $6.3 billion. J&J shares closed the week off 2% at $99.58.
TRACKING WASHINGTON -- The ability to transfer electronic medical records from one doctor or hospital to another is essential to the smooth functioning of the healthcare system and to providing the best possible care to patients. Yet these transfers often are being blocked by developers of heath information technology or medical centers that refuse to send records to rival providers. This will not be an easy problem to fix, but some possible approaches were detailed in a report to Congress from the Office of the National Coordinator for Health Information Technology, a unit of the Department of Health and Human Services. The full extent of the problem is difficult to assess, according to the report, mainly because of contractual restrictions imposed by software developers on their customers. It did not name any parties because it could not determine whether some of the information was blocked for legitimate reasons, like patient privacy. The report suggests new transparency requirements for developers to disclose the restrictions and costs associated with buying their systems. And the federal government could name the suspected wrongdoers and let them explain the reasons behind their actions. Congress could go still further and pass a new law providing criminal penalties and stiff fines for vendors and providers who deliberately block information sharing with no valid excuse.
In other news, people newly covered by Medicaid drove a significant increase in prescription drug use in 2014, even as those with private commercial coverage filled fewer prescriptions and, over all, patients did not visit the doctor as often, according to a new report by the IMS Institute for Healthcare Informatics (Danbury CT), which tracks the health industry. The report, released last Tuesday, offers a window into how consumers used their insurance in 2014, the first full year after millions of Americans gained coverage through the healthcare law, which expanded eligibility for Medicaid in many states and set up marketplaces where consumers could shop for insurance. Patients with Medicaid in states that expanded access to the program filled 25.4% more prescriptions than in the previous year, before the expansion. In states that opted not to expand the program, the increase was much smaller at 2.8%. Sabrina Corlette, a senior research fellow at the Center on Health Insurance Reforms at Georgetown University, described the difference as “stark,” adding, “it suggests that in the Medicaid expansion states, people are accessing the healthcare system. They are seeing physicians and other prescribers and getting needed drugs.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Amgen Inc.’s (Thousand Oaks CA) Corlanor to treat patients with chronic heart failure, giving the world’s largest biotechnology company its first cardiovascular product. The agency approved the use of Corlanor (ivabradine) on top of current standard of care beta blockers for patients whose symptoms of heart failure are stable and who have a normal heartbeat and a resting heart rate of at least 70 beats per minute. Chronic heart failure is a common and debilitating condition in which the heart is unable to pump enough blood throughout the body. RBC Capital Markets analyst Michael Yee said that, long term, Corlanor could become a $500 million a year drug for Amgen.
Elsewhere, Momenta Pharmaceuticals Inc. (Cambridge MA) said the FDA approved the first generic version of Teva Pharmaceuticals Industries Ltd.’s top-selling multiple sclerosis drug, Copaxone. The agency cleared the application for the 20mg version of the blockbuster drug, submitted by Momenta’s partner Sandoz, a unit of Swiss drugmaker Novartis AG. The generic version, called Glatopa, was developed under a collaboration agreement between Momenta and Sandoz.
The Medicines Co.’s (Parsippany NJ) intravenous blood clot preventer can be used in angioplasty procedures, an independent advisory panel to the FDA said last Wednesday. The panel voted 9-2 to support the approval of the once-rejected injection, cangrelor, for use in some patients undergoing angioplasty, a procedure to widen narrowed or clogged coronary arteries that often includes the use of stents. The recommendation follows a review published by FDA staff, which supported the approval of the drug. Cangrelor, which won European approval in March, was rejected by the FDA in April 2014. In its complete response letter, the agency had asked the drugmaker to reanalyze data from a pivotal trial called Champion-Phoenix.
And FDA advisers said AstraZeneca Plc’s (London) Onglyza and a related diabetes drug should carry new information about a possible association with heart failure and death. The panel of diabetes experts voiced concern about data suggesting Onglyza and Kombiglyze can increase hospitalization due to heart failure and overall mortality. The panel voted 14-1 that such information should appear on the drugs’ prescribing labeling. Yet the panelists also said complicating factors make it difficult to tell whether the risk is real or a statistical fluke. Considering the drug’s overall benefits for treating diabetes, the panel voted 13-1, with one abstention, that the drugs’ heart safety profile was acceptable. Onglyza and Kombiglyze are part of a recently-developed class of diabetes drugs called DPP-4 inhibitors, which also includes Merck & Co.’s Januvia and Tradjenta, made by Eli Lilly & Co. and Boehringer Ingelheim GmbH.
MEDICAL STOCK SPOTLIGHT -- Novogen Ltd. (Nasdaq) once again led advancing issues, soaring $2.00, or 36% for the week, to $7.36. The drug discovery firm announced that it had signed a Memorandum of Understanding with the Feinstein Institute for Medical Research of New York to collaborate with the objective of developing effective treatments for brain cancers. The collaboration brings together the drug discovery expertise of Hornsby, Australia-based Novogen and the preclinical and clinical expertise of the Feinstein Institute in neurosciences and oncology. At the heart of the collaboration is the company’s super-benzopyran (SBP) drug technology platform, distinguished by its ability to kill the full spectrum of cells within a tumor including both rapidly- and slowly-dividing cancer cells (tumor-initiating cells).
Elsewhere, Oramed Pharmaceuticals Ltd. (Nasdaq) surged $1.94, or 31%, to $8.17. Equities researchers at brokerage MLV & Co. assumed coverage on shares, setting a “Buy” rating and a $30.00 price target. MLV & Co.’s price target suggests a potential upside of 266% from the stock’s previous close. Jerusalem-based Oramed is engaged in the field of oral delivery approaches for drugs and vaccines presently delivered via injection. Oramed’s flagship product, an orally ingestible insulin capsule in phase II clinical trials, is focused on the treatment of diabetes.
MediciNova Inc. (Nasdaq) rocketed 28% to $4.45, an all-time high, after announcing that it has received “fast track” designation from the FDA for MN-001 (tipelukast) for the treatment of patients with nonalcoholic steatohepatitis with fibrosis. Fast track designation is designed to expedite the review process for drugs being developed to treat potentially fatal or serious diseases that do not have a viable alternative treatment. La Jolla, CA-based MediciNova focuses on acquiring and developing novel and small molecule therapeutics for the treatment of serious diseases with unmet medical needs.
But Athersys Inc. (Nasdaq) plummeted $1.63, or 54%, to $1.40 after a stem-cell therapy--its only product to reach human trials--failed a mid-stage study testing it as a treatment for a type of stroke. Data on Friday showed that patients given the therapy, MultiStem, did not show a significant difference from those given a placebo as measured by the Global Stroke Recovery Assessment scale. The study, which was to test the safety and efficacy of the treatment given between 24 and 48 hours after an ischemic stroke, showed that MultiStem was no better than a placebo when given after 36 hours, the Cleveland, OH-based company said. However, data also showed that the therapy had better efficacy when given before 36 hours.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Galapagos NV, a biotech developing new treatments for inflammatory diseases, registered up to $150 million worth of common stock. Galapagos currently trades on the Euronext under the symbol “GLPG.” The Mechelen, Belgium-based company, which was founded in 1999 and booked €90 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “GLPG.” Galapagos initially filed confidentially on Feb. 6. Morgan Stanley, Credit Suisse and Cowen & Company are the joint bookrunners on the deal.
April 13, 2015 ...
MYLAN OFFERS TO BUY PERRIGO FOR $28.9 BILLION -- Mylan NV (Canonsburg PA) said it has proposed an unsolicited cash-and-stock deal worth $28.9 billion, or $205 a share, for rival Perrigo Co. Plc (Dublin IRL), which represents more than a 25% premium to Perrigo’s closing stock price prior to news of the offer. Perrigo reacted coolly, saying its board would meet to discuss the proposal and cautioning that “there can be no certainty that any offer will be made.” The proposal appeared to come out of nowhere. But Mylan said that the companies had held “many conversations over the years,” and said it sent a letter to Perrigo CEO and Chairman Joseph Papa last Monday proposing a transaction. Mylan said it still needed to conduct due diligence and expressed hope Perrigo would embrace the approach. “We have great respect for Perrigo’s board and management team and what they have built,” Mylan Executive Chairman Robert Coury said. “We look forward in the weeks ahead to working with them to capitalize on this tremendous opportunity and working together to create a unique leader with a one-of-a-kind profile in our industry.” Neither company is a household name, but a combination of Mylan and Perrigo would create one of the world’s top sellers of low-price medicines with $15.3 billion in yearly sales. A deal would also further the rapid consolidation among midsize drug firms.
Companies have been doing merger deals recently to adapt to a changing healthcare marketplace and remain competitive with rivals. In the process, companies have amassed billions of dollars in debt, cut thousands of jobs and grappled with the difficult task of digesting one organization after another. Yet the pace has continued unabated. Mylan and Perrigo recently closed on their own multibillion-dollar deals. Mylan is best known for selling generic prescription drugs, though its top-selling product is the EpiPen emergency treatment for allergic reactions. Perrigo makes over-the-counter cough-and-cold remedies and infant formula for chains like Wal-Mart Stores Inc. Each of the businesses is under pressure. Mylan has been coping with upstarts in India and other emerging markets that have been undercutting prices on its products, as well as bigger competitors like Israel’s Teva Pharmaceutical Industries Ltd. Perrigo, meanwhile, has been struggling to keep growing despite the low margins on the private-label medicines it sells. Perrigo closed the week up 21% at $198.55. Mylan surged 21% to $70.24.
MEDICARE ADVANTAGE PAYMENTS TO RISE IN 2016 -- Payments to health insurers operating Medicare Advantage plans for the elderly and disabled will increase by 1.25% in 2016, the U.S. government said last week, in response to expected growth in health spending. The announcement, by a division of the U.S. Department of Health and Human Services, comes after the U.S. government proposed a 0.95% cut in payments to insurers in February. More than 16 million people are enrolled in these plans, in which healthcare benefits are managed by private insurers, including UnitedHealth Group Inc. (Minnetonka MN), Humana Inc. (Louisville KY) and Aetna Inc. (Hartford CT). Each April the government announces reimbursement rates for insurers. The information helps insurers determine how profitable it will be to sell these plans, which optional benefits to provide and in which regions and markets to compete. The increase comes after many years of cuts to Medicare Advantage payments, because of an overall decline in healthcare spending and changes under the Affordable Care Act that seek to align payments more closely with the government-run Medicare fee-for-service program. The increase is larger than expected, Leerink Partners analyst Ana Gupte said, and bodes well for insurers that sell these plans next year. “2016 enrollment growth should be accelerated compared to previous years,” Gupte said.
Some insurers as well as the nation’s largest insurer lobbyist group, America’s Health Insurance Plans, had warned the government that any cuts would hurt the elderly. “The final rate notice took a notable step to provide stable funding for the Medicare Advantage program,” AHIP President Karen Ignagni said, adding, however, that the policy did not do enough to protect chronically ill and vulnerable populations. The increase for 2016 versus the decline announced in February results from expectations of Medicare Advantage spending growth of 4.2%, compared with the 1.7% the government forecast in February. The 4.2% growth reflects additional spending in 2014 and 2015, as well as higher expected outlays in 2016. The Centers for Medicare & Medicaid Services said higher spending was due to hospitalizations, rural health clinics and federally qualified health centers. It also includes a 0.1% increase based on the assumption that Congress will enact legislation raising Medicare payments to doctors. Shares of Humana, which receives about two-thirds of its revenue from Medicare Advantage plans, closed the week up 50 cents at $178.48. UnitedHealth added 1% to $119.00 and Aetna gained 1% to $107.91.
TRACKING WASHINGTON -- The Obama administration took vendors of electronic health records to task for making it costly and cumbersome to share patient information and frustrating a $30 billion push to use digital records to improve quality and cut costs. The report, by the Office of the National Coordinator for Health Information Technology, listed a litany of complaints it has received about vendors allegedly charging hefty fees to set up connections and share patient records; requiring customers to use proprietary platforms; and making it prohibitively expensive to switch systems. The report also cited complaints that some hospital systems make it difficult to transfer patient records to rival systems or physicians as a way to control referrals and enhance their market dominance. Congress requested the report last December amid rising concerns that the government’s massive investment in digitizing health records has created a windfall for the information-technology industry, but left patient records largely stuck in silos. Spurred by $28 billion in incentives to date, nearly 80% of doctors and 60% of hospitals have converted from paper files to electronic health records, known as EHRs, since 2009. But only 20% to 30% of providers are able to share records with outside providers, according to government and industry surveys.
In other news, Medicaid recipients who get services through managed care organizations or alternative benefit plans would get the same access to mental health and substance-abuse benefits as provided by private health plans, under a rule proposed last week by the Obama administration. Under a 2008 law, health insurance and group health plans must provide the same level of benefits for mental or substance-abuse treatment as they provide for medical and surgical care. Certain provisions of that law would now apply to Medicaid and the Children’s Health Insurance Program, a federal-state partnership, under the proposal. A number of states put limits on mental health coverage. The proposed rule wouldn’t change those limits on Medicaid fee-for-service plans, but it would stop such limits for Medicaid recipients who are in managed care plans. Medicaid is the state-federal health care program for people with low incomes. “It’s significant,” said Timothy Jost, a professor at the Washington and Lee University School of Law. “The mental health parity law preceded the ACA and it’s an issue people have been battling for some time. A significant number of people with mental health problems are on Medicaid.” States would be required to include provisions requiring parity in contracts for Medicaid managed care.
FDA/EMA ROUNDUP -- Clovis Oncology Inc. (Boulder CO) announced its experimental drug rucaparib has received “breakthrough therapy” status from the U.S. Food and Drug Administration for the treatment of patients with advanced ovarian cancer, who have already undergone at least two rounds of platinum-containing therapy. The company was granted another breakthrough therapy status for its lung cancer drug rociletinib in May last year, for which Clovis intends to seek marketing approval in a few months. Rucaparib is an inhibitor of the enzymes PARP1 and PARP2 and is designed for use as a mono-therapy in the treatment of patients with platinum-sensitive ovarian cancer with BRCA-mutated tumors.
Elsewhere, Horizon Pharma Plc (Dublin IRL) said Friday that its experimental Friedreich’s ataxia treatment has received “fast-track” designation from the FDA, a move that could speed approval. The specialty pharmaceutical company said the drug, Actimmune, is a treatment for Friedreich’s ataxia, an inherited disease causing nervous-system damage that often results in motor incapacitation and the use of a wheelchair. Horizon said there are currently no FDA-approved treatments for the disorder. Actimmune is already approved by the FDA for use in two genetic diseases.
Swiss specialty pharmaceutical company Santhera Pharmaceuticals Holding AG (Liestal) won a “fast track” designation from the FDA for treating patients suffering from Duchenne Muscular Dystrophy (DMD). With fast track status, Santhera might also win “accelerated approval and priority review,” which will further speed up the regulatory process. Raxone/Catena (idebenone), is a “synthetic short-chain benzoquinone,” which works by enhancing mitochondrial electron transport, thereby increasing the energy levels of cells found in muscles, according to Santhera.
And Denmark’s Novo Nordisk A/S (Bagsvaerd) said the FDA accepted a resubmitted application for its key insulin drug, Tresiba, based on interim analysis data from a clinical trial. Tresiba, already available outside the U.S., was rebuffed by the agency two years ago on concerns that the drug could be linked to higher rates of heart attacks or strokes. The FDA had asked Novo to conduct a dedicated trial to test for such risks, and the company last week said it expects to complete the study in the second half of 2016. When Novo said in late March that it was looking to resubmit the marketing application for Tresiba and a related drug, industry analysts had estimated Tresiba could get approved as early as October this year, based on the interim data.
MEDICAL STOCK SPOTLIGHT -- Novagen Ltd. (Nasdaq) led advancing issues, surging $1.46, or 35% over the week, to $5.63 after the Australia-based biotechnology company announced that studies of its experimental drug, Anisina, showed signs of what could be a breakthrough in melanoma treatment. Anisina was successful in destroying melanoma cells irrespective of their mutational status. This is significant because melanoma is associated with a variety of mutations, including those with the BRAF gene which occurs in about half of melanoma patients who do not have targeted therapy options. The BRAF gene has multiple treatment options while other mutations do not, but the study conducted by the University of Queensland Diamantina Institute suggests that Anisina treats the disease regardless of the type of mutation.
Elsewhere, Daxor Corp. (Nasdaq) leaped $1.97, or 34%, to $7.76 after receiving approval from the U.S. Patent Office for its Total Body Albumin Analyzer. The patent for the total body albumin analyzer is the first one issued for an instrument to measure the total albumin within the human body. Many diseases such as congestive heart failure, diabetes, kidney disease, involve loss of albumin concentration within the circulation. New York-based Daxor has also been issued a patent covering new technology used in its automated Blood Volume Analyzer. The test for measuring blood volume currently uses five sample points to provide an accurate measurement of a subject’s blood volume by measuring the dilution of a tracer in the subject’s bloodstream over a thirty-five minute period.
And hot biotech Sucampo Pharmaceuticals Inc. (Nasdaq) rocketed $4.25, or 27%, to $19.92 after brokerage Guggenheim launched coverage with a “Buy” rating, seeing multiple growth drivers ahead. Analyst Louise Chen wrote that Bethesda, MD-based Sucampo’s constipation drug Amitiza still has growth potential, despite growing competition from Actavis Plc’s and Ironwood Inc.’s Linzess. She added that further indications and formulations of Amitiza that are in development, along with Sucampo’s other drug candidate cobiprostone, could add up to $1.1 billion in annual sales and contribute $4.91 to EPS.
But Nymox Pharmaceutical Corp. (Nasdaq) plummeted 31% to $1.20 as investors took profits following four straight days of gains the prior week during which shares rose more than 175%. The stock soared after the company announced that it would begin further analyses of its phase III studies of NX-1207 for prostate enlargement (BPH). These analyses will include new long-term data from studies of NX02-0017 and NX02-0018. St. Laurent, QC-based Nymox plans to provide these new late-stage trial results in the second quarter or early third quarter.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Adaptimmune Therapeutics Ltd., which is developing cancer immunotherapies based on genetically engineered T-cell receptors, registered up to $150 million worth of common. The Abingdon, United Kingdom-based company, which was founded in 2008, plans to list on the Nasdaq under the symbol “ADAP.” Adaptimmune Therapeutics initially filed confidentially on February 5, 2015. BofA Merrill Lynch, Cowen & Company and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
April 6, 2015 ...
UNITEDHEALTH BUYS PHARMACY BENEFITS MANAGER CATAMARAN -- UnitedHealth Group Inc. (Minnetonka MN) agreed to buy Catamaran Corp. (Schaumburg IL) for about $12.8 billion, bulking up its drug-benefits business to get better negotiating power in talks with pharmaceutical companies over prices. UnitedHealth will pay $61.50 a share, financing the acquisition with cash and debt, the companies said in a statement. The offer, which would be UnitedHealth’s largest purchase ever, is 27% more than Catamaran’s closing share price prior to news of the deal. Benefits managers like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. They also often oversee patients’ drug use, maintaining lists of covered drugs and handling mail orders or complex treatments. The deal will put more pressure on drugmakers and the prices they charge. The pharmacy benefits industry has become the focal point of tensions between drug companies and customers over the cost of new treatments. Express Scripts Holding Co. (St. Louis MO), the biggest in the industry, successfully led a campaign last year to push for discounts on $1,000-a-day treatments for hepatitis C from drugmakers Gilead Sciences Inc. (Foster City CA) and AbbVie Inc. (North Chicago).
The Catamaran deal lets UnitedHealth bet more on growth in drug benefits as the initial surge of new health-insurance customers from Obamacare begins to slow. The biggest U.S. health insurer will combine Catamaran with its drug-benefit unit, called OptumRX, giving it a broader base of customers. Optum “has largely been servicing United’s captive business,” said Ana Gupte, an analyst at Leerink Partners. “They have aspirations to broaden that.” Adding scale will help UnitedHealth drive a harder bargain in negotiations with drugmakers and pharmacies said Steve Halper, an analyst at FBR & Co. “They have a lot more clout,” Halper said. “You’re negotiating with the manufacturers for rebates and pricing with a much larger base.” UnitedHealth closed the week off 1% at $117.36 in New York. Catamaran gained 23% to $59.26.
SUPREME COURT RULES MEDICAID PROVIDERS CAN'T SUE STATES FOR HIGHER PAY -- Hospitals and other healthcare providers can’t sue to challenge reimbursement rates set by states under the Medicaid insurance program for the poor, the U.S. Supreme Court ruled. The 5-4 decision last Tuesday is a blow to hospitals, which claim that Medicaid rates aren’t covering their costs. Providers now will have to take any objections to rates to the U.S. agency that oversees the joint federal-state program. Writing for the court, Justice Antonin Scalia rejected contentions that the U.S. Constitution authorized reimbursement lawsuits. Providers pointed to the Constitution’s supremacy clause, which says federal law trumps contrary state requirements. That provision “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so,” Scalia wrote. Chief Justice John Roberts and Justices Samuel Alito, Clarence Thomas and Stephen Breyer joined Scalia in the majority. Justices Sonia Sotomayor, Ruth Bader Ginsburg, Elena Kagan and Anthony Kennedy dissented.
The dispute stems from reimbursement rates set by Idaho for services provided to people with developmental disabilities. Healthcare providers sued the state, claiming the reimbursement rates were too low to comply with the federal Medicaid law. A federal court agreed and said the rates were unlawful because the state didn’t consider provider costs. The American Hospital Association and the Federation of American Hospitals, in a court brief supporting the Idaho healthcare providers, said the cost of providing care to Medicaid beneficiaries in 2012 exceeded reimbursements by $13.7 billion. California said in court papers that since 2008, litigation over reimbursements has required the state to give Medicaid providers more than $1.5 billion in “excess payments” that are unnecessary to ensure beneficiaries receive quality care. The federal appeals circuit covering California allowed challenges by providers. The case is Armstrong v. Exceptional Child Center, 14-15.
TRACKING WASHINGTON -- Medicare is reported to have spent over $4.5 billion on the new, advanced, and highly expensive drugs for the treatment of hepatitis C during 2014, a 15 times increase in spending compared to the previous year’s spending on older, conventional treatments for the disease, as per previously undisclosed federal data. According to Sean Cavanaugh, director of Medicare and deputy administrator at the Centers for Medicare and Medicaid Services (CMS), “Part D,” a Medicare prescription drug benefit program, spent $286 million in 2013 on the earlier-generation hepatitis C drugs. The expenditure figures from last year dwarf these figures from 2013. The exorbitant costs of these new-generation hepatitis C treatments will be paid mostly by the federal taxpayers, who contribute the most toward the Medicare’s prescription drug program. The total expenditure for 2014 on hepatitis C drugs amounts to over $4.7 billion, out of which only $157 million have been spent on the drugs which belong to the earlier classes of hepatitis C treatments. The major part of the expenditure was taken up by the new class of treatments including the $84,000 Sovaldi by Gilead Sciences Inc. (Foster City CA), which accounted for over $3 billion of the total Medicare expenditure.
In other news, a little-noticed provision of a bill passed by the House of Representatives with overwhelming bipartisan support would provide doctors new protections against medical malpractice lawsuits. The bill, which requires the government to measure the quality of care that doctors provide and rate their performance on a scale of zero to 100, protects doctors by stipulating that the quality-of-care standards used in federal health programs--Medicare, Medicaid and the Affordable Care Act--cannot be used in malpractice cases. The provision is nearly identical to legislative language recommended by doctors and their insurance companies. They contend that federal standards and guidelines do not accurately reflect the standard of care and should not be used to show negligence by a doctor or a hospital. Medicare, Medicaid and private insurers increasingly require doctors to report data that can be used to assess the quality of care. They then evaluate and pay them based on their performance.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) was granted approval by the U.S. Food and Drug Administration for its new once-daily, oral formulation of Exjade (deferasirox) called Jadenu. The drug is designed for treating chronic iron overload resulting from blood transfusions in patients aged 2 years or older and chronic iron overload in patients aged 10 years or older who are suffering from non-transfusion-dependent thalassemia syndrome. Chronic iron overload may also develop into a disease called hemochromatosis, characterized by weakness, fatigue, pain in the joints or abdomen and even organ failure. The condition if left untreated can lead to lethal liver and heart damage.
Elsewhere, pharmaceutical giant Amgen Inc. (Thousand Oaks CA) announced that its supplemental New Drug Application for Kyprolis has won a priority review designation from the FDA. The drugmaker has been seeking a label expansion for treating patients suffering from relapsed multiple myeloma, and those who have undergone at least one treatment previously. Priority review status is normally granted by the FDA for drugs that are meant to target a largely unmet need in the healthcare market or for debilitating diseases for which no other viable and/or approved treatment options exist. The designation speeds up regulatory approval by shortening the FDA’s final decision time from the standard 10 months to six.
But for the second time last month, Amgen Inc. (Thousand Oaks CA) lost a battle over its effort to block a biosimilar version of its Neupogen drug, a $5.7 billion seller used to fend off infections during chemotherapy. On this latest occasion, the FDA denied a citizen’s petition that the biotech filed arguing that Sandoz, which plans to sell a biosimilar, violated federal law by failing to provide it with needed information by a specified deadline. In its filing, Amgen maintained that Sandoz, which is the Novartis AG generic drug unit, was required to provide a complete copy of its biosimilar marketing application 20 days after it was submitted to the FDA. The biotech also sought Sandoz’s manufacturing plans. The agency wrote that the law “generally, does not describe any FDA involvement in monitoring or enforcing” the exchange of marketing and manufacturing information. The FDA rejection follows a ruling by a federal court over the same issue. The litigation is not over yet as Amgen last week filed an appeal of the FDA ruling with another federal court.
Outside the U.S., AbbVie Inc. (North Chicago) has been given the go ahead by the European Commission (EC) to market its blockbuster drug Humira (adalimumab). Humira is used to treat severe chronic plaque psoriasis in adolescents and children of ages four and above. The drug is used with children who have responded inadequately to phototherapies and tropical therapy, or those who are unsuitable for those treatments. Market authorization from the EC means Humira can be used to treat severe chronic plaque psoriasis in each member state of the European Union. Plaque psoriasis is a chronic autoimmune skin condition, characterized by the excess piling of skin cells. These then form thick lesions and scales on the skin causing inflammation.
MEDICAL STOCK SPOTLIGHT -- Nymox Pharmaceutical Corp. (Nasdaq) led advancing issues, nearly tripling over the week to $1.73. St. Laurent, QC-based Nymox announced last Wednesday that it is undertaking further analysis of its pivotal phase III studies of NX-1207 for prostate enlargement (BPH). This will include new long-term data from Studies NX02-0017 and NX02-0018. Ultimately, the company expects to provide these new pivotal phase III study results in the second or early third quarter of this year. The NX02-0017 and NX02-0018 studies were initiated in 2009. NX02-0017, which consisted of 499 patients randomized, was completed in 2012. NX02-0018 had 498 randomized patients and was completed in 2013. At 12 months post-treatment, there was no overall top-line statistical significance for the efficacy of treatment in terms of BPH Symptom Score improvement versus controls. The safety profile of NX-1207 was excellent.
Elsewhere, Cellular Dynamics International Inc., a company in the forefront of making human cells that might someday be used to cure disease, more than doubled to $16.46 after saying it has agreed to be sold to Fujifilm Holdings Corp., Tokyo, for about $307 million. The company was co-founded in 2004 by University of Wisconsin-Madison scientist James Thomson, who is viewed as one of the most influential stem-cell scientists in the world. It became a publicly traded company in 2013 and is at the forefront of an area known as regenerative medicine, which uses our own cells, tissues and organs to promote healing. CDI has about 150 employees and will continue to operate in Madison and Novato, CA, as a subsidiary of Fujifilm, the companies said.
Burlington, MA-based Dyax Corp. (Nasdaq) soared $10.51, or 64%, to $27.05 after news surfaced regarding early testing for a new drug for hereditary angioedema (HAE). The early testing showed that the drug may prove to be a “best in class” option. RBC Capital Markets’ Michael Yee said: “Well above consensus expectations, and we reiterate that this drug looks like best-in-class HAE (treatment). Dyax impresses and clearly shows proof of concept that it can essentially reduce/prevent nearly all HEA attacks.” Hereditary angioedema, or HAE, is a rare disease of the immune system, affecting an estimated 1 in 10,000 to 1 in 50,000 people around the world. HAE causes attacks of spontaneous swelling that are often painful and severe. The most common locations of HAE attacks are the hands, feet, face, genitals, abdomen and larynx.
But Can-Fite BioPharma Ltd. (NYSE) plummeted $3.22, or 58%, to $2.32 after the company announced that its phase II/III trial for its psoriasis drug candidate CF101 did not achieve its primary endpoint. According to the company’s announcement, patients given CF101 in the trial did not show significant improvement in their condition compared with patients given a placebo. “We are disappointed that our trial did not meet its primary endpoint. Regretfully, in the PASI 75 (psoriasis area and severity index) and PGA (physician’s global assessment) we did not see any real effect in patients over placebo. We have not yet completed our analysis of secondary endpoint and sub-group analysis and intend to do that in the near future,” chief executive Dr. Pnina Fishman said. Petach, Tikva, Israel-based Can-Fite is continuing its R&D efforts related to other drugs and indications in its pipeline, he added.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Community Healthcare Trust Inc., a newly-formed REIT focused on acquiring healthcare properties, registered up to $143.7 million worth of common stock. The Franklin, TN-based company, which was formed in 2014, plans to list on the NYSE under the symbol “CHCT.” Community Healthcare Trust is a fully-integrated healthcare real estate company that was recently organized as a Maryland corporation to acquire and own properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. CHT initially filed confidentially on February 17, 2015. Sandler O’Neill and Suntrust Robinson Humphrey are the joint bookrunners on the deal. No pricing terms were disclosed.
March 30, 2015 ...
SENATE DELAYS VOTE ON MEDICARE PAYMENT “FIX” FOR TWO WEEKS -- The U.S. Senate will take up legislation to replace a formula for reimbursing doctors who treat Medicare patients when the chamber returns from a two-week recess, Senate Majority Leader Mitch McConnell (R-KY) said on Friday. The House had one day earlier passed the bill in an overwhelming 392-37 vote. Supporters had hoped the Senate would take up the measure before a two-week spring break that began once the chamber adjourned Friday. “We’ll turn to this legislation very quickly when we get back,” Mr. McConnell said. “There’s every reason to believe it’s going to pass the Senate by a very large majority.” Congress has long wanted to replace the formula for calculating doctor payments, which was set by a 1997 budget law. The formula was designed to rein-in increasing Medicare costs by tying increases in physician pay to economic growth. When healthcare costs rose faster than the economy, the formula resulted in cuts to doctor pay and Congress stepped in to avert the reductions. Congress has passed 17 such patches and without congressional action would face either another patch or else would allow doctors to receive a 21% cut in pay for Medicare patients treated starting April 1.
Dr. Robert Wah, the president of the American Medical Association, said his group was “extremely disappointed” that the Senate vote was delayed and said that physicians would face a “devastating” cut when the current patch expires just days from now. The Centers for Medicare and Medicaid Services has said that it takes a minimum of 14 days to pay claims from doctors. Lawmakers expect that if Congress acts soon enough the government would be able to make payments without imposing the pay cuts. One possible wrinkle is that Senate Minority Leader Harry Reid (D-NV) appeared to request votes on a limited number of amendments related the legislation. Mr. McConnell said that he would “be discussing the way forward” with Mr. Reid.
HUMANA TO NARROW FOCUS OUTSIDE INSURANCE WITH CONCERTA SALE -- Health insurer Humana Inc. (Louisville KY) will sell its Concentra clinics unit for $1.06 billion in cash, less than five years after buying the business to expand into occupational health and physical therapy services. Concentra is being acquired in a joint venture by Select Medical Holdings Corp. (Mechanicsburg PA), which runs hospitals, and the private equity firm Welsh, Carson, Anderson & Stowe (New York), Humana said in a statement. Welsh Carson sold the business to Humana in 2010 for about $800 million. Concentra had about $1 billion in revenue last year. The unit runs about 300 clinics offering primary care, physical therapy and wellness services in 38 states, as well as about 250 workplace health clinics. Concentra was a way for Humana to “expand convenient, affordable high-quality health care for its membership base,” the health insurer said in the statement. Since then, Humana has decided to focus on primary care services, instead of workplace injury care, which was Concentra’s focus. “Concentra’s operations did not ultimately align with Humana’s strategy as well as we had originally anticipated,” Humana CEO Bruce Broussard said in the statement. “We expect Humana will continue to invest in other primary care assets.”
Concentra was founded in 1979, and pitches itself to employers as a way to lower their healthcare costs by delivering basic services on site. It has about 6,000 workers, according to its website. The deal is expected to close in the second quarter of this year. Select Medical, which operates more than 100 hospitals and 1,000 outpatient rehabilitation clinics, closed the week up 12 cents at $14.75. Humana fell $5.27, or 3%, to $177.52.
TRACKING WASHINGTON -- The Republican-controlled Senate voted 52-46 along party lines early Friday morning to advance the first Republican budget in nearly a decade. The ten-year fiscal blueprint achieves balance in ten years with deep spending cuts and no new taxes. It also calls for full repeal of President Obama’s healthcare law and increased Medicare savings. The contours of the 2016 campaign season took shape throughout the lengthy Thursday debate, where senators powered through a marathon session of votes on politically charged amendments to the GOP’s 10-year budget proposal. The voted concluded at 3 a.m. Friday. Republicans offered amendments to increase defense spending, subject lawmakers’ salaries to spending caps, and undermine President Obama’s healthcare law. Meanwhile, Democrats countered with amendments to raise the minimum wage, mandate paid sick leave and increase protections for pregnant workers. Unlike in the House, where GOP leaders allow a limited number of votes on competing budgets, the Senate process allows for a “vote-a-rama” where any senator can offer an amendment to the budget resolution until debate is exhausted and a final passage vote is called.
In other news, the White House is due to issue an ambitious plan to slow the growing and deadly problem of antibiotic resistance over the next five years, one that requires massive investments and policy changes from a broad array of U.S. government health agencies, according to a copy of the report reviewed by Reuters. The 60-page report is the first ever to tackle antibiotic resistance so broadly. It was compiled by a government task force led by the administration’s top officials for health, agriculture and defense. Doctors and health experts have warned for decades that rising rates of resistant bacteria are leading to tens of thousands of deaths, threatening to nullify modern medical advancements. The goals include drastically reducing the rates of the most deadly “superbug” infections within five years, investing in new diagnostic tools and antibiotic drugs, and improving antibiotic use. Other tactics include surveillance and prescribing practices in livestock and hospitals and increasing international collaboration through foreign ministries of health and the World Health Organization.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said it approved Abiomed Inc.’s (Danvers MA) miniature blood pump system that maintains heart function and circulation during high-risk procedures. The device, Impella 2.5 System, can be used during angioplasty and stenting, the agency said. Angioplasty and stenting are procedures used to re-open arteries in the heart that are blocked due to coronary artery disease. The news helped send shares up $10.31, or 17% for the week, to $70.31.
Elsewhere, Emergent BioSolutions Inc. (Rockville MD) said the FDA approved its treatment for inhaled anthrax, triggering a $7 million milestone payment from the Department of Health and Human Services (HHS). The company developed the treatment, Anthrasil, as part of a $160 million contract it signed in 2005 with the Biomedical Advanced Research and Development Authority (BARDA), a part of the HHS. Anthrasil, which is approved in combination with other antibacterials, is already being stored in the U.S. Strategic National Stockpile, the company said. The drug is made by Emergent Bio’s Cangene Corp. unit using plasma from healthy, screened donors who have been immunized with Emergent Bio’s Anthrax vaccine, BioThrax, the only FDA-licensed vaccine for the disease.
The FDA approved Regeneron Pharmaceuticals Inc.’s (Tarrytown NY) big-selling, eye-drug Eylea to treat diabetic retinopathy, the most common diabetic eye disease and a leading cause of blindness in adults. The agency’s decision marked the fourth approval for Eylea, an injectable medicine that had sales of $2.78 billion in 2014. The agency had previously approved Roche Holding AG’s rival drug Lucentis for diabetic retinopathy, a condition in which blood vessels in the eye swell and leak fluid, or in which abnormal new blood vessels grow, hampering vision. Eylea was initially approved for wet age-related macular degeneration, the leading cause of blindness in the elderly. It is also approved for diabetic macular edema and macular edema following retinal vein occlusion, all eyesight robbing conditions.
And outside the U.S, European regulators have postponed a decision on whether to recommend approval of a closely watched Bristol-Myers Squibb Co. (New York) drug that helps the immune system fight cancer, officials said on Friday. Nivolumab, which is already approved in the U.S. under the brand name Opdivo for melanoma and lung cancer, was on the agenda at a monthly meeting of European Medicines Agency (EMA) experts, but no verdict was reached. The committee is considering whether to recommend the antibody medicine for treating advanced melanoma in adults.
MEDICAL STOCK SPOTLIGHT -- Oramed Pharmaceuticals Inc. (Nasdaq) led a small group of advancing issues, soaring $2.61, or 66% for the week, to $6.54 on no company specific news. Volume was 12 times normal but analysts weren’t seeing any news or rumors to account for the move. Oramed Pharmaceuticals is a Jerusalem, Israel-based pharmaceutical company. The company engages in the research and development of pharmaceutical solutions for the use of orally ingestible capsules or pills for delivery of polypeptides. Its product portfolio includes ORMD-0801, an oral insulin capsule that completed phase IIa clinical trials for the treatment of diabetes; and ORMD-0901, an analog for GLP-1 gastrointestinal hormone, which is in pre-clinical trials for the treatment of type 2 diabetes.
Elsewhere, biotech Conatus Pharmaceuticals Inc. (Nasdaq) surged $1.51, or 24%, to $7.75. The San Diego, CA-based company announced top-line results from its phase II double-blind, placebo-controlled clinical trial of emricasan, a first-in-class, orally active pan-caspase protease inhibitor, in 38 patients with nonalcoholic fatty liver disease (NAFLD), including the subset of NAFLD patients with nonalcoholic steatohepatitis. The trial met its primary endpoint, showing a statistically significant reduction in alanine amino transferase in patients treated for 28 days with emricasan at 25 mg twice per day dosing compared to patients in the placebo control group. Conatus focuses on the development and commercialization of novel medicines to treat liver diseases in the U.S.
But MEI Pharma Inc. (Nasdaq) plunged $4.56, or 72%, to $1.74 after the company’s cancer drug failed to meet the main goal in a mid-stage study. The drug, pracinostat, was being tested in combination with chemotherapy drug azacitidine to treat patients with myelodysplastic syndrome (MDS)--a blood cancer where immature blood cells in the bone marrow fail to become healthy cells. The trial failure raised questions about the future of the drug, which is also being tested for another rare blood cancer. “The risk profile for pracinostat has significantly increased and one potential scenario is the discontinuation of the drug’s development,” Roth Capital’s Joseph Pantginis said, slashing his price target on the stock to $2.50 from $14 and downgrading it to “Neutral” from “Buy.” Pantginis said Pracinostat’s failure called into question a late-stage study of the drug in Acute Myeloid Leukemia (AML) patients, scheduled to begin in mid-2015.
And Ohr Pharmaceutical Inc. (Nasdaq) plummeted $6.52, or 70%, to $2.74 after saying its experimental eye drug failed the main goal in a mid-stage study as a combination therapy. The study tested the eye-drop solution, OHR-102, in combination with Roche Holding AG’s injectable eye drug Lucentis, in patients with wet age-related macular degeneration (AMD), the leading cause of blindness in the elderly. Ohr’s drug failed the study’s main goal of reducing the average number of Lucentis injections per patient when used in combination with the Roche drug. Wet AMD is characterized by the growth of new blood vessels under the retina and macula, a process known as choroidal neovascularization (CNV) that leads to a rapid deterioration in vision. Although a combination of OHR-102 and Lucentis improved visual clarity in about 42% of classic CNV patients, compared with 28% in the Lucentis monotherapy group, less of a benefit was seen in the overall population, the New York-based company said.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Blueprint Medicines Corp., a preclinical biotech developing kinase inhibitors for cancer and genetic diseases, registered up to $100 million worth of common stock. Blueprint bills itself as a patient-driven oncology company developing highly selective kinase inhibitors for genomically defined cancer subsets. Blueprint claims it has developed a platform that combines genomics with a novel library of kinase inhibitors, enabling Blueprint to rapidly develop potent highly selective compounds against clear genomic driver targets. The Cambridge, MA-based company, which was founded in 2008, plans to list on the Nasdaq under the symbol “BPMC.” Goldman Sachs and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.
March 23, 2015 ...
POLL ON HEALTHCARE LAW SHOWS INCREASED SUPPORT -- The fight over Obamacare in Washington is as ferocious as ever, with a new Republican budget plan that would repeal the healthcare law Democrats passed five years ago. In the rest of the country, however, opposition to the law appears to be easing. The gap between favorable and unfavorable views of the Affordable Care Act is the narrowest in more than two years, according to a poll released last Thursday by the Kaiser Family Foundation (Menlo Park CA). The poll of 1,503 U.S. Adults found 43% opposed to Obamacare and 41% in favor. With a margin of sampling error of plus or minus 3 percentage points, the result was essentially an even split. Those in favor most often cited expanded access to insurance, while opponents cited cost. Negative views of the law increased in the months after October 2013, when the sign-up website healthcare.gov and some state insurance marketplaces were crippled by technology failures. Now the government reports that some 16.4 million Americans have gained insurance coverage under the law.
The future of the law is in the hands of the Supreme Court. The justices are considering whether to strike down the federal subsidies that make private healthcare plans affordable to millions of new enrollees, with a decision expected by late June. A majority of those polled by Kaiser thought a ruling against the subsidies would be harmful, a view shared by majorities of Democrats, Republicans, and independents. About two-thirds of the poll’s respondents said they wanted Congress to come up with a way to preserve subsidies if the court rules against the Obama administration. But their expectations for that are dim. Less than 20% said they were even “somewhat confident” that lawmakers in Washington could work together to find such a solution, and a majority said they were “not at all confident” Congress would fix the problem.
VALEANT TRUMPS ENDO WITH $11 BILLION BID FOR SALIX -- Salix Pharmaceuticals Ltd. (Raleigh NC) accepted a sweetened, $11.1 billion takeover offer from Valeant Pharmaceuticals International Inc. (Bridgewater NJ), leading rival bidder Endo International Plc (Dublin IRL) to withdraw. Valeant’s revised $173-a-share offer, which adds about $1 billion in cash for Salix stockholders, will be available through April 7, according to a statement from the companies. Endo dropped its offer of $175 a share in cash and stock, a price that had surpassed Valeant’s initial bid of $158 a share. Salix is the latest company swept up in a dealmaking stampede as pharmaceutical companies chase new drugs. Salix’s biggest products are for gastrointestinal disorders, including Xifaxan for travelers’ diarrhea and Uceris for ulcerative colitis. The company had previously agreed last month to be acquired by Valeant for about $10 billion in cash. ValueAct Capital Management LLC (San Francisco) and Pershing Square Holdings Ltd. (New York), which each have a big stake in Valeant, were involved in the talks to sweeten the bid for Salix, a person familiar with the matter said. ValueAct, which first invested in a much smaller Valeant in mid-2006, now holds more than 5.8% of the big company, according to data compiled by Bloomberg. Pershing Square reported a passive 4.9% stake.
The termination fee Salix would have to pay to walk away from the deal was boosted to $456 million from $356 million as part of the sweetened agreement, the companies said. “While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions,” Endo said in a statement. “We would like to wish Salix and Valeant continued success as they move forward with their transaction.” Thwarted last year in a long-running quest to buy Botox-maker Allergan Inc. (Irvine CA), Valeant is counting on Salix’s Xifaxan getting an additional use approved by the U.S. Food and Drug Administration, for irritable bowel syndrome with diarrhea. Salix closed the week up 2% at $172.80 while Valeant rose 3% to $204.26. Endo jumped 6% to $92.37.
TRACKING WASHINGTON -- U.S. Senate Republicans proposed less aggressive federal budget cuts last week than their House counterparts, forgoing a massive revamp of the Medicare health system for seniors and setting up a conflict over defense spending. Senate Budget Committee Chairman Mike Enzi’s plan, like the House of Representatives plan, has little to no chance of becoming law as is. Instead, both mark the onset of the annual congressional budget battle and a test of Republicans’ ability to get things done since winning control of both houses of Congress for the first time since 2006. Enzi’s spending blueprint proposes $5.1 trillion in spending cuts and interest savings over 10 years, compared with $5.5 trillion in the House Republican budget released the prior day. The Senate version would achieve a budget surplus a year later, in 2025, and assumes nearly $1 trillion in revenue from some expiring tax breaks that have routinely been renewed. Like the House budget, Enzi’s plan gets the bulk of its savings from repealing the Affordable Care Act, also called Obamacare, and by cutting welfare programs and other federal benefits. The Senate version maintains statutory caps on the core defense budget and seeks thwart adding money to an off-budget war funding account. That puts it in direct conflict with the House’s plan to boost defense spending by adding $36 billion to the fiscal 2016 war operations budget.
In other news, the U.S. government recovered $3.3 billion in fiscal 2014 from individuals and companies that tried to defraud federal health programs, part of an effort by the Obama administration to improve enforcement and prevent abusive billing practices. The administration recovered $7.70 for every dollar spent investigating healthcare-related fraud and abuse in the past three years, according to a report released Thursday by the Health and Human Services Department and Justice Department according to the Wall Street Journal. That marks the third-highest return on investment since the antifraud program was launched nearly two decades ago, the report said. “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health-care fraud and prevent future fraud and abuse,” HHS Secretary Sylvia Mathews Burwell said in a statement. The Obama administration has been intensifying its focus on fraud and waste by preventing abuse and cutting the time from when fraud is identified and an arrest is made. The recoveries, while substantial, are small compared to the estimated fraud in the system. More than $27.8 billion has been returned to the Medicare Trust Funds since the fraud and abuse program began in 1997, the U.S. report said.
FDA/EMA ROUNDUP -- GlaxoSmithKline Plc’s (London) drug to treat chronic breathing problems is safe and effective enough for adults with asthma to use but not adolescents, an advisory panel to the U.S. Food and Drug Administration concluded on Thursday. The panel voted 16-4 that Breo Ellipta should be approved for once-daily treatment of asthma in adults 18 years and older. It voted 19-1 that the data did not support approval for use in children aged 12 to 17. The FDA is not obliged to follow the advice of its advisory panels but typically does so. Glaxo licensed the product from Theravance Inc. in 2002. The drug consists of a corticosteroid, which reduces inflammation, and a long-acting beta-agonist, or LABA, called vilanterol, which is designed to open the airways.
Elsewhere, an independent FDA panel recommended unblinding a late-stage study testing Pharmacyclics Inc. (Sunnyvale CA) and Johnson & Johnson’s (New Brunswick NJ) Imbruvica, after the treatment was successful against two similar forms of cancer in combination with other drugs. Pharmacyclics, which recently agreed to be acquired by AbbVie Inc. for about $21 billion, said Imbruvica showed a statistically significant improvement in survival without disease progression, the study’s main goal. Imbruvica, which is co-marketed by Pharmacyclics and J&J, is already approved for four cancer indications in the U.S. The study is testing Imbruvica in combination with bendamustine and rituximab (BR), against a placebo in combination with BR, in 578 previously treated patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma. Imbruvica is already approved for CLL patients who have had at least one prior therapy.
The FDA said an advisory panel will discuss the development of Ebola vaccines, days after an American health worker was flown back after being tested positive for Ebola in Sierra Leone. The agency would discuss the development of vaccines on May 12, it announced on its website last Wednesday. Ebola has so far claimed about 10,000 lives in Sierra Leone, Liberia and Guinea. Only a handful of cases have been reported in the U.S., Spain and Britain. The resurgence of the virus last year prompted drugmakers from across the world to develop new treatments that are in different stages of studies. Mapp Biopharmaceutical Inc.’s (San Diego CA) ZMapp and a compound from Tekmira Pharmaceuticals Corp. (Burnaby BC) have so far shown they could cure non-human primates given injections of Ebola virus.
And outside the U.S., Novartis AG (Basel CHE) has been given the green light in Europe for Jakavi to treat a rare blood cancer. Specifically, the drug, a JAK 1 and 2 tyrosine kinase inhibitor, has been approved by the European Commission for the treatment of adults with polycythemia vera (PV) who are resistant to or intolerant of hydroxyurea. PV is a rare and incurable blood cancer associated with an overproduction of blood cells that can cause serious cardiovascular complications, such as blood clots, stroke and heart attack. It affects roughly one to three people per 100,000 globally. Approximately 25% of patients with PV develop resistance to or intolerance of hydroxyurea and are considered to have uncontrolled disease.
MEDICAL STOCK SPOTLIGHT -- Esperion Therapeutics Inc. (Nasdaq) led advancing issues, soaring $37.94, or 51% for the week, to $112.33. The Plymouth, MI-based company announced positive results for its phase IIb study, ETC-1002-009, that evaluated the safety and efficacy of its new drug, ETC-1002, in reducing “bad” cholesterol levels in patients on stable statin treatment. ETC-1002 is designed to prevent the onset of cardiovascular diseases by reducing the low-density lipoprotein (LDL) levels in patients. The once-daily, oral drug is not designed to replace statins--the standard prevention therapy for heart ailments since the 1990s. It will only work as a supplementary therapy to statins or will be recommended for patients who do not respond to statin treatment. The Phase IIb study on ETC-1002 succeeded in meeting the primary endpoint of lower LDL levels in patients treated with the drug, compared to those treated with a placebo.
Elsewhere, Retrophin Inc. (Nasdaq) rocketed $7.58, or 51%, to $22.34. The New York-based orphan-drug biotech is the new owner of an FDA-approved, rare disease treatment and a potentially lucrative voucher for a future speedy review thanks to a $75 million buyout agreement. Baltimore’s Asklepion Pharmaceuticals Inc. won approval for Cholbam, a treatment for a rare group of bile acid synthesis and peroxisomal disorders. And, under a January agreement, Retrophin has exercised its rights to acquire the company, paying $27 million in cash and 661,278 shares with the promise of $37 million additional tied to sales milestones. Alongside Cholbam, Retrophin also gets a Rare Pediatric Disease Priority Review Voucher, which the FDA granted Askelpion in tandem with the approval. The voucher guarantees its user a 6-month agency review, cutting short the standard 10-month process, and can be sold to the highest bidder.
And Prothena Corp Plc (Nasdaq) surged $9.51, or 33%, to $38.66 after saying its Parkinson’s disease treatment showed the ability to safely reduce a key protein potentially linked to the disease in an early stage study. The treatment, known as PRX002, is one of a new class of drugs known as immunotherapies, which use the body’s immune system to fight diseases. Dublin, Ireland-based Prothena is joining with Swiss-based Roche Holding AG to develop the drug. PRX002 is a monoclonal antibody that reduces free serum alpha-synuclein, a protein potentially involved with the onset and progression of Parkinson’s in 96% of patients. Forty patients were involved in the phase I study and received either a single dose of the treatment or a placebo. As part of its development pact with Roche, the biotech company received $45 million in milestone payments. It could receive up to $600 million.
But Anthera Pharmaceuticals Inc. (Nasdaq) skidded $1.14, or 21%, to $4.34 after reporting a loss of $7.4 million, or 32 cents per share, in its fourth quarter. For the year, the Hayward, CA-based company reported that its loss narrowed to $29.6 million, or $1.36 per share. Anthera shares have more than tripled since the beginning of the year. Separately, analysts at Zacks downgraded shares of Anthera from an “Outperform” rating to a “Neutral” rating and set a $3.90 price target on the stock. Anthera is a biopharmaceutical company focused on developing and commercializing products to treat serious diseases associated with inflammation and autoimmune diseases. The company’s primary phase III product candidate, blisibimod, targets elevated levels of B-cell activating factor (BAFF), which has been associated with a variety of B-cell mediated autoimmune diseases, including lupus.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Cidara Therapeutics Inc., which is developing novel therapies for fungal infections, registered up to $69 million worth of common stock. Cidara plans to use $25 million from the IPO to develop its lead drug, the IV CD101 along with a parallel topical formulation program for CD101 through phase II and into the start of phase III. Another $25 million will be devoted to advancing pre-clinical programs and its development platform, called “Cloudbreak.” The company is not yet generating product revenue. In February, Cidara completed a $42 million Series B financing to fund its drug-development programs. Cidara reported a net loss of $11.9 million for 2014, up from a net loss of $1.3 million in 2013 according to its preliminary prospectus. The San Diego, CA-based company, which was founded in 2012, plans to list on the Nasdaq under the symbol “CDTX.” Jefferies and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
March 16, 2015 ...
OBAMACARE SIGNUPS APPROACH 12 MILLION -- Nearly 11.7 million people have either signed up or re-enrolled for insurance coverage under the U.S. healthcare reform law, more than the 9.1 million predicted by the Obama administration, health officials said last week. As of Feb. 22, about 8.8 million signed up in one of the 37 states that use online exchanges operated by the federal government and 2.85 million were in the 14 states, and Washington, D.C., that operate their own exchanges, the Department of Health and Human Services said in a statement. The Democratic-backed Affordable Care Act, narrowly passed by Congress in 2010 over unified Republican opposition, aimed to help millions of Americans without health insurance obtain coverage. Conservatives criticize the law, commonly called Obamacare, as government overreach. The online exchanges, or marketplaces, are geared toward those who do not receive insurance through their employer and provide tax subsidies on a sliding scale to make health coverage affordable for low-income people. In the states that use the federal exchange, called healthcare.gov, 87% qualified for a tax credit averaging $263 per month, according to HHS. It said more than half of consumers in states using healthcare.gov bought a plan that cost $100 or less after tax credits.
Enrollment across the board has largely exceeded expectations, health officials said. The enrollment period for 2015 coverage opened on Nov. 15 and closed on Feb. 15. President Barack Obama’s healthcare policy has been challenged in the courts since the outset. In the latest case, the U.S. Supreme Court heard arguments on March 4 and is expected to decide this year whether or not to throw out tax subsidies in states that do not operate their own marketplaces. If the court rules against the Obama administration, up to 7.5 million people in at least 34 states would lose the tax subsidies, according to consulting firm Avalere Health LLC (Washington DC). More than 4.1 million people under 35 years old have purchased health insurance through state and federal exchanges, the HHS said last week, about a third of enrollees.
VALEANT SAID TO BE PLANNING TO RAISE ITS BID FOR SALIX -- Valeant Pharmaceuticals International Inc. (Laval Quebec) is planning to team up with Pershing Square Capital Management LP (New York) and other top shareholders, including ValueAct Capital LLC (San Francisco), to raise its bid for Salix Pharmaceuticals Inc. (Raleigh NC) this past weekend, according to people briefed on the matter. The raised offer will be above $160 a share and consist entirely of cash, these people said. The exact price of Valeant’s new offer was not yet known. Valeant hopes that the increased offer will be enough to end a bidding war that has erupted over Salix, a maker of gastrointestinal drugs. Valeant agreed to buy Salix for $158 a share in cash, or about $10 billion, last month. But last week, the drug giant Endo International Plc (Dublin IRL) offered $11.2 billion, or $175 a share, mostly in stock, for Salix. Although the Endo bid is higher, it also introduces several uncertainties to the sale process for Salix. Among the top concerns for analysts are the need for shareholder votes, a large stock component and the results of a pending treatment approval by the Food and Drug Administration. Valeant Pharmaceuticals is planning to team up with William Ackman in hopes that an increased offer will be enough to end a bidding war for Salix.
Analysts said the Endo offer sent Salix shares trading substantially higher, making it difficult for Valeant to stand by its lower bid. Details of Valeant’s new bid were still coming together on Friday afternoon. The Salix board reportedly met on Saturday to consider the rival offers, these people said. The chief concern for the board members’ is whether a deal would provide certainty for the company’s shareholders. That would suggest they may be leaning toward accepting an all-cash offer that does not require a vote. To finance the increased offer, Valeant is turning to top shareholders, including Pershing Square, the hedge fund run by Ackman. Earlier this month, it emerged that Pershing Square had taken a nearly 5% stake in Valeant but pledged to remain a passive investor. “In order for them to take the Endo transaction, they have to walk away from an all-cash deal,” Mr. Ackman said. “If you think Valeant is getting it on the cheap, then you should buy Valeant stock, which is what we did. We think Valeant stock is very cheap.” Salix shares closed the week up 7% at $169.40. Valeant slipped 1% to $197.43. Endo fell 30 cents to $87.33. (Source: New York Times)
TRACKING WASHINGTON -- More than 85% of Americans who signed up for health coverage this year through the Affordable Care Act qualified for government subsidies, according to a new report that underscores the scope of the aid at a time when the Supreme Court is considering sharply restricting it. Altogether, close to 10 million of the 11.7 million people who enrolled in coverage this year could get subsidies, the report from the U.S. Department of Health and Human Services shows. Reliance on government aid is higher in states where the federal government operates insurance marketplaces than in states like California that run their own systems. The legal challenge being considered by the Supreme Court would strip away subsidies in states that rely on the federal government, affecting as many as 7.7 million people, according to the report. In many of those states, consumers are getting subsidies that top $300 a month on average, according to the data. In Mississippi, for example, that has meant the difference between an average monthly premium of $405 without subsidies and $52 with them. In Texas, the average premium drops from $328 a month to $89 a month with aid. “We now know in very tangible terms how much assistance the Affordable Care Act is providing to people,” said Larry Levitt, senior vice president at the nonprofit Kaiser Family Foundation (Menlo Park CA).
In other news, the physicians who treat Medicare patients would avoid a cut in their government reimbursements under a proposal to be presented to U.S. House members this week, according to Republican and Democratic aides. The bipartisan $200 billion framework to replace Medicare’s cost-containment formula for doctor reimbursement was negotiated by House leaders of both parties and members of the committees with jurisdiction over Medicare. Some of the cost would be offset with $35 billion worth of Medicare savings from beneficiaries over 10 years. Another $35 billion over a decade would come from reducing or delaying higher payments to hospitals and other Medicare service providers over time, the aides said. The rest would be offset with $130 billion worth of adjustments in the budget resolution that would include government health programs, said a Republican aide who spoke on condition of anonymity because the proposal hasn’t been presented to members. There’s pressure on Congress to act by March 31 to prevent a more than 20% cut in payments to doctors for treating Medicare patients. Congress has avoided such payment cuts 17 times by passing what has become known as “doc-fix” legislation.
FDA/EMA ROUNDUP -- Boston Scientific Corp. (Marlborough MA) said on Friday that the U.S. Food and Drug Administration approved its device to prevent stroke in patients with a dangerous irregular heart rhythm known as atrial fibrillation (AF). The tiny umbrella-shaped product, called the Watchman Left Atrial Appendage Closure Device, is designed to spare heart patients a lifetime of taking anticoagulant drugs, such as warfarin, that carry a high risk of bleeding. The device will be made available to U.S. centers involved in Boston Scientific's clinical studies and additional specialized centers, the company said. People with AF, the most common type of arrhythmia, are five times more likely to suffer a stroke than those without the condition.
Elsewhere, an injection for double chin reduction developed by Kythera Biopharmaceutical Inc. (Calabasas CA) was unanimously backed by an independent panel of experts, bringing the drug a step closer to approval by the FDA. The FDA typically accepts the panel’s recommendations. The drug, ATX-101, is a formulation of synthetically derived deoxycholic acid, which destroys fat under the chin, leaving surrounding tissue largely unaffected.
AcelRx Pharmaceuticals Inc. (Redwood City CA) said the FDA is calling for an additional clinical trial to assess risk tied to its experimental pain-management treatment, further delaying its potential approval and marketing. The device, Zalviso, is designed for moderate-to-severe pain management in hospital settings. The FDA has said the company must perform an additional clinical study to assess the risk of inadvertent dispensing, as well as overall risk of dispensing failures. AcelRx said it won’t be resubmitting Zalviso as a new-drug applicant candidate this quarter and plans to meet with the agency to discuss the new requirement.
Outside the U.S., Merck & Co.’s (Kenilworth NJ) cancer drug Keytruda, which works by boosting the immune system but has yet to be licensed in Europe, is the first medicine to be made available to patients in Britain under a new early access scheme. The Medicines and Healthcare Products Regulatory Agency said that the treatment had been cleared to treat adults and children from 12 years of age with advanced melanoma, the deadliest form of skin cancer, after other drugs had failed. Keytruda, or pembrolizumab, was accepted under the scheme based on the significance of early study findings and unmet medical need. The new early access program is funded by drug companies. While Keytruda is already approved in the U.S., Merck’s application for marketing authorization in Europe is still under review.
MEDICAL STOCK SPOTLIGHT -- Amarin Corp Plc (Nasdaq) led advancing issues, soaring $1.12, or 63% for the week, to $2.90 following a major upgrade by brokerage H.C. Wainwright. Specifically, the firm placed a “Buy” rating on the stock (up from “Neutral”) and said they believe the stock has an incredible 515% potential upside. Amarin has been a disaster stock since the Food and Drug Administration revoked the Special Protocol Assessment, or SPA, agreement for the Dublin, Ireland-based company’s ANCHOR clinical trial of its prescription fish-oil pill Vascepa. The FDA repealed the SPA due to issues over the clinical trial’s design and doubts about the ability of fish oil pills to improve cardiovascular outcomes.
Elsewhere, MELA Sciences Inc. (Nasdaq) leaped $1.21, or 62%, to $3.04. The company had the “Buy” rating on its stock reaffirmed by analysts at H.C. Wainright in a report released on Thursday. Irvington, NY-based MELA, a medical device company, designs, develops, and commercializes a non-invasive point-of-care instrument to aid in the detection of melanoma. The company’s principal product, MelaFind, comprises a hand-held component that emits light of multiple wavelengths to capture digital data from clinically atypical pigmented skin lesions.
And small-cap Lion Biotechnologies Inc. (OTCMKTS) surged $4.12, or 46%, to $13.12. Piper Jaffray assumed coverage on the Woodland Hills, CA-based company’s shares in a report issued last week. The firm issued an “Overweight” rating and a $21.00 target price on the stock, saying, “The company has a license from the NIH to develop TILs (tumor infiltrating lymphocytes) to treat melanoma as well as other solid tumors likely to be responsive to this approach. Unlike some emerging cellular therapy platforms, TILs have a unique advantage in being able to target a repertoire of individualized tumor antigens. With highly promising results already reported in melanoma, we believe LBIO’s platform will play a very important role in the evolving cancer immunotherapy space.”
But AcelRx Pharmaceuticals Inc. (Nasdaq), a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of pain, suffered a 54% smackdown to $4.68 due to an unanticipated FDA request relating to ongoing clinical trials. AcelRx’s key product is Zalviso, a patient-activated, handheld device which allows a hospital patient to self-administer pain medication, bypassing the invasive procedure of using an IV. The product--which had already successfully undergone three phases of clinical trials--was rejected by the FDA in July. After fulfilling additional FDA requests for more data, the Redwood City, CA-based company hoped to resubmit Zalviso for approval later this March. But just prior to the company’s fourth-quarter earnings conference, the FDA made an additional request for yet another clinical trial to assess the device’s dispensing risks, pushing back the resubmission date.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Par Pharmaceuticals Inc., which manufactures and distributes generic and branded drugs in the U.S., registered up to $100 million worth of common stock. However, the deal size is likely a placeholder for an IPO that some analysts estimate could raise as much as $700 million or more. Par is controlled by equity investment firm TPG, which bought the publicly-traded generic drugmaker in September 2012 for $1.9 billion. The Woodcliff Lake, NJ-based company, which was founded in 1978 and booked $1.3 billion in sales for the 12 months ended December 31, 2014, has not yet chosen which market to list on but plans to list under the symbol “PRX.” J.P. Morgan, Goldman Sachs, and Citi, are among the joint bookrunners on the deal.
March 9, 2015 ...
U.S. SUPREME COURT SPLIT OVER OBAMACARE CHALLENGE -- The Supreme Court appeared clearly divided last week during heated arguments over the fate of President Obama’s healthcare law with the court’s four liberal members voicing strong support for the administration’s position. But the administration must almost certainly capture the vote of either Chief Justice John G. Roberts Jr. or Justice Anthony M. Kennedy to prevail. The chief justice said almost nothing. Justice Kennedy asked questions suggesting that he was uncomfortable with the administration’s reading of the statute. But he added that the challengers’ reading posed problems, too. “Your argument raises a serious constitutional question,” he told their lawyer. Solicitor General Donald B. Verrilli Jr. argued for the Obama administration, facing Michael A. Carvin, who represented the plaintiffs in another challenge to the law that reached the Supreme Court in 2012. The argument, which lasted 80 minutes rather than the usual hour, started with a presentation from Mr. Carvin that was tied closely to the text of the law. “This is a straightforward question of statutory interpretation,” he said, referring to a provision in the law that seems to say that subsidies are available only to people living where the insurance marketplaces, known as exchanges, had been “established by the state.”
Mr. Carvin faced a barrage of questions from the court’s liberal wing focusing on the healthcare law as a whole. “We don’t look at four words,” Justice Elena Kagan said. “We look at the whole text.” Justice Stephen G. Breyer echoed the point. “If you want to go into the context” of the law, he told Mr. Carvin, “at that point your argument really is weaker.” Justice Sonia Sotomayor said Mr. Carvin’s reading of the law would have devastating consequences. “We’re going to have the death spiral that this system was enacted to avoid,” she said. Justice Kennedy repeatedly asked whether Congress had the constitutional authority to make states choose between setting up their own insurance exchanges and letting their citizens lose tax subsidies to help them buy insurance. “There is a serious constitutional problem here if we adopt your position,” he told Mr. Carvin. Justice Kagan made a similar point, saying that a properly drafted law would have made the choice starker. “That’s not the clarity with which we expect the government to speak when it’s upsetting federal-state relations,” she said. The court’s decision is expected in late June.
ABBVIE TO BUY PHARMACYCLICS IN $21 BILLION DEAL -- AbbVie Inc. (North Chicago) is buying Pharmacyclics Inc. (Sunnyvale CA) for about $21 billion, giving it access to what is expected to be one of the world’s top-selling cancer drugs and expanding its reach in the profitable oncology field. The deal--the latest example of a big drugmaker swooping on a biotech firm to refill its medicine pipeline--bewildered industry observers’ expectations that Pharmacyclics would sell out to Johnson & Johnson (New Brunswick NJ). AbbVie will pay $261.25 per share in cash and stock, a 13% premium to Pharmacyclics’ closing price prior to news of the deal. Back in 2008 and 2009, the shares dipped below $1. The acquisition lessens AbbVie’s dependence on its blockbuster rheumatoid arthritis drug Humira that accounts for most of its revenue but is expected to start to see sales decline from 2017 or 2018. AbbVie failed last October to buy Dublin-based Shire Plc for $55 billion after the U.S. took steps to deter such tax-lowering deals. Deutsche Bank analyst Robyn Karnauskas said the deal was positive for AbbVie as Pharmacyclics’ blood cancer treatment Imbruvica would diversify the business beyond Humira. “Imbruvica is not only complementary to AbbVie’s oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies,” AbbVie CEO Richard Gonzalez said in a statement.
Pharmacyclics expects U.S. sales of Imbruvica to hit $1 billion this year and by 2020 worldwide sales are forecast to reach $5.8 billion, according to consensus analyst estimates compiled by Thomson Reuters Cortellis. AbbVie, which was spun out of Abbott Laboratories Inc. (Abbott Park IL) in 2013, said the deal would be “highly accretive” to its revenue and earnings by 2017. Pharmacyclics co-markets Imbruvica with Johnson & Johnson. Besides Imbruvica, it has three product candidates in development. In a statement, J&J said: “We’re looking forward to continuing our collaboration with the team at AbbVie to further develop and commercialize this important therapy for patients and their healthcare teams.” Media reports had said J&J was close to buying Pharmacyclics. Novartis AG (Basel CHE) was also interested in the company, a report said. The deal, expected to close in the middle of the year, comprises about 58% cash and 42% AbbVie common stock. Pharmacyclics shareholders can opt for cash, AbbVie stock or a combination, AbbVie said. Pharmacyclics closed the week up 18% at $254.56. AbbVie fell 8% to $55.64.
TRACKING WASHINGTON -- The Supreme Court argument over subsidies that help millions of people afford their health insurance suggests that the Obama administration has two chances to attract one critical vote, according to some court observers. The justices gathered in private Friday to cast their votes in the case. The outcome after Wednesday’s argument appears to be in the hands of two conservative justices--one who voted with the court’s four liberals to uphold the law in 2012 and the other who joins the liberals more often, but who would have demolished the entire law three years ago. If Justice Anthony Kennedy had his way in 2012, there would be no healthcare case because there would be no Affordable Care Act. Last Wednesday, Kennedy at least left open the possibility that he would not vote the same way again because of a legal concept known as constitutional avoidance. The idea is that judges should avoid interpreting a law in a way that raises constitutional problems if there’s any other reasonable way to view it. The dispute focuses on four words in the massive health law, “established by the state,” which the challengers say is clear evidence that Congress intended subsidies to go only to people in states that created their own health insurance marketplaces, or exchanges.
The idea was to have a carrot-and-stick approach, the challengers’ lawyer, Michael Carvin, said. Congress wanted states to establish their own exchanges and held out generous subsidies to the residents of those that did. But Kennedy said such a scheme would raise a serious constitutional question about whether the federal government was trying to coerce the states to act. Kennedy told Carvin that “if your argument is accepted, the states are being told either create your own exchange or we’ll send your insurance market into a death spiral.” He repeated his concern when Solicitor General Donald Verrilli Jr. defended the administration’s view that subsidies are available everywhere because Congress did not want a law designed to reduce the number of uninsured Americans to leave people unable to afford insurance based on where they live. If Carvin is right, “this is just not a rational choice for the states to make and they’re being coerced,” Kennedy said. “And that you then have to invoke the standard of constitutional avoidance.”
FDA/EMA ROUNDUP -- On Friday, the U.S. Food and Drug Administration cleared the first-ever imitation of a bioengineered drug, which Novartis AG (Basel CHE) will call Zarxio, according to a statement from the agency. Novartis agreed to delay selling the biosimilar in the U.S. until a lawsuit with Amgen Inc. is resolved or until April 10, whichever is earlier, said Julie Masow, a spokeswoman. Amgen’s Neupogen generated $1.2 billion in sales last year as a therapy to help increase cancer patients’ white blood cell counts and fight infections. The drug is part of a class of medicines called biologics that have never faced generic competition. The 2010 Patient Protection and Affordable Care Act authorized the FDA to approve imitations of biologics. They are called biosimilars rather than generics because biologics are manufactured from living organisms and can’t be precisely copied.
Elsewhere, Bristol-Myers Squibb Co. (New York) received an expanded U.S. approval for the use of its checkpoint inhibitor Opdivo to treat a form of advanced lung cancer. The new Opdivo approval covers patients with squamous non-small cell lung cancer no longer responsive to chemotherapy, according to an announcement made by the FDA. In December, Bristol’s drug was approved initially to treat skin cancer. The FDA moved exceptionally fast expanding Opdivo’s approval. Bristol said the lung cancer application was accepted last week with an approval decision expected in June. The worldwide commercial market for squamous cell lung cancer patients tops $3 billion, according to an analysis by Barclays.
The FDA rejected Pacira Pharmaceuticals Inc.’s (La Jolla CA) application to expand the use of its post-surgery pain drug, Exparel, sending the company’s stock down 16% for the week to $96.63. Exparel is currently injected directly into tissue at the site of an operation, a technique known as infiltration. Pacira applied to expand its use as a nerve-numbing injection, or nerve block, in March last year. Nerve blocks work by introducing a local anesthetic close to a nerve, allowing the drug to control pain in a specific region of the body, such as the upper arm, thigh or lower leg. The FDA’s rejection could delay approval for the nerve block indication by at least a year, Canaccord Genuity analyst Corey Davis said. The drug’s main indication for post-surgical pain is still the company’s primary revenue driver, Pacira said.
And outside the U.S., Pfizer Inc.’s (New York) blockbuster vaccine against pneumonia and other bacterial infections won another approval, for use in European Union residents aged 18 and older. Prevnar 13, called Prevenar 13 in some countries, is the best-selling vaccine ever. It protects against 13 strains of pneumococcal disease, the most common bacterial cause of pneumonia and a top cause of death and hospitalization worldwide. It also causes children’s ear infections, bloodstream infections and other illnesses. Pfizer says more than 750 million doses have been distributed worldwide. Last year, Prevnar’s global sales reached $4.5 billion, making it the No. 2 product for the company, which also makes Lipitor and Viagra. In the U.S., it’s approved for children from six weeks through 17 years old and adults over 49.
MEDICAL STOCK SPOTLIGHT -- CorMedix Inc. (Nasdaq) led advancing issues, surging $3.09, or 60% for the week, to $8.25. The Bridgewater, NJ-based pharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of cardiac, renal and infectious diseases, announced several strategic business updates. Chief among the moves is that the company has engaged investment bank Evercore as financial advisor to explore strategic alternatives in order to accelerate the global development of its Neutrolin catheter lock solution and maximize shareholder value. According to CorMedix, Neutrolin is a novel formulation of citrate and heparin 1000 u/ml that decreases the triple threat of infection, thrombosis and biofilm.
Elsewhere, Atara Biotherapeutics Inc. (Nasdaq) soared $8.75, or 45%, to $28.31 following an announcement that its collaborative partner, Memorial Sloan Kettering Cancer Center, New York, has received breakthrough therapy designation from the Food and Drug Administration for Atara’s optioned cytotoxic T lymphocytes, which is activated against Epstein-Barr Virus in the treatment of patients with rituximab-refractory, EBV-associated lymphoproliferative disease. Brisbane, CA-based Atara is a clinical-stage biopharmaceutical company developing therapeutics with an initial focus on muscle wasting conditions and oncology. Its product candidates are biologics targeting myostatin and activin, members of the Beta protein super family which play roles in the growth and maintenance of muscle and other body tissues. Its lead product candidate is PINTA 745 which is in a phase II clinical trial for protein energy wasting, a condition affecting many end-stage renal disease patients.
And Celladon Inc. (Nasdaq) leaped $5.85, or 32%, to $24.00. Roth Capital Partners initiated coverage of San Diego, CA-based Celladon with a “Buy” rating and 12-month price target of $70. According to Roth, Celladon is about to announce potentially pivotal trial results from a 250-patient, heart-failure, gene-therapy trial (CUPID 2) in April. There are over 11 million patients suffering from heart failure in the U.S. and key European countries. The number of people impacted by heart failure increases by one million every year--leading to a doubling of the prevalent population in 10 years, according to Roth. The total annual cost of treating heart failure today is $39 billion in the U.S. alone. Mydicar gene therapy, developed by Celladon, reduced the risk of hospitalizations, the need for a heart transplant and death by 88% in a previous study.
But Sunshine Heart Inc. (Nasdaq) plummeted $1.72, or 30%, to $4.03 after the early-stage medical device company temporarily suspended enrollment for a study of its signature C-Pulse system. The Eden Prairie, MN-based company said it will be taking a “temporary pause” from enrollment in accordance with the study protocol which stipulates: if “more than three of the first twenty subjects pass away for any reason, including non-device related deaths, the company will work with the FDA to discuss a plan to resume enrollment.” To date, of the four reported patient deaths, two have been adjudicated by an independent Clinical Events Committee (CEC) as being non-device related, the company noted. The FDA has advised the company to file an Investigational Device Exemption (IDE) supplement that discusses the reasons for the temporary study suspension and a plan for study resumption.
IPO SECTOR -- Summit Therapeutics Plc, which is developing novel therapies for muscular dystrophy and bacterial infections, raised $34 million by offering 3.45 million shares at $9.90, below its expected offer price of $11.54. Oxford, U.K.-based Summit, which already trades on the AIM market of the London stock exchange under the ticker “SUMM,” will list on the Nasdaq under the symbol “SMMT.” Summit is conducting clinical programs focused on the genetic disease Duchenne muscular dystrophy and the infectious disease Clostridium difficile infection. JMP Securities and Oppenheimer & Co. acted as joint bookrunners on the deal. Shares closed the week up 4% at $10.29 on the Nasdaq. They fell 22% to 141.50 pence in London.
March 2, 2015 ...
MORE THAN ONE MILLION AMERICANS SWITCHED HEALTH PLANS DURING ENROLLMENT SEASON -- About 1.2 million people who bought coverage on HealthCare.gov in 2014 dropped their health plan and picked a new one through the site for 2015, the Obama administration said last week. The extent of people’s willingness to consider shifting to a different insurance carrier came as a surprise to federal officials, said Andy Slavitt, a former top executive at UnitedHealth Group Inc. (Minnetonka MN) who is now principal deputy administrator at Centers for Medicare and Medicaid Services and will become acting administrator today. “This is a much more active consumer than anybody expected,” Mr. Slavitt said, noting that in other programs such as the federal employees’ health plan, or Medicare prescription drug benefits, as few as 10% of customers changed plans from year to year. “We wanted to create maximum choice while we had maximum consumer protection,” he said. Nearly two million people were automatically re-enrolled in their 2014 plans after taking no action for 2015. And just over one million came back to the site to review their options but made no changes, according to new figures from CMS, the federal agency overseeing implementation of the federal health law. In all, 4.17 million of this year’s sign-ups under the health law are people who had coverage through HealthCare.gov in 2014.
The Obama administration decided last summer to automatically renew coverage for people who didn’t come back to the site. They made that decision to minimize the risk that people would drop out, even though supporters of the health law worried it could financially harm people who didn’t review their insurance choices. The decision benefited insurers who offered low prices in the first year of the law’s exchanges and scooped up large numbers of customers, since many of those people did remain loyal. Many people using HealthCare.gov to buy insurance had good reason to shop around for 2015. Carriers that scooped up the largest number of customers in the first year typically increased their rates for the second year by around 10%, the Wall Street Journal found. At the same time, many insurers that were new to the exchanges for 2015, or had fared poorly the first year, offered aggressively low rates in an effort to undercut the market leaders. That influx of lower-priced plans had an additional, unexpected result: It pulled down the value of tax credits that many customers received to offset the cost of premiums. The credits are pegged to the price of the second-lowest-cost midrange plan in a given geographic area, as well as an enrollee’s income.
FBI CLOSING IN ON CULPRITS BEHIND MASSIVE ANTHEM HACK -- The Federal Bureau of Investigation said it’s close to finding the hackers responsible for the attack on health-insurance company Anthem Inc. (Indianapolis IN) that exposed personal data on about 80 million customers. FBI officials are still deciding whether to publicly reveal information about the attackers in one of the biggest thefts of medical-related customer data in U.S. history, Robert Anderson, the bureau’s executive assistant director for cyber security, said. Agency officials don’t want to compromise investigations or operations by any disclosures, he said. “If you’re going to be calling out nations or actor sets you’ve got to be willing to provide some of the technical findings,” Joseph Demarest, assistant director for the FBI’s cybercrime division, said in Washington. “Sometimes it’s almost impossible without giving up or compromising current ongoing efforts to understand those actors.” Investigators have found some evidence in the breach of Social Security numbers and other personal information that points to Chinese state-sponsored hackers, three people familiar with the probe told Bloomberg News early in February. Anderson said he didn’t know yet whether the Chinese government carried out the attack. The FBI is tracking 60 hacking groups backed by foreign governments, the majority of which come from China, Demarest told reporters.
Demarest also said that the Islamic State terrorist group in Syria and Iraq lacks the capability to carry out hacking attacks, although the FBI is concerned the group will acquire more sophisticated skills and tools. “In some of these cases you’re going to be able to identify actors much early on,” Anderson said. It will take longer to identify” the ones that are very sophisticated that can obfuscate their attack” by using different Internet protocol addresses around the world. In another case, the FBI and other U.S. agencies were able to determine within weeks that the North Korean government attacked Sony Pictures Entertainment. Anderson said there will be more cases like Sony in which the attackers are publicly named. “The Sony case is not going to be a one off,” Anderson said. “You’re going to see us start to do this because, honestly, the community and the guys and gals that are working cyber--both on the law enforcement and national security side--are getting better at it. You’re going to see this more often.”
TRACKING WASHINGTON -- Americans who obtained health insurance through an online federal marketplace and then filed tax returns using flawed forms provided by the government do not need to amend their returns, the U.S. Treasury said last week. “We have concluded that these individuals do not need to file amended returns,” a Treasury official said in a statement. The Obama administration said on Feb. 20 that 800,000 people who signed up for health insurance under the Affordable Care Act received incorrect tax forms and should wait to receive new ones before filing their taxes. The Treasury estimated that about 50,000 people have already submitted their returns, using the incorrect forms. However, these people do not have to worry about the Internal Revenue Service coming after them if it turns out they would have owed more money using the corrected forms. “The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms,” said the official, who was not identified by name.
In other news, Senate Finance Committee Chairman Orrin Hatch (R-UT) is backing a Supreme Court challenge to one of the keystones of President Barack Obama’s healthcare law. Now, he says he’s preparing a plan to help people who might be hurt if his side wins the case. The Supreme Court is scheduled to hear arguments this week in a case by conservatives and Republicans that says many subsidies the law provides for millions of people are unconstitutional. They argue that the law only allows such subsidies for the 13 states that set up their own marketplaces to sell health insurance, not the 37 states that use the federal HealthCare.gov website. Democrats say the subsidies were supposed to go to people buying policies on either the federal or state marketplaces. Should the court uphold the suit--a decision is expected in June--millions of people could be forced to drop their health coverage because those subsidies make their insurance affordable. So Hatch told an audience at the conservative Heritage Foundation that he will release “a short-term solution for those Americans that may be affected by the decision” in that case. Hatch provided no details on what he might propose or when it would be ready.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved a new antibiotic combination to treat several hard-to-treat infections. The drug from Actavis Plc (Dublin IRL) contains two ingredients, cephalosporin and avibactam, designed to help fight antibiotic-resistant bacteria. The FDA approved Avycaz to treat certain abdominal infections, in combination with another drug, and for complicated urinary-tract infections, including kidney infections, for which there are few other options. Avycaz is the fifth drug given an expedited review by the FDA in an effort to make newer antibiotics available to fight drug-resistant superbugs. The most common side effects reported in company trials included vomiting, nausea, constipation and anxiety. The new drug will be distributed by Forest Laboratories, which was acquired by Dublin-based Actavis last summer.
The FDA also approved a hormonal contraceptive device from Actavis Plc on Friday that gives American women another reversible contraceptive choice as effective as sterilization. The intrauterine device (IUD) device, Liletta, releases the hormone levonorgestrel to inhibit thickening of the womb lining, preventing pregnancy for up to three years. Typically smaller than an iPod Shuffle, the IUD is a t-shaped piece of plastic that must be inserted into the uterus to prevent fertilization. Actavis holds the commercial license for the product, but the marketing application was submitted by non-profit pharmaceutical company Medicines360, which holds the U.S. public sector clinical rights. The companies expect the device, which also helps to check heavy menstrual bleeding, to be available in the United States by the second quarter of 2015. It is already in use in Europe.
Elsewhere, the FDA approved Novartis AG’s (Basel CHE) drug to treat patients who have relapsed after earlier therapies for multiple myeloma, an aggressive blood cancer, even though an advisory panel in November recommended against approval. The drug, Farydak, in clinical trials almost doubled to 10.6 months the amount of time it took for the disease to progress, compared with standard treatment. But it was associated with a wide array of serious side effects, including severe diarrhea and heart problems, which are prominently listed in a boxed warning. Farydak was approved for use in combination with Takeda Pharmaceutical Co Ltd.’s Velcade and the anti-inflammatory drug dexamethasone once a patient has received at least two prior treatment regimens. The FDA granted Farydak conditional approval, meaning that continued approval may hinge on demonstrating benefits in confirmatory trials.
And outside the U.S., Roche Holding AG (Basel CHE) said on Friday that European regulators had recommended approval of its drug Avastin in combination with chemotherapy as a treatment for women with an advanced form of cancer of the cervix. Avastin, which is already approved in Europe to treat advanced stages of breast cancer, colorectal cancer, non-small cell lung cancer, kidney cancer and ovarian cancer, was the drugmaker’s biggest seller last year with sales of 6.42 billion Swiss francs ($6.76 billion).
MEDICAL STOCK SPOTLIGHT -- Biocept Inc. (Nasdaq) led advancing issues, soaring $1.71, or 118% over the week, to $3.16. The massive upward move came after the San Diego, CA-based biotech announced that its blood-based diagnostic, OncoCEE-BR, was used to determine hormonal status of metastatic breast cancer patients in a prospective study at Columbia University in New York. Up to 75% of breast tumors rely on estrogen receptor (ER) signaling to grow. Understanding the hormone receptor (HR) is important as well, because it is comprised of the ER and the progesterone receptor (PR). Targeting this pathway with anti-estrogen therapy has been shown in trials to have a clear clinical benefit in the treatment of this subset of breast cancer patients. The study at Columbia used Biocept’s proprietary CTC isolation platform to prospectively define both ER and PR status using a simple blood sample in women with metastatic breast cancer. Results from the study indicate Biocept’s blood-based diagnostic may be as effective in determining a patient’s HR status as traditional tissue biopsy.
Elsewhere, Cytori Therapeutics Inc. (Nasdaq) leaped 104% to $1.12 after receiving authorization from the Food and Drug Administration to increase the number of scleroderma clinical trial locations from 12 to 20 centers in the U.S. The San Diego-based company’s STAR research is an 80 patient pivotal clinical trial sanctioned by the FDA in January 2015 to study the effects of the firm’s lead drug ECCS-50 for treatment of patients with hand manifestations of scleroderma. Dr. Steven Kesten, Chief Medical Officer of Cytori, said that increasing the number of trial locations to 20 institutions should open the STAR trial to more physicians and patients with scleroderma. There are only around 35 specialized scleroderma centers in the U.S. and the FDA’s decision to increase the trial sites permits Cytori to substantially expand the geographic coverage of the trial and facilitate additional trial registration.
And Second Sight Medical Products Inc. (Nasdaq), jumped $7.42, or 85%, to $16.17. The medical device maker, which develops, manufactures, and markets implantable prosthetic devices, announced that all three of the centers approved to implant its Argus II Retinal Prosthesis System under the French Government national healthcare reimbursement program entitled ‘Forfait Innovation’ have successfully accomplished their first implants in patients with retinitis pigmentosa (RP). In 2014, the Argus II became the first-ever medical device to be named as the recipient of Forfait Innovation, allowing select hospitals in France to offer this “early access” treatment to patients with advanced RP. The condition, an inherited disease that often results in nearly complete blindness, affects roughly 24,000 French persons and 167,000 persons across all Europe.
But biotechnology company Vitae Pharmaceuticals Inc. (Nasdaq) skidded $2.58, or 18%, to $11.62. The firm said partner Boehringer Ingelheim GmbH has voluntarily placed a temporary clinical hold on its experimental Alzheimer’s drug and has notified regulatory agencies of the decision. Fort Washington, PA-based Vitae says the action was taken to investigate skin reactions observed in some study participants during an early-stage trial of the drug. Wall Street sell-side analysts have placed a $22 one-year price target on Vitae shares of Vitae. This is the consensus average based on three firms who have recently issued reports on the company. According to analysts, Vitae is expected to report earnings per share for the current fiscal quarter of $-0.45, the consensus mean estimate.
IPO SECTOR – Bayer AG (Leverkusen DEU) will wait until the second half of the year to decide whether to sell its plastics business in an initial public offering or spin it off after the slow-growing unit dragged down 2014 earnings. The planned listing of the material science unit by mid-2016 at the latest is on track and the economic and legal separation of the business will be completed by August, Bayer said in a statement Thursday. Sales and profit growth at the unit were the slowest of Bayer’s three businesses last year because of falling prices for the plastics used in smartphones and cars. Bayer said last year it planned to list the unit separately on the stock market as it focuses on the faster growing crop-science and healthcare divisions, where sales are being spurred by new products such as the blood thinner Xarelto and cancer drugs Stivarga and Xofigo. The company’s 2015 profit forecast, for growth by a low to mid-teens percentage rate, is “robust,” Alistair Campbell, an analyst at Berenberg in London, said. “The 2015 outlook is broadly where we would have hoped, albeit with a disappointing mix,” Campbell wrote, referring to weaker growth in consumer healthcare products. “We will need to revisit our assumptions on profitability” of the consumer health business that Bayer bought from Merck & Co. for $14 billion last year, he said.
February 23, 2015 ...
WHITE HOUSE SAYS HEALTH LAW SIGN-UPS TOP 11 MILLION -- Some 11.4 million Americans picked health plans through HealthCare.gov and state-run insurance exchanges during the official sign-up window for insurance under the federal health law, the White House said. The announcement followed a relatively smooth enrollment period that saw few of the technological problems that hobbled the online exchanges that were launched in the fall of 2013 as part of the Affordable Care Act. The White House posted a video of Sylvia Mathews Burwell, secretary of the Department of Health and Human Services, giving the news to President Barack Obama in the Oval Office. “That’s great,” Mr. Obama replied. “It gives you some sense of how hungry people were out there for affordable, accessible health insurance. The Affordable Care Act is working. It’s working a little better than we anticipated. It’s certainly, I think, working a lot better than many of the critics talked about early on.” The Obama administration has said around 6.7 million people were enrolled in health plans ahead of the new sign-up window. The administration closed out the last sign-up period, which lasted six months, with around 8 million people who had picked plans through the exchanges. The tally puts the Obama administration on track to meet its goal of having between nine million and 10 million people enrolled in coverage through the exchanges by the end of 2015.
The enrollment numbers likely don’t include all of the people who were trying to get coverage on HealthCare.gov, which serves 37 states, or on one of the 13 state-run sites when the sign-up deadline passed the previous Sunday. The federal government said last Monday that it would give those people through Feb. 22 to finish applying for coverage and picking their plans, and most states have followed suit. Ms. Burwell said in her filmed conversation with the president that the numbers were “preliminary.” And Americans who find out they’ll be paying a tax penalty for not having health insurance last year will get a chance to avoid the fee in 2016, after the U.S. on Friday announced an extra enrollment period starting next month. While sign-ups for 2015 coverage ended on Feb. 15, in a special grace period consumers will have a second chance to get coverage this year from March 15 through April and avoid next year’s bigger fines, Andy Slavitt, principal deputy administrator at the Centers for Medicare and Medicaid Services, said on Friday.
VALEANT SAID TO BUY SALIX FOR $10.1 BILLION -- Valeant Pharmaceuticals International Inc. (Laval Quebec) agreed to buy Salix Pharmaceuticals Ltd. (Raleigh NC) for about $10.1 billion, a person with knowledge of the matter said on Saturday, to add gastrointestinal drugs to its stable of offerings. Valeant will pay $158 a share in cash for Salix, the person said, asking not to be identified because the company hasn’t announced the deal. Salix shares closed the week up $5.50, or 4%, at $157.85, almost completely eliminating any premium in the purchase price. Valeant gained $6.26, or 4%, to $173.26. The deal with Salix marks a comeback for Valeant, which was thwarted last year in a long-running quest to buy Allergan Inc. (Irvine CA), the maker of Botox. Valeant is a serial acquirer, using an advantageous tax structure to make purchases and then slashing research and development costs to boost profits. Before Salix, Valeant had completed $19.2 billion of deals in the past five years, including the purchase of eye-care company Bausch & Lomb Inc. in 2013. Valeant emerged this month with the lead offer for the assets of Dendreon Corp. (Seattle WA), a bankrupt developer of a drug for advanced prostate cancer.
Valeant has a sizable presence in Bridgewater, NJ, though it’s headquartered in Canada in part because of lower corporate tax rates, CEO Mike Pearson has said. A Valeant spokeswoman and a Salix spokesman declined to comment. Salix makes drugs to treat ulcerative colitis and travelers’ diarrhea and is nearing approval for a potential treatment of irritable bowel syndrome. The company said last month that it will restate its results for 2013 and most of 2014 after the board conducted an accounting review of how inventory of top drugs built up with wholesalers. With that move, Salix put behind it the accounting issues that kept potential acquirers at bay last year, when it was on a handful of drugmakers’ shopping lists including Actavis Plc (Dublin IRL) and Allergan. Shire Plc (Dublin IRL) also was interested in Salix, according to two people with knowledge of the situation. After conducting its review, Salix will lower its reported revenue for 2013 and the first three quarters of 2014 by $20.7 million, and reduce net income over the same period by $11.9 million, the company said. (Source: Bloomberg News)
TRACKING WASHINGTON -- About 800,000 HealthCare.gov customers got the wrong tax information from the government, the Obama administration said Friday, and officials are asking those affected to delay filing their 2014 returns. The tax mistake is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up. California, which is running its own insurance market, on Thursday announced a similar problem affecting about 100,000 people. The errors mean that nearly 1 million people may have to wait longer to get their income tax refunds this year. And they could also affect the size of those refunds. Another 50,000 or so who already filed may have to resubmit their returns. Federal officials also announced Friday a special sign-up extension for uninsured people facing the healthcare law’s tax penalties for the first time this year. Uninsured people who go to file their taxes and learn they’re facing a penalty will have between March 15 and April 30 to sign up for subsidized coverage through HealthCare.gov. The fines for being uninsured are going up in 2015. The tax error highlights the complicated links between Obama’s healthcare law and taxes, connections consumers will experience for the first time this year.
In other news, health insurers paid by the U.S. government to provide Medicare coverage will see their rates cut by about 0.9% next year, the government said Friday. The proposed cut will be the subject of heavy lobbying by the health insurance industry, and isn’t expected to become final until April 6. Insurers estimate payments to the program, which allows private companies such as Humana Inc. (Louisville KY) and UnitedHealth Group Inc. (Minnetonka MN) to offer Medicare plans, have been reduced by nearly 10% in the last two years. About 15.7 million people, or 30% of Medicare beneficiaries, get coverage through the Medicare Advantage program, according to the Kaiser Family Foundation (Menlo Park CA). The private program allows for lower out-of-pockets costs compared with the traditional government-run version. Government payments to the insurers have been under pressure since 2010, when the Patient Protection and Affordable Care Act was partly financed with $206 billion in cuts to Medicare Advantage plans over a decade. At the time, U.S. spending for Advantage beneficiaries was estimated to be as much as 13% higher than for people enrolled in traditional Medicare, leading to criticism that the insurers were overpaid. The government reduced Medicare Advantage payment rates 4% in April 2014, slightly more than the 3.55% cut proposed in February last year.
FDA/EMA ROUNDUP -- The Food and Drug Administration warned healthcare providers across the country on Thursday that difficult-to-clean medical scopes inserted down the throat might be infecting patients with dangerous drug-resistant bacteria. The alert came a day after California hospital officials reported that two patients had died and five more had fallen ill because of what they said were improperly sterilized scopes at Ronald Reagan UCLA Medical Center. A deadly superbug that may have been transmitted during procedures using the devices was the likely cause, the hospital said. The germ, known as CRE, is estimated to kill about half its victims because it is resistant to almost all antibiotics. The CRE germs attack broadly, and the infections they cause are not limited to people with severely compromised immune systems, such as those with cancer, said Dr. Thomas R. Frieden, director of the federal Centers for Disease Control and Prevention. The UCLA Health System, of which the Ronald Reagan hospital is a part, has identified at least 179 patients who may have been infected during procedures performed between October and January and is in the process of informing them, said its spokeswoman, Elaine Schmidt.
Elsewhere, Celgene Corp. (Summit NJ) announced that its major blockbuster drug Revlimid has won expanded approval from the FDA to include newly diagnosed multiple myeloma (NDMM) patients. The product Revlimid (lenalidomide), in combination with dexamethasone, was approved in June 2006 for treating patients with multiple myeloma who had received at least one prior treatment. The latest expansion of Revlimid’s existing indication to NDMM patients will allow Celgene to make its drug available to the entire multiplemyeloma market.
23andMe Inc. (Mountain View CA), the genetic-testing company backed by Google Inc., gained FDA permission to sell consumers its first screening kit to detect whether they carry the risk of a rare genetic disorder. The approval of 23andMe’s test for Bloom syndrome, which is associated with short stature, sun sensitivity and higher cancer risk, ends a conflict with the FDA. The agency, in its approval notice on Thursday, also announced it intends to exempt other such “carrier screening tests” from premarket review. 23andMe, which scans people’s saliva to provide information on their ancestry and inherited features, hasn’t been able to include health analysis in its reports since a standoff began with the FDA in late 2013. Sales took a “big hit” and the company has only recently recovered, partly by selling the health analyses outside the U.S., CEO Anne Wojcicki said in a January interview.
And the FDA said it approved Medtronic Inc. Plc’s (Dublin IRL) device to permanently treat varicose veins of the legs. The VenaSeal closure system works by sealing the affected superficial veins using an adhesive agent. The device is manufactured by Covidien LLC, whose acquisition Medtronic completed last month.
MEDICAL STOCK SPOTLIGHT -- Aoxing Pharmaceutical Co Inc. (AMEX) led advancing issues, nearly quadrupling over the week to $1.95 to mark a new high. The sharp upward move came after the Jersey City, NJ-based company announced financial and operational results for the quarter ended Dec. 31, 2014. Revenues were $6.43 million, an 85% increase over the previous year’s fourth period. Net profit was $0.6 million versus a net loss of $1.9 million the previous year. The company said, “The increase in revenue was primarily attributable to the changes in our marketing program and an increase in the sales price of our main product, Zhongtongan, whose sales represented 90% of our overall sales revenue for the first half of the 2015 fiscal year.” Aoxing is a specialty pharmaceutical company focusing on the research, development, manufacturing, and distribution of a variety of narcotics and pain-management products.
Elsewhere, Eagle Pharmaceuticals Inc. (Nasdaq) soared $12.70, or 61%, to $33.68. Teva Pharmaceutical Industries Ltd. and Eagle Pharma announced that the companies have entered into an exclusive license agreement for EP-3102, Eagle’s bendamustine hydrochloride (HCl) rapid infusion product for the treatment of chronic lymphocytic leukemia (CLL) and indolent B-cell non-Hodgkin lymphoma (NHL). Teva will be responsible for all U.S. commercial activities for the product including promotion and distribution. Woodcliff Lake, NJ-based Eagle has responsibility for obtaining all regulatory approvals, conducting post-approval clinical studies, if required, and initially supplying drug product to Teva.
And BioLineRx Ltd. (Nasdaq) leaped 29% to $2.42. The Israel-based company entered into a strategic collaboration with Novartis AG back in December that is designed to facilitate the development and commercialization of drug candidates identified by BioLineRx. The companies will co-develop up to three pre-clinical and early clinical therapeutic product candidates through clinical proof-of-concept. Projects reaching the clinical stage will be eligible for selection by Novartis. If selected, the Swiss drug giant will pay BioLineRx an option fee of $5 million as well as fund 50% of the remaining development costs associated with establishing clinical proof-of-concept. As part of the agreement, Novartis has made an initial equity investment in BioLineRx of $10 million--a 12.8% stake.
But Vascular Biogenics Ltd. (Nasdaq) plunged $9.86, or 70%, to $4.25. The Israel-based, clinical-stage biotechnology company announced that it would be discontinuing the development of its lead drug candidate VB-201 for psoriasis and ulcerative colitis. The failure of VBL’s new drug came as separate phase II studies showed that the primary endpoints of the studies could not be met. In fact, the placebo in the studies showed a better performance.
IPO SECTOR – ViewRay Inc., which markets the only MRI radiation therapy system that images and treats patients simultaneously, filed with the Securities and Exchange Commission to raise up to $69 million worth of common in an IPO. The Oakwood Village, OH-based company, which was founded in 2004 and booked $8 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq under the symbol “VRAY.” ViewRay initially filed confidentially on November 14, 2014. Cowen & Company and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
February 16, 2015 ...
SHAKY STANDING ISSUES SURFACE FOR ANTI-OBAMACARE PLAINTIFFS -- New reports are raising questions about whether four people pursuing a Supreme Court case challenging Obamacare subsidies in much of the country actually have the legal right to bring that case. The questions about two of those people relate to whether they were eligible or received health coverage from the Department of Veterans Affairs. The third person reportedly gave a short-term motel as her address in Virginia when she joined the suit, and the fourth person reportedly projected income for 2014 that exceeds what her employer has said they would have paid her. The Wall Street Journal reported that the issues could undermine the legal standing that the plaintiffs claim in their joint lawsuit. And the final person in that foursome of would-be destroyers of a large piece of the Affordable Care Act reportedly doesn’t actually understand that if their case is successful, millions of Obamacare customers likely would be unable to afford their current health insurance plans and would stop having coverage. “I don’t want things to be more difficult for people,” that woman, Virginia resident Brenda Levy, told Mother Jones magazine. “I don’t like the idea of throwing people off their health insurance.” Levy, 64, also told Mother Jones, “I don’t know how I got on this case. I haven’t done a single thing legally. I’m going to ask them how they found me.”
Levy, who is a substitute teacher, reportedly was unaware that there is no backup plan that would replace the insurance plans lost by people who could no longer afford them if her suit prevailed at the Supreme Court. The Journal reported last week that Levy, in court papers had projected her 2014 income would be $43,000. But a spokesman for the school system listed as her employer told the newspaper that Levy’s annual pay rate would not be more than $10,000. If that was Levy’s only income, she would not be subject to the Obamacare penalty for failing to have insurance, would not earn enough to be eligible for subsidies to help buy insurance, and thus possibly wouldn’t have legal standing to challenge the subsidies in court. She did not answer questions about her actual income from the paper, but the general counsel for the group backing the case told the Journal “there is no reason to assume that substitute teaching is her only or principle source of income.” The case, due to be argued March 4 before the Supreme Court, claims that billions of dollars of those subsidies, or federal tax credits, that helped most HealthCare.gov customers pay for their health plans are illegal. The suit is expected to be decided in late June.
J&J CREATES NEW RESEARCH EFFORTS TARGETING DISEASE PREVENTION -- The quest to identify who is likely to develop a particular disease--and then stop the disorder before it starts--has tantalized the medical world for decades. But that’s the goal of three research projects launched last week by Johnson & Johnson’s (New Brunswick NJ) pharmaceutical research arm, Janssen Research & Development. The projects, announced Thursday, aim to prevent illnesses--particularly ones related to aging and lifestyle--including Alzheimer’s disease, cancer, heart disease and Type 1 diabetes. “A hundred years from now, someone’s going to look back on us and say, ‘Can you believe they waited until you got a disease and then did something?’” Dr. William Hait, head of Janssen research and development, said, according to the Associated Press. The scope of the effort is a first for a major drug company. There are a few small-scale projects by groups of scientists or small technology companies collecting genetic data or blood samples from patients to learn more about diseases and develop new therapies, in one case for possible preventive treatments. But since the 1800s, big drugmakers have focused on making medicines to treat or cure illnesses.
The move by Johnson & Johnson, the world’s biggest maker of healthcare products, is possible because of recent, mammoth advances in genetics and other science. Meanwhile, some preventive treatments for widespread illnesses have become routine in developed countries including blood testing and use of cholesterol-lowering statin pills to prevent heart attacks and strokes in at-risk patients, or colonoscopies and removal of any polyps to prevent colon cancer. Billions of research dollars will be needed to accomplish Johnson & Johnson’s goals, and it could easily take a generation, cautions analyst Steve Brozak, president of WBB Securities. But Brozak said J&J is one of a few organizations that have the resources--money and scientific talent--to succeed at what he called a shift to “true modern medicine” that’s as revolutionary as Henry Ford creating the manufacturing assembly line. Johnson & Johnson has nearly 10,000 scientists and other employees at Janssen alone, plus four “innovation centers” collaborating with university researchers. And it’s got plenty of money, with a $16 billion profit last year.
TRACKING WASHINGTON -- The Obama administration is cutting off health-insurance coverage under the Affordable Care Act for 200,000 people who haven’t proven they are legally residing in the U.S. Department of Health and Human Services officials last week said health plans would terminate Feb. 28 for people who had signed up for coverage in 2014 and whose plans had been automatically renewed for 2015, after officials concluded those people hadn’t supplied enough information to verify their immigration or citizenship status. The cutoffs were announced at the same time federal officials said some 7.75 million people have picked plans or been automatically re-enrolled in coverage through HealthCare.gov for 2015, as of Feb. 6. The main sign-up window for 2015 coverage closed yesterday. But on Friday, the Obama administration said it is considering an extra enrollment period for tax filers who learn they owe a fine for not carrying insurance last year, to give them a chance to avoid even heavier penalties in 2015. “You’re going to hear from us, one way or another, within the next two weeks on whether that’s something that we would do,” HHS Secretary Sylvia Mathews Burwell said Friday. “It’s an issue that’s been raised.” A new period would let people sign up as soon as they get a taste of the financial penalty that comes with not enrolling.
In other news, the U.S. government on Thursday announced a cancer care initiative for Medicare beneficiaries that will link payments to oncology practices to quality of care and patient outcomes as a means of improving treatments and cutting costs. The initiative by the Centers for Medicare & Medicaid Services (CMS) as part of the Affordable Care Act comes as expensive new cancer treatments put an increasing strain on state and federal healthcare budgets. “We aim to provide Medicare beneficiaries struggling with cancer with high-quality care around the clock and to reward doctors for the value, not volume, of care they provide,” Dr. Patrick Conway, the chief medical officer for CMS, said in a statement. Cancer cost the United States an estimated $263.8 billion in medical costs and lost productivity in 2010, according to the National Institutes of Health. The majority of those diagnosed are over 65 and Medicare beneficiaries, CMS said. The initiative aims to link payment to quality of care, find new ways to improve and coordinate care delivery, and to share cancer care information more broadly among providers, consumers, and others to support better decisions, CMS said. It said the model would reward practices that focus on providing services that specifically improve the patient experience and health outcomes.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said it approved Eisai Co Ltd.’s (Tokyo) drug to treat the most common form of thyroid cancer more than two months ahead of the expected decisiion date. The drug, Lenvima, was cleared for use in patients with progressive, differentiated thyroid cancer (DTC) who have not adequately responded to radioactive iodine therapy, the agency said on Thursday. Lenvima, known chemically as lenvatinib, is a kinase inhibitor that blocks certain proteins from helping cancer cells grow and divide. The drug is also being tested for use in other cancers. The drug, which was granted “orphan drug status” by the FDA, was evaluated by the agency under its priority review program.
Elsewhere, Swiss pharmaceutical giant Roche Holding AG (Basel) announced that the FDA has approved its eye medicine, Lucentis (ranibizumab injection), for the treatment of diabetic retinopathy (DR) in patients suffering from diabetic macular edema (DME), making it the fourth Lucentis indication for treating serious eye diseases since 2006. Lucentis has now become the first approved treatment for DR in the U.S. for patients with DME. The FDA approval was not unexpected as the agency had already granted Breakthrough Therapy Designation and Priority Review to the drug for this indication, based on the positive results from two phase III clinical trials, RISE and RIDE.
Amgen Inc. (Thousand Oaks CA) announced that two of the FDA’s advisory committees--the Cellular, Tissue and Gene Therapies Advisory Committee (CTGTAC) and the Oncologic Drugs Advisory Committee (ODAC)--will together be reviewing its Biologics License Application (BLA) for the drug talimogene laherparepvec, used for treating patients with metastatic melanoma. Melanoma is responsible for the highest number of skin-cancer deaths in the U.S. The committees will review the drug in a meeting scheduled for April 29. In late-stage clinical studies, the results showed that the drug shrank cancer tumors and also improved the median survival rate.
And Novartis AG’s (Basel CHE) new heart failure drug was granted a speedier review by the FDA, shortening it by four months, the drugmaker said on Friday. Novartis in August reported data for LCZ696, which found the drug cut the risk of both cardiovascular death and hospital admissions by a fifth. The shortened review means that the FDA could approve the drug, expected to be a “multi-blockbuster” with sales between $2 billion and $5 billion, in August, Novartis said.
MEDICAL STOCK SPOTLIGHT -- Genetic Technologies Ltd. (Nasdaq) led advancing issues, more than doubling over the week to $8.04 on no apparent, company specific news. The Australian genetic testing company closed at a low of $1.27 on Jan. 28, a day before it announced that up to six new breast cancer diagnosis and treatment centers were expected to begin offering its BREVAGenplus product to at-risk patients between January and March. It describes BREVAGenplus as an enhanced version of its breast-cancer assessment test. “It hit a tipping point because of their news announcement and people noticed so they got the volume and it increased in price and after that it just snowballed,” said John Kirkland, managing director at Ironridge Global Partners in San Francisco. Genetic Technologies performs advanced DNA genetic research and testing. The company has several gene-based patents which include intron sequence analysis, genomic mapping and fetal cell recovery.
Elsewhere, Signal Genetics Inc. (Nasdaq) nearly doubled to $3.91 on no company specific news. On February 2, the Food and Drug Administration gave conditional approval to its proprietary prognostic genetic test, MyPRS (Myeloma Prognostic Risk Signature), for use as entry criteria for a forthcoming clinical trial to treat high-risk multiple myeloma patients sponsored by the University of Arkansas for Medical Sciences (Little Rock). Carlsbad, CA-based Signal Genetics is a commercial stage, molecular diagnostic company focused on providing innovative diagnostic services that assist physicians to make better-informed decisions concerning their cancer patients.
And Pfenex Inc. (NYSE) soared $5.92, or 91%, to $12.45. The San Diego, CA-based company and Hospira Inc. announced that they have entered into an exclusive agreement to develop and commercialize PF582, Pfenex’s biosimilar candidate to Genentech’s Lucentis (ranibizumab injection). The latter medicine treats wet age-related macular degeneration, macular edema caused by a blocked blood vessel in the eye, and diabetic macular edema. Lucentis had estimated global sales of approximately $4 billion in 2014. Under terms of the collaboration, Pfenex will receive an upfront payment of $51 million and up to an additional $291 million over the next five years.
But molecular oncology diagnostics firm Biocept Inc. (Nasdaq) plummeted 33% to $1.41. The tank job followed the company’s announcement of the pricing of 8 million shares of its common stock and warrants to purchase up to an aggregate of 8 million shares at a combined offering price of $1.25--a 69% discount to the shares’ $2.11 trading price at the beginning of the week. The gross proceeds to Biocept from this offering are expected to be approximately $10 million. Biocept is a San Diego-based commercial-stage cancer diagnostics company developing and commercializing proprietary circulating tumor cell (CTC) and circulating tumor DNA (ctDNA) tests utilizing a standard blood sample.
IPO SECTOR – Bellerophon Therapeutics Inc., which is developing drug-device therapies for pulmonary and cardiac diseases, raised $60 million in an initial public offering by offering 5 million shares at $12, below the range of $14 to $16. The Hampton, NJ-based company had originally planned to sell 4 million shares. Bellerophon Therapeutics lists on the Nasdaq under the symbol “BLPH.” Leerink Partners and Cowen & Company acted as lead managers on the deal. Investor enthusiasm quickly sank though, and shares closed the week down 25% at $8.97.
February 9, 2015 ...
HEALTH INSURER ANTHEM HIT BY HACKERS -- Health insurer Anthem Inc. (Indianapolis IN) said hackers broke into a database containing personal information on about 80 million of its customers and employees, likely making it the largest computer breach disclosed by a healthcare company. Investigators are still determining the extent of the incursion that was discovered the previous week, and Anthem said it is likely that tens of millions of records were stolen, the Wall Street Journal reported. Anthem stored the Social Security numbers of its millions of customers without encrypting them, the result of what a person familiar with the matter described as a difficult balancing act between protecting the information and making it useful. Scrambling the data, which included addresses and phone numbers, could have made it less valuable to hackers or harder to access in bulk. It also would have made it harder for Anthem employees to track healthcare trends or share data with states and health providers, that person said. Because the data wasn’t encrypted, it would be easily readable by hackers. The company believes a hacker group used a stolen employee password to access the database. Companies can employ random pass codes, limit access from outside the office or use complex math to scramble data. But those things slow companies down. Anthem closed the week up 73 cents at $135.69.
There is no evidence yet that identity thieves are using the data stolen from Anthem, it said. On Thursday, investigators began to focus on links to a group in China. Although the investigation remains in its early stages, the Anthem hack relied on malware and tools that have been used almost exclusively by Chinese cyberspies, investigators said. “Chinese laws prohibit cyber crimes of all forms,” Chinese Embassy spokesman Zhu Haiquan said. “Unfounded hypothesis and jumping to conclusions is irresponsible and will be counterproductive to address these issues.” Employers and government agencies “require us to maintain a member’s Social Security number in our systems so that their systems can uniquely identify their members,” Anthem spokeswoman Kristin Binns said. Ms. Binns said Anthem encrypts personal data when it moves in or out of its database but not when it is stored, which is common in the industry. Anthem officials became aware of the breach when one of their senior administrators noticed someone was using his identity to request information from the database. The request--or query--by the hackers appears so far to have been for financial information only.
PFIZER BETS $16 BILLION ON NEW TYPE OF GENERICS WITH HOSPIRA DEAL -- Pfizer Inc. (New York) said Thursday it would buy smaller rival Hospira Inc. (Lake Forest IL) in a nearly $16-billion deal that would transform the pharmaceutical colossus into a leading player in the emerging market for lower-priced knockoffs of costly biotech drugs. Biotech drugs, made from living cells, are more complicated to make--and to copy--than traditional pills and therefore have proven highly resistant to low-cost competition, even after patents ran out. But after years of turning to these costly drugs to boost sales, big drug companies like Pfizer are now borrowing from the playbooks of generic makers and developing imitator versions of each other’s biotech drugs. The lure is a global market that could soar to $20 billion in sales in five years, up from just a few billion dollars now, as health plans and governments seek to rein in spiraling healthcare costs. These biotech-drug knockoffs, called biosimilars, can cost 20% to 30% less than the higher-priced originals. The Hospira deal underscores that the time has finally come for biosimilars, which have already gone on sale in some countries and could come to the U.S. as early as this year. Hospira is selling the drugs in Europe and Australia, and has asked health regulators for permission to sell two in the U.S.
Acquiring Hospira would turn Pfizer, which has been trying to build up its biosimilars business, into a top player along with Novartis AG (Basel CHE). “The puzzle pieces come together in a very nice way,” Pfizer CEO Ian Read said. Pfizer is also interested in plugging Hospira’s portfolio of generic intravenous drugs and drug-infusion pumps, sold mostly in the U.S., into its world-wide commercial infrastructure, according to Pfizer executive John Young, who will run the combined businesses. Hospira has had manufacturing issues in recent years, but Mr. Young said that due diligence left Pfizer feeling “comfortable that the issues have been or are being properly addressed.” Under the terms of the deal, Hospira shareholders will receive $90 a share in cash, a 39% premium to the closing price prior to news of the deal. Pfizer said it expects the deal to close during the second half of this year and immediately add to earnings. Pfizer said it also expects to realize $800 million in cost savings within three years. Pfizer stock closed the week up 6% at $33.17, while Hospira surged 38% to $87.43.
TRACKING WASHINGTON -- The House of Representatives passed a bill last week to repeal the Affordable Care Act for the first time in the new Congress, but Democrats appeared to show more zeal in defending the law than Republicans did in trying to extinguish it. The measure goes now to the Senate, where the majority leader, Mitch McConnell, Republican of Kentucky, has said that the chamber will vote on legislation repealing the health law but has not announced a schedule. Republicans in both chambers are divided over how to replace the law and how to respond if the Supreme Court upholds a challenge to insurance subsidies now being provided to millions of people under the law. The House vote, 239 to 186, generally followed party lines. No Democrats voted for repeal. Three Republicans--Representatives Robert Dold of Illinois, John Katko of upstate New York and Bruce Poliquin of Maine--voted against the bill. Despite an explicit veto threat from President Obama, Republicans said the vote on Tuesday was necessary to give new House members a chance to take a stand on the health law, which most Republicans had campaigned against. Democrats said it was the 56th time since 2011 that the House had voted to repeal or undermine some or all of the law, which was adopted in 2010 without any Republican votes.
In other news, the Obama administration says sign-ups continue to build under the president’s healthcare law ahead of a Feb. 15 enrollment deadline. Nearly 7.5 million people enrolled as of Jan. 30 in 37 states where the federal government is running insurance markets, which offer subsidized private coverage for people who don’t have a job-based plan. South Florida led other major metro areas, with more than 637,000 people enrolled from Miami to West Palm Beach. Additionally, states acting in tandem with the federal HealthCare.gov site have signed up at least 2.4 million people through their own insurance exchanges. Officials are preparing for a surge toward the end of this week, as supporters make a final push. The goal is at least 9.1 million people enrolled and paying premiums for 2015.
FDA/EMA ROUNDUP -- Eli Lilly & Co. (Indianapolis IN) and Boehringer Ingelheim Pharmaceuticals GmbH (Ingelheim DEU) received approval from the U.S. Food and Drug Administration for their diabetes drug Glyxambi, a combination of two compounds, empagliflozin and linagliptin. The medicine has been approved for adults with type II diabetes and functions as an adjunct to diet and exercise to enhance glycemic control in patients for whom both the compounds are appropriate. The once-daily tablets combine empagliflozin, a sodium glucose co-transporter-2 (SGLT2) inhibitor which reduces the re-absorption of blood sugar in the kidneys to remove glucose from the urine, with linagliptin, a dipeptidyl peptidase-4 (DPP-4) inhibitor, which hinders the liver from producing excess glucose and increases the hormones in the body which stimulate production of insulin by the pancreas.
Elsewhere, MedShape Inc. (Atlanta GA), which develops orthopedic devices using advanced material technologies, announced it has received 510(k) clearance from the FDA for its FastForward Bone Tether Plate. The Bone Tether Plate features MedShape’s latest technology platform--the 3D printing of medical grade titanium alloy (Ti-6AL-4V) that allows for the fabrication of devices with complex and/or customizable geometries. The plate serves as the primary component in the FastForward Bunion Correction System, a new approach to surgically correct “hallux valgus” deformities that preserves and protects the native bone anatomy. A 510(k) is a premarketing submissions made to the FDA to demonstrate that the device in question is as safe and effective as a legally marketed device that is not subject to premarketing approval.
Alcon, a global eye care division of Novartis AG (Basel CHE) announced that the FDA has approved Pazeo, a solution to treat ocular itching in allergic conjunctivitis patients. The condition is characterized by inflammation and affects the transparent layer covering the eyes. It does not harm the patient’s eyes or damage vision. Though not harmful, these allergies cause discomfort. The press statement released by Alcon states that 30% of the entire U.S. population suffers from seasonal allergy symptoms of which 70% to 80% have been reported to have ocular symptoms, like itchy eyes.
And the FDA approved a highly anticipated medicine from Pfizer Inc. (New York) to treat postmenopausal women with a certain type of advanced breast cancer who have not already taken other drugs. The agency approved Ibrance for women who have tumors that do not contain a protein known as HER-2 and have receptors for the hormone estrogen. Ibrance, known generically as palbociclib, works by blocking molecules linked to cancer cell growth. Pharmaceutical industry analysts expect Ibrance to grow into a mega-blockbuster, with annual sales as high as $4 billion by 2020. The drug is intended to be used in combination with another older cancer medication known generically as letrozole.
MEDICAL STOCK SPOTLIGHT -- Auris Medical Holding AG (Nasdaq) led advancing issues, soaring $2.42, or 61% over the week, to $6.38. The clinical-stage biopharmaceutical company dedicated to developing therapeutics that address unmet medical needs in otolaryngology announced that Thomas Meyer, PhD, Chairman and CEO, will present at the Leerink Global Healthcare Conference this Wednesday at the Waldorf Astoria Hotel in New York. Auris Medical is a Zug, Swiss-based company currently focusing on the development of treatments for acute inner ear tinnitus (AM-101) and for acute inner ear hearing loss (AM-111) by way of intratympanic injection with biocompatible gel formulations. Intratympanic means injected into the tympanum, or middle ear, through the ear drum.
Elsewhere, Esperion Therapeutics Inc. (Nasdaq) surged $13.49, or 29%, to $59.39 after the FDA announced it was removing a partial clinical hold that had been placed on Esperion’s cholesterol lowering drug ETC-1002 in 2009. A partial clinical hold allows clinical studies to continue, but with specific restrictions issued by the FDA. For example, Esperion has been able to continue studying ETC-1002 in midstage clinical trials. Those midstage trial results have (so far) been solid. Patients taking ETC-1002 as a monotherapy saw their bad cholesterol levels fall by 27% and 30% at doses of 120 mg and 180 mg, respectively. Combining ETC-1002 with Merck & Co.’s Zetia lowered bad cholesterol levels by 43%. Since the FDA has lifted its partial clinical hold, investor attention can now turn to Plymouth, MN-based Esperion’s planned discussion with the FDA of its phase IIb results and the launch of its phase III trials by year-end.
And Coherus Biosciences Inc. (Nasdaq) leaped $6.22, or 28%, to $28.66, a new 52-week high. The upward move was driven by the company’s announcement that it will participate in the 2015 Leerink Global Healthcare Conference to be held this Wednesday in New York City. The announcement led to more shares changing hands than in a normal week. Over the last 30 days, this biopharmaceutical company, focused on the development of biosimilar therapeutics to aid patients, did not witness any estimate revision and the Zacks Consensus Estimate also remained unchanged. Last week’s price action is encouraging though, so investors should keep a close watch on the Redwood City, CA-based company in the near future.
But Ardelyx Inc. (Nasdaq), a clinical stage biopharmaceutical company, plunged $11.09, or 41%, to $15.92 after saying that its key kidney drug led to higher-than-expected diarrhea rates in patients. The Fremont, CA-based company’s phase Iib clinical trial of Tenapanor in 161 patients evaluated the drug’s safety and efficacy in treating hyperphosphatemic patients who were suffering from chronic kidney disease (CKD) and were on hemodialysis. The results showed that the drug led to increased diarrhea. However, the drug successfully met the primary endpoint with significant reduction in the levels of phosphate for patients on dialysis. Tenapanor works as an inhibitor for sodium transport by flushing out sodium via feces instead of urine, thus saving the kidneys from extra work and helping treat CKD as well as end-stage renal disease and irritable bowel syndrome.
IPO SECTOR – IASIS Healthcare Corp. filed with the Securities and Exchange Commission to raise up to $100 million in an initial public offering. However, the deal size is likely a placeholder for an IPO that could raise $300 million or more according to some analysts. IASIS owns and operates medium-sized, acute-care hospitals in high-growth urban and suburban markets. The company owns or leases 18 acute care hospital facilities and one behavioral health hospital facility with a total of 4,362 licensed beds and has total annual net revenue of approximately $2.8 billion. IASIS originally filed for an IPO in 2001, but later withdrew its $200 million offering. In 2004, the company was acquired by investment bank TPG Capital. Franklin, TN-based IASIS, which was founded in 1998 and booked $2.5 billion in sales for the 12 months ended September 30, 2014, plans to list on the NYSE under the symbol “IAS.” J.P. Morgan, BofA Merrill Lynch, Barclays, Evercore, Goldman Sachs and Citi are the joint bookrunners on the deal. No pricing terms were disclosed.
February 2, 2015 ...
PFIZER BEATS STREET'S 4Q FORECASTS -- Pfizer Inc. (New York), the biggest U.S. drugmaker, forecast a decline in sales this year as patent expirations and a stronger dollar weigh on revenue. Sales will reach $44.5 billion to $46.5 billion this year, down from $49.6 billion in 2014, Pfizer said in a statement. Analysts had estimated $47.6 billion on average. The company’s projection includes a $3.5 billion impact from the loss of exclusivity on some products and $2.8 billion related to foreign-exchange rates. Pfizer is at a pivotal moment, having indicated it may pursue a large deal, break itself into pieces, or some combination of the two. The company is trying to replace revenue after losing exclusive sales rights to blockbuster medicines including Celebrex and Lipitor. While Pfizer’s 2015 projections were hurt by foreign-exchange fluctuations, the forecast also probably reflects some weakness in the business as well, said Ashtyn Evans, a healthcare analyst at Edward Jones. “It could be anything from new launches to just pressure in some of their products that have gone generic, losing share faster than expected, so I’m just waiting to see at this point,” she said. Alex Arfaei, an analyst at BMO Capital Markets Corp., said in a note to clients that he doesn’t foresee revenue growth through 2017 due to patent expirations and foreign-exchange pressure.
The disappointing forecast overshadowed a fourth quarter that beat analysts’ profit and sales estimates, with revenue from products including the vaccine Prevnar surpassing expectations. Fourth-quarter profit, excluding one-time items, beat by 1 cent analysts’ estimates compiled by Bloomberg. Revenue fell 3% to $13.1 billion. Pfizer has $33 billion of cash on its balance sheet, and after walking away from an almost $120 billion deal to acquire AstraZeneca Plc (London) last year, eyed Actavis Plc (Dublin) and reached out to Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), people familiar with the matter have said. AstraZeneca was attractive partly because of the U.K. company’s oncology pipeline. The proposed deal would also have let Pfizer relocate its legal address overseas, lowering its U.S. tax burden. Months after Pfizer dropped its pursuit, the U.S. Treasury Department imposed rules to limit the benefits of so-called tax inversion deals. Pfizer closed the week off 4% at $31.25. The stock has gained 6% in the past year.
DOCTORS' PAY TO BE LINKED TO QUALITY IN HISTORIC OVERHAUL OF MEDICARE BILLING -- The Obama administration last week unveiled an ambitious plan to control health costs by moving the $2.9 trillion U.S. health systems away from costly fee-for-service medicine, beginning with the Medicare program. By the end of 2018, Health and Human Services Secretary Sylvia Burwell told reporters that 50% of traditional Medicare’s $362 billion in annual payments would go to doctors, hospitals and other providers that participate in alternative payment models which emphasize cost containment and quality of care. Officials, who hope to see the initiative matched by private insurers, employers and state Medicaid programs for the poor, said the move was intended to head off a resurgence in healthcare cost growth from an historically low 3.6% in 2013 to a projected 6.6% in 2020. The administration announced its goals after Burwell met with private and public sector stakeholders including insurers, consumer and provider groups and employers including Boeing Co. (Chicago). Wall Street analysts said for-profit hospitals and private insurers would be well positioned to benefit from a new shift toward lower-cost care delivery. Groups representing doctors and hospitals said the move could mean greater flexibility for their members in determining care delivery, while consumer representatives said the unprecedented goals could boost the quality of care.
About 20% of traditional Medicare payments, a sum worth $72 billion, currently go to providers with cost-saving business models. The remainder are based on fee-for-service payments that reward providers for the volume of care they provide. Fee-for-service has been blamed by policymakers for promoting higher costs, mediocre care and unnecessary procedures. The administration’s goals would be phased in by first increasing the participation of alternative care models to 30% of Medicare payments by the end of 2016. Officials described the 50% goal for 2018 as a “tipping point” that could help make payment reform mainstream across the U.S. health system. Within four years, the administration expects all but 10% of traditional Medicare to be linked to new quality and efficiency standards, including most of the remaining fee-for-service providers. The government has also been experimenting with payment models that officials say have generated $417 million in savings to Medicare. New care models, however, have shown limited progress in controlling costs and little evidence of being able to sustain cost savings.
TRACKING WASHINGTON -- President Barack Obama said he will ask Congress for $215 million to fund his vision for a million-strong cohort of volunteers whose genetic and health data will be used to develop personalized medicine. “Precision medicine--in some cases, people call it personalized medicine--gives us one of the greatest opportunities for new medical breakthroughs that we have ever seen,” Obama said Friday at the White House, where he announced the initiative. The White House proposal will be part of the fiscal 2016 budget that Obama plans to submit to lawmakers later today. The National Institutes of Health, with $130 million, will spearhead the development of the national cohort, while the National Cancer Institute will get $70 million to focus on genomic drivers in cancer. “Precision medicine is a game-changer,” said Jo Handelsman, associate director for science at the White House office of science and technology policy. “It holds the potential to revolutionize the way we approach health in this country.” Precision medicine holds promise because the cost of genomic sequencing has fallen dramatically, from hundreds of millions of dollars to about $1,000 per patient. The lower costs, in conjunction with advances in scientific understanding of the disease, has led drugmakers to pursue more personalized therapies for cancers and numerous genetic disorders.
In other news, the Obama administration on Friday proposed a plan to move most doctors, hospitals and their patients to national standards for handling electronic clinical data by the end of 2017. The U.S. Department of Health and Human Services, as part of an effort to propel the $2.9 trillion U.S. healthcare system away from a costly fee-for-service system, released a report draft aimed at establishing an inter-operable, health information technology system that can be accessed by patients and their healthcare providers. Policy experts say that national health IT standards would lead to transparency in medical data, prices and provider performance, while helping support hospitals and medical practices in pursuing care-delivery models that emphasize care quality and savings over quantity. Earlier last week, Health and Human Services Secretary Sylvia Burwell announced the goal of moving 50% of fee-for-service Medicare payments to quality-care focused providers by the end of 2018. Public comment on the standards advisory closes May 1.
FDA/EMA ROUNDUP -- Medical device maker Abiomed Inc. (Danvers MA) raised its full-year revenue forecast and said the U.S. Food and Drug Administration had approved its heart pump, sending its stock up 31% to $51.74 for the week. Abiomed’s heart pump, Impella RP, helps blood circulation for up to 14 days in patients who develop acute right heart failure following implantation, myocardial infarction, heart transplant or open-heart surgery. The device is the first percutaneous, single access pump approved for right heart support, the company said. In surgery, “percutaneous” pertains to any procedure that allows access to internal organs via a needle-puncture of the skin, rather than by using an “open” approach where organs must be exposed, typically using a scalpel.
Elsewhere, the FDA on Thursday approved two fixed-dose HIV pills that combine protease inhibitors--one made by Bristol-Myers Squibb Co. (New York) and the other by Johnson & Johnson (New Brunswick NJ)--both with a boosting agent produced by Gilead Sciences Inc. (Foster City CA). Bristol-Myers said its drug, Evotaz, is a once-daily pill containing Reyataz, also known as atazanavir, a protease inhibitor, with the booster cobicistat. J&J’s once-daily Prezcobix, combines protease inhibitor darunavir, or Prezista, with cobicistat. The FDA approved both drugs for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in adults.
Shire Plc’s (Dublin IRL) attention deficit hyperactivity drug, Vyvanse, can be used to treat binge-eating disorder in adults, the FDA said Friday. Vyvanse is Shire’s top drug, generating $1.23 billion in 2013. It’s the first medicine approved in the U.S. to treat binge-eating disorder, in which patients eat when they aren’t hungry, to the point of being uncomfortably full, the FDA said in a statement.
And the FDA said it approved Teva Pharmaceutical Industries Ltd.’s (Petach Tikva ISR) generic version of AstraZeneca Plc’s (London) blockbuster heartburn drug Nexium, the agency’s first such approval for the drug. The approval comes as generic drugmakers scramble to get their versions to the market and AstraZeneca is taken to court over so-called “pay-for-delay” settlements to delay the launch of generics to protect its drug’s exclusivity. Nexium garnered about $1.9 billion in global sales in the first half of 2014, according to AstraZeneca’s latest earnings statement.
MEDICAL STOCK SPOTLIGHT -- Genetic Technologies Ltd. (Nasdaq) led advancing issues, surging $1.54, or 123% for the week, to $2.79. The Melbourne, Australia-based company announced that up to 6 new breast diagnosis/treatment centers are expected to begin offering BREVAGenplus to their at-risk patients in the January to March timeframe, with a growing number of additional new breast and imaging center customers expected to follow later in calendar year 2015. As a result, the company expects sales growth to accelerate in the second half of 2015 and beyond. BREVAGenplus is an easy-to-use predictive risk test for the millions of women at risk of developing sporadic, or non-hereditary breast cancer, according to Genetic Technologies.
Elsewhere, Spark Therapeutics Inc. (Nasdaq) soared $27.00, or 117%, to $50.00. The company, which is developing gene therapy treatments for orphan retinal dystrophies, raised $161 million in an upsized initial public offering by offering 7 million shares at $23--above the upwardly revised range of $19 to $21. Philadelphia, PA-based Spark, which was founded in 2013, lists on the Nasdaq under the symbol “ONCE.”
And Biogen Idec Inc. (Nasdaq) shot up $31.63, or 9%, to $389.16 after the company announced upbeat financial and operational results for the fourth quarter of fiscal year 2014. The Cambridge, MA-based biotech firm said that its fourth-quarter profits increased 75% year-over-year to $883.5 million as its multiple sclerosis treatment drugs—particularly Tecfidera, which closed its second year on the market in the U.S.--contributed toward a 34% growth in revenue for the quarter. The company reported that Tecfidera sales rose to $916 million for the year, higher than the Street’s estimate of $880 million; Biogen expects Tecfidera revenue to increase further in the coming years.
But Venaxis Inc. (Nasdaq) crashed 74% to $0.50 after receiving “not substantially equivalent” remarks on its blood-based diagnostic test, APPY1, from the Food and Drug Administration. Castle Rock, CO-based Venaxis’s APPY1 Test is a rapid blood test that aids in the identification of appendicitis in the emergency room. It is developed for children, adolescents, and young adults with a low risk of appendicitis. The FDA allows healthcare devices rapid market access, provided they are “substantially equivalent” to other competing products. APPY1 has already been cleared by European authorities.
IPO SECTOR – TRACON Pharmaceuticals Inc., a biotech developing combination therapies with VEGF inhibitors to treat cancers, raised $36 million by offering 3.6 million shares at $10 each, well below the $12 to $14 range. The San Diego, CA-based company also sold 500,000 shares at the offer price to shareholder National Education Association in a concurrent private placement. At $10, TRACON commands a fully diluted market cap of $127 million. TRACON lists on the Nasdaq under the symbol “TCON.” Wells Fargo Securities and Stifel acted as lead managers on the deal. Shares closed the week off 1% at $9.40.
January 26, 2015 ...
JOHNSON & JOHNSON TOPS 4Q EARNINGS EXPECTATIONS, LOWERS OUTLOOK -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, forecast lower earnings in 2015 as competition cuts into revenue for some of its best-selling drugs. Adjusted profit this year will reach $6.12 to $6.27 a share, the company said. That figure excludes an estimated charge of 32 cents a share for intangible amortization costs--an expense Johnson & Johnson previously included in its pro forma results. Incorporating that figure, 2015 earnings would be $5.80 to $5.95 a share, compared with 2014 adjusted profit of $5.97 a share. “It’s not uncommon for J&J to be a little more conservative as they start the year,” Tony Butler, an analyst at Guggenheim Securities LLC, said of the 2015 forecast. He said it’s not clear whether there is some “underlying weakness” that the company is worried about. Last January, J&J forecast 2014 adjusted earnings of $5.75 to $5.85 a share, then increased the outlook throughout the year. The company is seeking to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. Jami Rubin, an analyst at Goldman Sachs Group Inc., lowered her recommendation to “Sell” from “Neutral” on Jan. 15 because she sees the company bringing fewer new drugs to market this year than in previous years, she said in a note.
J&J’s accounting decision on intangible amortization means the company is no longer deducting the changing cost of hard-to-value assets like trademarks and patents in the company’s adjusted earnings. The drugmaker is facing increased competition in its pharmaceutical business. Sales of Olysio plummeted to $321 million in the quarter, down from $796 million in the previous three months, as the hepatitis C drug faced new competition from Gilead Sciences Inc.’s (Foster City CA) Harvoni that combined two drugs in one pill. “The most important change has been demand in hepatitis C for Olysio,” Butler said. “Once Gilead launched Harvoni as a single pill, effectively that becomes the product du jour.” The strengthening dollar also hit J&J harder than expected, leading the company to miss sales estimates in all three of its major businesses, said Glenn Novarro, an analyst at RBC Capital Markets. The company’s forecast probably reflects the worse-than-expected foreign-exchange pressure, he said. Shares of J&J closed the week off $1.84, or 2%, at $102.20. The shares have risen 13% in the past 12 months.
GOVERNMENT CLOSER TO GOAL OF 9.1 MILLION ENROLLED UNDER HEALTH LAW -- Enrollment on the federal Obamacare exchange has reached 7.1 million, the Obama administration said last week in a report that warned last-minute shoppers to log onto HealthCare.gov before it’s too late. The “snapshot” report reflected enrollment among new and returning customers through Friday, Jan. 16, on HealthCare.gov, the federal website that serves 37 states without their own portals. Customers have until Feb. 15 to sign up, so officials are beefing up efforts to drive uninsured Americans to HealthCare.gov or exchanges run by 13 states and the District of Columbia. “Time is running out. If you don’t have health coverage, visit HealthCare.gov or contact the Marketplace call center to learn about your options and the financial help that is available,” Health and Human Services Secretary Sylvia Mathews Burwell said. The administration is well on its way toward exceeding its modest goal of 9.1 million enrollees for the 2015 plan year, although its target is far short of congressional estimates that put anticipated enrollment at 13 million.
Monthly HHS reports wrap in data from the state-run exchanges, and customers tend to flock to the exchanges before key deadlines. The tax industry is lending a hand, since this is the first year that Americans will have to attest whether they hold health insurance or owe a fine to the IRS. TurboTax Intuit (Mountain View CA) said it is working with Enroll America, a Washington, DC-based nonprofit that champions Obamacare enrollment, to make sure customers understand their coverage options and can find in-person help before the Feb. 15 deadline.
TRACKING WASHINGTON -- President Barack Obama will urge Congress to spend U.S. taxpayers’ money for research in “precision medicine,” a burgeoning field of care in which treatments are tailored to an individual patient. “I want the country that eliminated polio and mapped the human genome to lead a new era of medicine--one that delivers the right treatment at the right time,” Obama said in his State of the Union address. “I’m launching a new Precision Medicine Initiative to bring us closer to curing diseases like cancer and diabetes--and to give all of us access to the personalized information we need to keep ourselves and our families healthier.” Obama did not provide details on what the initiative would entail and how much it would cost. He’s expected to detail the program in his fiscal 2016 budget, to be released Feb. 2. The Obama administration views medical research as an area of healthcare policy the Republican-led Congress may be willing to help advance, even as it fights the president over the continued implementation of Obamacare, his signature legislative accomplishment. Precision medicine relies on tests such as genetic sequencing to identify patients who will respond to drugs such as Vertex Pharmaceuticals Inc. (San Diego CA) Kalydeco for cystic fibrosis. Advances in such therapies have been helped by the dramatic drop off in costs for sequencing.
In other news, President Obama on Thursday unveiled plans to greatly increase federal assistance to working Americans struggling to afford child care, choosing a Democratic pocket in a solidly Republican state to sharpen the contrast between the two parties’ economic visions. In an appearance at the University of Kansas--his second stop in a Republican state in two days of promoting his domestic initiatives--Mr. Obama called for an $80 billion expansion of a federal program that provides child care subsidies to low- and middle-income families with children ages 3 and under, nearly doubling the aid and offering it to more than one million additional children over the next decade. He promoted his plan to nearly triple, to $3,000 per child, the maximum child care tax credit. And the president said he would push to put more federal money into early childhood programs, expanding the availability of free pre-school and extending Head Start--focused on low-income families--to last an entire day, and for the full school year. “These aren’t just nice-to-have’s, this is a must-have,” Mr. Obama told several thousand people in a gymnasium on the campus. “It is time that we stop treating child care as a side issue or a, quote-unquote ‘women’s issue.’ This is a family issue, this is a national economic priority for all of us.”
FDA/EMA ROUNDUP -- NPS Pharmaceuticals Inc. (Bedminster NJ) won U.S. approval for the first drug to treat a rare hormonal abnormality, vindicating Shire Plc’s (Dublin IRL) gamble to buy the company for $5.2 billion before the outcome was publicly known. The Food and Drug Administration cleared NPS’s Natpara to control low blood calcium levels related to hypoparathyroidism, according to a statement from the agency. The drug may garner $665 million in sales by 2021, according to Chiara Russo, an analyst at Janney Montgomery Scott in Boston. Shire agreed to buy NPS this month to expand its portfolio of rare-disease treatments. It’s Shire’s biggest acquisition, and the second deal since its proposed $52 billion buyout by AbbVie Inc. fell apart. The NPS deal is CEO Flemming Ornskov’s seventh takeover since his appointment was announced in October 2012, as he pursues a goal of doubling sales to $10 billion by 2020.
Elsewhere, DexCom Inc. (San Diego CA) won U.S. clearance for the first system of glucose-monitoring apps that can be used with mobile devices such as the iPhone to remotely track the health of a diabetic. The FDA gave the green light to the Dexcom Share system, which transmits data from a small, wire-like sensor inserted just under the skin, according to a statement Friday from the agency. Other similar systems exist, but none has been cleared for sale by the agency since the FDA began regulating mobile medical applications as devices in 2013. The subcutaneous sensor sends glucose levels continuously to a monitor that is worn externally, and the Dexcom Share system allows the information to be shared by the user. The app downloads the data for followers from a Web-based storage location, the FDA said.
A panel of experts on Thursday voted to recommend that the FDA approve Astellas Pharma Inc.’s (Tokyo) drug for the treatment of rare, often fatal invasive fungal infections that can target patients with blood cancers. The Anti-Infective Drugs advisory committee panel voted 11-0 that the Japanese drugmaker had demonstrated sufficient safety and efficacy to support approval of the drug, isavuconazonium, to treat invasive aspergillosis. The panel voted 8-2 with one abstention to recommend the medicine to treat invasive mucormycosis. The Food and Drug Administration, which typically follows the recommendations of its advisory panels but is not obligated to do so, is expected to make its approval decision by March 8.
And outside the U.S., AbbVie Inc. (North Chicago) said that its new, all-pill hepatitis C combo treatment has been approved for patients in the 28 European Union member countries. The company said the European Commission granted marketing authorization for the combination of Viekirax and Exviera. Viekirax itself is a combination pill containing antiviral drugs ombitasvir, paritaprevir and ritonavir; Exviera is a single pill containing dasabuvir. It’s already approved in EU nonmembers Switzerland, Norway, Iceland and Liechtenstein, plus Canada and the U.S.
MEDICAL STOCK SPOTLIGHT -- Egalet Corp. (Nasdaq) led advancing issues, soaring $3.61, or 73% over the week, to $8.54 after the company announced positive results from a Category 3 human abuse liability (HAL) study of Egalet-001, an abuse-deterrent, extended-release, oral morphine formulation in late-stage clinical development for the management of pain severe enough to require daily, around-the-clock opioid treatment and for which alternative treatments are inadequate. The clinical HAL study demonstrated that in non-dependent, recreational opioid users, the abuse potential of manipulated Egalet-001 taken orally was significantly lower than that for manipulated MS Contin (morphine sulfate controlled-release). Wayne, PA-based Egalet Corp. is a specialty pharmaceutical company engaged in developing and planning to commercialize proprietary, abuse-deterrent oral products for the treatment of pain and in other indications.
Elsewhere, Array BioPharma Inc. (Nasdaq) surged $2.62, or 58%, to $7.11 after the drug developer said it will buy worldwide rights to a potential cancer treatment in late-stage clinical testing from Swiss pharmaceutical giant Novartis AG. The Boulder-CO-based company said the deal is conditional on Novartis closing some acquisitions with British drugmaker GlaxoSmithKline Plc that it announced last spring. The companies said in April that Novartis would buy Glaxo’s cancer-drug business for more than $14 billion. Array didn’t detail the financial terms of its purchase of encorafenib from Novartis, other than to say it involved a “de minimis payment” and no future milestone or royalty payments by either company. Researchers are studying encorafenib in combination with another treatment, binimetinib, in a late-stage trial of some patients with melanoma.
And Agile Therapeutics Inc. (Nasdaq) shot up $1.59, or 27%, to $7.54 after the company announced a definitive stock purchase agreement with a group of institutional accredited investors. The repurchase pertains to the placement of 3.4 million shares of common stock at $5.85 per share yielding nearly $20.0 million. Shares of Princeton, NJ-based Agile have received an average broker rating score of 1.25 (Strong Buy) from the four analysts that provide coverage for the company, Zacks Investment Research reports. Brokers have set a 12-month consensus price target of $16.00 for the company and are expecting that the company will post ($0.40) EPS for the current quarter, according to Zacks. Agile is a women’s health specialty pharmaceutical company. The company is focused on the development and commercialization of new prescription contraceptive products.
But Advaxis Inc. (Nasdaq) plunged $5.78, or 43%, to $7.73 after news that the law firm of Federman & Sherwood has initiated an investigation into Advaxis with respect to possible violations of federal securities laws. Princeton, NJ-based Advaxis is a clinical stage biotechnology company focused on the development of cancer therapies. Federman & Sherwood is investigating whether Advaxis and certain of its officers and/or directors have violated the Securities Exchange Act of 1934. Advaxis is the developer of cancer immunologies. Its claim to fame is ADXS-HPV, currently in phase II/III trials as a therapy for cervical cancer, though it has a total of three drugs being observed across six different clinical trials at this time.
IPO SECTOR – Avinger Inc., which sells an image-guided, catheter-based system to treat peripheral arterial disease, announced terms for its IPO. The Redwood City, CA-based company plans to raise $60 million by offering 4.6 million shares at a price range of $12 to $14. At the midpoint of the proposed range, Avinger would command a fully diluted market value of $169 million. Avinger, which was founded in 2007 and booked $12 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq Global Market under the symbol “AVGR.” Canaccord Genuity and Cowen & Company are the joint bookrunners on the deal. It is expected to price this week.
January 19, 2015 ...
SHIRE TO BUY NPS FOR $5.2 BILLION TO BOOST RARE DISEASE DRUGS -- Irish drugmaker Shire Plc (Dublin) said it will pay $5.2 billion to acquire NPS Pharmaceuticals Inc. (Bedminster NJ), which specializes in drugs for rare conditions. The acquisition will expand Shire’s portfolio of specialty drugs, medications for niche diseases and conditions that typically command much higher price tags than conventional medications. Shire’s best-selling drugs currently include the attention deficit disorder drugs Vyvanse and Adderall XR. Under the agreement, approved by the boards of directors from both companies, Shire will acquire all outstanding shares of NPS for $46 per share in cash. The agreement is Shire’s first major deal after AbbVie Inc.’s (North Chicago) attempts to acquire Shire fell apart last October. Shire received a breakup fee of $1.6 billion after AbbVie walked away from the so-called tax-inversion deal. AbbVie scrapped the acquisition after the Obama administration took steps to deter such tax-lowering deals. Shire CEO Flemmimg Ornskov indicated his company would keep hunting for more deals. Shire has been aiming to use the breakup fee to restart its shift from drugs for common conditions like attention-deficit disorder toward drugs for rarer diseases. Dr. Ornskov said combining NPS’s two drugs with Shire’s existing sales force could eventually yield blockbuster sales for each of the NPS therapies.
NPS specializes in rare-disease drugs. Its Gattex injections treat a potentially deadly bowel disorder that diminishes the body’s ability to absorb nutrients and fluids. Gattex, which costs $376,200 a year, had $67.9 million in sales during the first nine months of 2014. NPS earned $157.4 million in total revenue during the period. The market for rare-disease treatments is considered attractive, despite a small number of patients, because companies can command prices in the hundreds of thousands of dollars--as is the case with Gattex. Sales of so-called specialty drugs are forecast to reach $162 billion in 2018, up from $108 billion in 2013 and $81 billion in 2008, according to Credit Suisse. NPS also has another rare-disease drug that could generate hundreds of millions of dollars in revenue. The drug, which treats a hormone condition called hypoparathyroidism, is already approved in Europe; the U.S. Food and Drug Administration is due to decide soon whether to approve the drug, under the name Natpara. NPS closed the week up $3.54, or 8%, at $45.45. Shire slipped $2.28, or 1%, to $215.21.
OBAMACARE'S LEAD AGENCY CHIEF ANNOUNCES HER RESIGNATION -- Marilyn B. Tavenner, the administrator of the federal Centers for Medicare and Medicaid Services, who helped preside over the rollout of sweeping changes in the nation’s healthcare system, said Friday that she was resigning. “February will be my last month serving as the administrator for CMS,” Ms. Tavenner said. Ms. Tavenner, who was at the center of the disastrous debut of the federal insurance marketplace in October 2013, had given no public indications that she would be stepping down. She joined the administration in February 2010, a few weeks before President Obama signed the Affordable Care Act. Ms. Tavenner was a senior official at the Medicare agency before she was confirmed by the Senate in May 2013 as administrator. The agency insures one in three Americans and has an annual budget of more than $800 billion. Sylvia Mathews Burwell, the secretary of health and human services, praised Ms. Tavenner, saying, “Marilyn will be remembered for her leadership in opening the health insurance marketplace. In so doing, she worked day and night so that millions of Americans could finally obtain the security and peace of mind of quality health insurance at a price they could afford. It’s a measure of her tenacity and dedication that after the tough initial rollout of HealthCare.gov, she helped right the ship.”
The online exchange, a centerpiece of the health law that lets people shop for health insurance policies, was nearly unusable for several weeks after it opened in the fall of 2013. Ms. Burwell said that Andrew M. Slavitt, the No. 2 official at the Centers for Medicare and Medicaid Services, would become the acting administrator after Ms. Tavenner leaves. Mr. Slavitt started work at the agency in July 2014. He had been a top executive at Optum, a unit of UnitedHealth Inc. (Minnetonka MN), one of the nation’s largest insurance companies. Optum helped build and operate the federal insurance exchange, and another unit of UnitedHealth sells health plans to consumers through the exchange in several states. Ms. Tavenner, a nurse by training, worked for more than two decades at the Hospital Corporation of America, a commercial hospital chain. From 2006 to 2010, she was the secretary of health and human resources in Virginia, managing Medicaid and other programs.
TRACKING WASHINGTON -- A tax on medical devices, imposed by the Affordable Care Act, has become a prime target for Republicans, some Democrats and a small army of lobbyists for the industry. But a new report from the Congressional Research Service challenges economic arguments that are being made to justify repealing the tax. Critics of the tax say it is destroying jobs and encouraging manufacturers to move operations overseas. Repealing it is a priority for Republicans on Capitol Hill. But in its report, the Congressional Research Service, a nonpartisan arm of Congress, said that many of the concerns were unfounded. The effects on jobs, research and company profits are “relatively modest,” the report said. As a result of the tax, it estimates, 47 to 1,200 workers could lose their jobs. They account for one one-hundredth to two-tenths of 1% of jobs in the industry. “These relatively modest effects occur partly because the tax is relatively small,” the report said. In addition, it said, “innovation and research would be minimally affected.” The tax, which took effect in 2013, is equal to 2.3% of the sale price of a medical device and is expected to raise $29 billion over 10 years. It applies to products like X-ray machines, magnetic resonance imaging scanners, pacemakers, artificial hearts and artificial hip and knee joints.
Elsewhere, with a month to go in the 2015 open enrollment season, the Obama administration says sign-ups under the president’s healthcare law are edging higher. The Health and Human Services Department says at least 163,000 people signed up last week for subsidized private health insurance. That brings the total to nearly 6.8 million people in 37 states where the federal government is running the new health insurance markets. National figures should be significantly higher, since the federal count doesn’t include major states like California and New York, among those running their own exchanges. An updated national total will be available later. The administration is expecting a surge near the Feb. 15 enrollment deadline. The goal is 9.1 million people nationwide signed up and paying premiums for 2015.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved AbbVie Inc.’s (North Chicago) treatment for Parkinson’s disease. The treatment, Duopa--a combination of carbidopa and levodopa--is the first to be effective for 16 hours, compared with existing oral formulations that last for up to four hours following a single dose. Duopa, already available in Canada, is administered using a small portable infusion pump that delivers the drug directly to the small intestine. AbbVie shares closed the week off 2% at $64.54. The prior week, the FDA approved Impax Laboratories Inc.’s Parkinson’s drug, Rytary, after rejecting it twice.
Elsewhere, the FDA approved a novel dieting device that acts like a pacemaker for the stomach by manipulating the nerve pathway that makes people feel hungry or full. The device, made by EnteroMedics Inc. (St. Paul MN), is the first of its kind to treat obesity by targeting nerves that link the stomach and the brain. The Maestro Rechargeable System would block electrical signals in the abdominal vagus nerve by dispatching high-frequency electrical pulses. Federally approved weight-loss drugs and devices have huge sales potential but a mixed track record. An FDA advisory panel concluded the Maestro system showed a sustained weight loss in patients even though it fell short of its goal. The device is one of a series of products called neuro-modulators that target nerves for a variety of conditions ranging from pain to Parkinson’s disease. It is intended for people with significant obesity and at least one other related condition. These other maladies could include Type 2 diabetes or high blood pressure. The device is implanted surgically into the abdomen, and is designed to be used in people age 18 and over who haven’t been able to shed pounds with a weight-loss program. It is to be used in people with a body-mass index of 35 to 45, or roughly 75 pounds or more over a person’s ideal body weight.
Arrowhead Research Corp. (Pasadena CA) saw its shares plummet 24% last week to $6.86 after the FDA restricted further clinical testing on the company’s hepatitis-B drug ARC-520, and announced a partial hold. The FDA said in a preliminary notification that Arrowhead was allowed to begin phase IIb testing on the drug; however, the company would need to make a few amendments to its clinical trials in order to have the partial hold removed. Arrowhead Research is a biopharmaceutical firm involved in the development of targeted RNA interference (RNAi) drugs. RNAi is a biological process that targets those genes in the human body which cause Hepatitis B. ARC-520 is expected to be Arrowhead’s first product on the market for the treatment of this contagious disease.
And health authorities were scrambling to determine how hundreds of bags of intravenous saline solution meant for training healthcare workers in demonstrations or on dummies have been given to real patients. The mystery ensued after Wallcur LLC (San Diego CA) recalled different-size bags of its saline solution and distilled water on Jan. 7. As of Thursday, 17 patients had fallen ill and one person--a hospice patient--had died after being given the solution, health officials said, though they could not say conclusively whether the saline solution was the cause. Patients in seven states reported symptoms, including chills, fever, tremors and headaches. The company said it began shipping the saline, in bags labeled “for clinical simulation,” on May 22, 2014. It said the products were not intended for people or animals because they were not sterile. The FDA, which is investigating the case, said the bags had been shipped to medical clinics, surgical centers and urgent care facilities, some of which administered them to patients.
MEDICAL STOCK SPOTLIGHT -- Canada’s Tekmira Pharmaceuticals Corp. (Nasdaq) led advancing issues, leaping $8.50, or 54% for the week, to $24.20 after agreeing to buy OnCore Biopharma, based in Pennsylvania, to focus on developing a hepatitis B virus treatment. The implied market value of the merged company is about $750 million, the companies said in a statement. OnCore will become a wholly owned subsidiary of Tekmira; upon closing of the deal, OnCore shareholders will hold about 50% of the total outstanding shares of Tekmira. Burnaby, BC-based Tekmira’s chief executive, Mark J. Murray, will be the chief of the merged company, and its chairman, Daniel Kisner, will become vice chairman. OnCore’s chairman, Vivek Ramaswamy, will be the chairman. Tekmira said it would continue its oncology and antiviral programs, including treatments for Ebola.
Elsewhere, ZIOPHARM Oncology Inc. (Nasdaq) soared $2.73, or 51%, to $8.11 after it and partner synthetic biology company Intrexon Corp. announced they had entered into a $100 million licensing deal with The University of Texas MD Anderson Cancer Center to acquire the rights to its investigational cancer treatment known as chimeric antigen receptor (CAR) T cell therapy. Under the agreement, Intrexon and Boston, MA-based ZIOPHARM will be granted rights for the development and marketing of the cancer treatment developed by MD Anderson which works by modifying the immune system of patients to treat the cancer tumor. The deal also includes an exclusive sublicensing agreement through MD Anderson for research conducted at the University of Minnesota. The agreement is expected to help the companies develop and expand their respective synthetic immunology pipelines.
And Aldeyra Therapeutics Inc. (Nasdaq), a biotechnology company focused on the development of products to treat diseases related to free aldehydes, announced the closing of its previously announced $7.79 million private placement of common stock and warrants. Lexington, MA-based Aldeyra is a biotechnology company focused primarily on the development of products to treat diseases thought to be related to endogenous free aldehydes, a naturally occurring class of toxic molecules. The company has developed NS2, a product candidate designed to trap free aldehydes. Aldeyra plans to initiate phase II clinical studies of NS2 in Sjögren-Larsson Syndrome and noninfectious anterior uveitis in early 2015. NS2 has not been approved for sale in the U.S. or elsewhere.
But eHealth Inc. (Nasdaq) tanked $12.40, or 56%, to $9.68 after warning fourth-quarter and fiscal 2014 earnings and revenue would be below expectations. The Mountain View, CA-based company said applications for individual and family health insurance plans fell 41% in the fourth quarter. eHealth expects full-year revenue of $178-$180 million, down from earlier guidance of $185-$194 million, and earnings of $1.5 to $4 million, far below earlier guidance of $13.5 to $18.5 million. The 18-year old company, the nation’s first and largest private health insurance exchange, generates most of its revenue from insurance carrier commissions on individual, family, small business and Medicare plans. But the market is increasingly competitive, with health insurance providers marketing directly to consumers.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Bellerophon Therapeutics LLC, which is developing nitric oxide-based therapies for cardiopulmonary diseases, registered up to $69 million worth of common stock. Bellerophon was spun out of Ikaria in February 2014 as a special dividend to existing stockholders, shortly before Ikaria’s non-biotech business was acquired by Madison Dearborn for $1.6 billion. Ikaria had originally intended to go public in November 2010 but withdrew its offering. The Hampton, NJ-based company plans to list on the Nasdaq under the symbol “BLPH.” Bellerophon initially filed confidentially on May 14, 2014. Leerink Partners and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.
January 12, 2015 ...
HOUSE PASSES BILL TO UNDERMINE OBAMACARE -- The House of Representatives brushed aside President Barack Obama’s veto threat and passed a bill Thursday that would revise his 2010 healthcare law to ease the requirement that employers provide insurance to their workers. The measure, passed 252-172, would require employers to provide coverage to workers who put in at least 40 hours a week. That’s up from the current 30-hour threshold, which Republicans say would cause employers to reduce hours and wages for many workers. The bill now goes to the newly Republican-led Senate, where the Democratic minority could block the measure. Last week’s House vote, with 12 Democrats supporting the bill, shows that it lacks the two-thirds backing needed to override a presidential veto. “We will sustain the president’s veto on that,” House Minority Leader Nancy Pelosi said earlier on Thursday. “The president’s threat to veto this common-sense legislation, rather than work toward bipartisan solutions to help middle-class families, is a sad commentary on where his priorities lie,” said House Speaker John Boehner of Ohio in a statement after the vote. Boehner spokesman Michael Steel said it was too soon to discuss the bill’s prospects without a veto-proof majority. “First, let’s wait until it goes to the Senate,” he said.
The bill represents the Republican Congress’s opening swipe against the Affordable Care Act. Although it is short of an all-out attempt at repeal, promised by House and Senate Republican leaders, previous House votes showed that last week’s measure would draw at least a few Democratic crossover votes. “It is simply unfair to try to finance health care for some hard-working American people on the backs of other hardworking Americans through a reduction in hours and wages,” said Representative Todd Young, an Indiana Republican and the bill’s main sponsor. By raising the threshold requiring insurance coverage to 40 hours a week, Young said, “we remove this perverse incentive to reduce hours and wages when they are most needed by our hourly workers.” He cited analysts who say 2.6 million workers in the U.S. earn less than $30,000 a year and are most at risk. Obamacare, passed with no Republican votes, is the president’s signature domestic accomplishment. “While the administration welcomes ideas to improve the law, H.R. 30 would shift costs to taxpayers, put workers’ hours at risk and disrupt health insurance coverage,” the administration said.
FDA PANEL BACKS NOVARTIS COPY OF AMGEN'S NEUPOGEN -- Novartis AG’s (Basel CHE) imitation of Amgen Inc.’s (Thousand Oaks CA) cancer drug Neupogen won the unanimous backing of U.S. advisers, taking a step closer to becoming the first biosimilar drug for sale in the U.S. Novartis’s biosimilar, which it plans to call Zarxio, should be approved for the same five conditions that Neupogen treats, advisers to the Food and Drug Administration voted last week. The treatment seeks to increase cancer patients’ white blood cell counts. The FDA itself, expected to decide whether to approve the biosimilar in March, doesn’t have to follow the advisory panel’s recommendation. Neupogen, which generated an estimated $1.2 billion in sales for Amgen in 2014, is part of the growing class of biologic medicines that are more complex than chemical drugs. They also are typically more expensive and, unlike chemical drugs, have never faced generic competition before. The U.S. may save $44 billion in drug spending in the next 10 years by introducing biosimilars, according to Rand Corp. (Santa Monica CA). “This has been utilized extensively in other parts of the world,” Deborah Armstrong, chairwoman of the FDA panel and oncology professor at Johns Hopkins University School of Medicine, said during the meeting. “There’s fairly robust safety and efficacy data that makes some of this a little bit easier.”
FDA staff supported approving Zarxio for all five conditions in a report released Jan. 5. Novartis’s biosimilar version of Neupogen “meets the requirement for a demonstration of ‘no clinically meaningful differences’ between the proposed product and the reference product in terms of safety, purity, and potency,” FDA reviewers said. The FDA only gained the power to approve a biosimilar in the 2010 Patient Protection and Affordable Care Act, also known as Obamacare. Chemical drugs have faced generic competition for more than three decades. Imitations of biologic drugs are called biosimilars instead of generics because they’re made from living organisms, which can’t be precisely copied. Novartis, based in Switzerland, has sold biosimilar Neupogen in Europe, where it uses the brand name Zarzio, since 2009. Biosimilars aren’t expected to slash drug prices by 80% like chemical generics. Economic and actuarial studies included in the Rand report estimated the $44 billion in savings from biosimilars over a decade assumed the imitations would cut prices anywhere from 10% to 50%. Novartis closed the week up 5.15 Swiss francs, or 6%, at 97.50 francs in Zurich. Amgen fell $4.16, or 3%, to $155.73 in New York.
TRACKING WASHINGTON -- On the new Congress’s first day, the House unanimously approved Republican legislation making it easier for smaller companies to avoid providing healthcare coverage to their workers by hiring veterans. The measure was approved 412-0 and is the first of many expected GOP bills aimed at President Barack Obama’s healthcare overhaul, which was enacted over unanimous Republican opposition. That 2010 law is phasing in a requirement that companies with more than 50 full-time workers provide medical coverage for their workers. The House bill, sponsored by Rep. Rodney Davis (R-IL), would exempt from that threshold veterans who already get health care from the Veterans Affairs Department or the military. Supporters say the measure would encourage employers to hire veterans. That’s a goal backed by members of both parties, even as federal figures show unemployment among Iraq and Afghanistan veterans dropped from 9.9% in November 2013 to 5.7% last November. Critics say the measure’s effect on companies and veterans is overstated. They say only modest numbers of firms are close to the 50-worker level and would be motivated to hire veterans to avoid providing medical insurance for their employees. In a written statement, the White House said it backed the measure, saying it supports “commonsense improvements” in the law.
Elsewhere, nearly 6.6 million people have selected a 2015 health insurance plan on HealthCare.gov--the U.S. government website that sells subsidized individual insurance plans in 37 states as of Jan. 2--the U.S. health agency said last Wednesday. The U.S. Department of Health and Human Services said that 102,896 individuals signed up for 2015 Healthcare.gov plans in the week of Dec. 27 through Jan. 2. Enrollment for these plans opened on Nov. 15 and remains open until Feb. 15. The government has said that it expects over 9 million people in total to enroll in the health insurance, created under the national healthcare reform law. Another 14 states and Washington, D.C. run their own websites to sell insurance and those figures are not included in the government’s tally.
FDA/EMA ROUNDUP -- As the United States grapples with a flu season that has killed 21 people so far, the Food and Drug Administration last week cleared the way for greater use of a molecular test designed to quickly detect the presence of the virus in a nasal swab. The test, made by Alere Inc. (Waltham MA), can now be used in a wide variety of clinical settings, including doctors’ offices, emergency rooms, clinics and other healthcare facilities. Previously, it could only be used in a limited number of laboratories. The FDA first cleared the Alere influenza A & B test in June as a prescription-only device, categorizing the test as moderately complex and therefore not to be used widely. The agency said it agreed to allow wider use of the test after the company submitted data showing its ease of use and low risk of false results when used by untrained operators.
Elsewhere, Bayer AG (Leverkusen DEU) announced that the FDA has granted a label expansion approval for the additional use of its drug, Gadobutrol (marketed in the U.S. as Gadavist injections), for pediatric patients younger than 2 years of age (including term neonates), at the standard injection dose given to adults. The injection was granted approval to be used with an MRI to find and sketch out the regions in a patient’s body with a disrupted blood-brain barrier and/or abnormal central nervous system blood vessels. The injection helps produce enhanced images, allowing the abnormalities to be analyzed more accurately.
The FDA approved the use of a drug made by Daiichi Sankyo Co. Ltd. (Tokyo) to reduce the risk of stroke and blood clots in patients with an irregular heartbeat not caused by a heart valve problem. The new drug, Savaysa, will compete with older blood thinners, including Xarelto, sold by Bayer AG and Johnson & Johnson, Boehringer Ingelheim’s Pradaxa, and Bristol-Myers Squibb Co.’s Eliquis. The FDA said the Daiichi drug is also approved to treat deep vein thrombosis and pulmonary embolism in patients who have already been treated with an anti-clotting drug administered by injection or infusion, for five to ten days. The agency said that, as with other approved anti-clotting drugs, bleeding, including life-threatening bleeding, is the most serious risk with Savaysa.
And an expert panel unanimously recommended that the FDA approve a cheaper copy of a special drug used in cancer therapy, paving the way for alternatives to an entire class of complex and costly drugs to enter the U.S. market. Most brand-name drugs eventually lose their patent protection, opening the market to lower-priced generic products. But one class of drugs, known as biologics, which includes some of the most expensive medications in the world, has been insulated from the competition of cheaper copies for years. That changed when the 14 members of the panel, convened by the FDA, agreed to approve a drug known as EP2006, which helps the body make white blood cells and is a close copy of an existing medication called Neupogen, also called filgrastim. EP2006 was approved in Europe in 2009 as Zarzio but has not been used in the U.S., in part because no regulatory pathway existed to bring copies of biologic drugs to market. The drug recommended is made by Sandoz, a unit of the Swiss company Novartis AG (Basel). Neupogen, the original, is made by Amgen Inc. (Thousand Oaks CA).
MEDICAL STOCK SPOTLIGHT -- Arena Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $1.84, or 51% for the week, to $5.43. The big upward move came after the San Diego-based biopharmaceutical company released positive data for its oral drug candidate, APD334, which is in a phase Ib trial. The oral drug targets the sphingosine 1-phosphate subtype 1 (S1P1) receptor to treat auto-immune diseases. BMO Capital analyst Jim Birchenough weighed in on the development and termed the results promising. However, he expects differentiation among S1P1 modulators, based on effects on the liver, pulmonary function, and heart rate. Auto-immune disorders (that APD334 sets out to cure) are so prevalent that AbbVie Inc.’s biotech drug Humira accounts for almost 65% of the company’s revenue.
Elsewhere, Anthera Pharmaceuticals Inc. (Nasdaq) rocketed 50% to $2.63 on anticipation of its symposium on systemic lupus erythematosus scheduled for this week in San Francisco. The Hayward, CA-based company’s candidate for the treatment of lupus is A-623 (blisibimod), a selective peptibody antagonist of the BAFF cytokine. On December 15, the company signed a license agreement with Tokyo-based Zenyaku Kogyo Ltd. for the development and commercialization of subcutaneous blisibimod in Japan and potentially other Asian countries.
And Tonix Pharmaceuticals Holding Corp. (Nasdaq) leaped $2.36, or 40%, to $8.28 after announcing it has completed a phase I safety, tolerability, and pharmacokinetic study of TNX-201, which is being developed for episodic, tension-type headache. In this single ascending dose, placebo-controlled trial, TNX-201 was well-tolerated at all doses studied, and showed a dose-related increase in pharmacokinetic parameters, according to the New York-based company. A phase II, double-blind, randomized, multicenter, placebo-controlled study to evaluate the efficacy and safety of TNX-201 for the treatment of a single episodic tension-type headache will begin in the second quarter of 2015.
But KaloBios Pharmaceuticals Inc. (Nasdaq) plunged 73% to $0.50. The company said it would discontinue the development of its drug for lung infections in cystic fibrosis patients after it failed in a mid-stage study. The South San Francisco-based company said its drug, KB001-A, did not extend the time before cystic fibrosis patients had to take antibiotics for their worsening respiratory tract symptoms. KB001-A was being developed to treat a powerful superbug, Pseudomonas aeruginosa, that causes lung infections. The drug also failed the trial’s secondary endpoints of improving lung function, the company said.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Inovalon Inc., which provides healthcare data and analytics to pharmas, payors and providers, registered up to $500 million worth of common stock. The Bowie, MD-based company, which was founded in 1998 and booked $336 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq under the symbol “INOV.” Inovalon initially filed confidentially on October 10, 2014. Goldman Sachs, Morgan Stanley, Citi, BofA Merrill Lynch and UBS Investment Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
January 5, 2015 ...
FDA DRUG APPROVALS REACHED 18-YEAR HIGH IN 2014 -- U.S. drug approvals in 2014 hit their highest level in 18 years and recommendations in Europe also came at a rapid rate, driven by expensive new treatments for cancer and rare diseases. After suffering a wave of patent losses on blockbuster products, which peaked two years ago, drugmakers are recovering their ability to bring new medicines to market and productivity is improving. The U.S. Food and Drug Administration’s Center for Drug Evaluation approved 41 novel medicines in 2014, 14 more than a year earlier, according to its website. That tally is second only to the all-time high of 53 approvals reached in 1996. The European Medicines Agency, which includes generic drugs in its list, recommended 82 new medicines last year, up from 79 in 2013 and 57 in 2012. Innovative new drugs have continued to command premium prices, to the relief of investors but the frustration of insurers and governments, which are starting to push back against the sky-high cost of some modern therapies. Nearly 40% of new drugs approved in the United States last year were for rare diseases, underscoring the industry’s focus on specialized products where competition is limited and annual costs often exceed $100,000 per patient.
Among 2014’s highlights were two cancer drugs that help the body’s own immune cells fight tumors and promise better, longer-lasting treatment with fewer adverse side effects. Merck & Co.’s (Whitehouse Station NJ) Keytruda and Bristol-Myers Squibb Co.’s (New York) Opdivo, which work by blocking a protein called Programmed Death receptor (PD-1), are the first in a coming wave of immunotherapies that analysts believe could generate annual sales of more than $30 billion a year. Fueled by new drug enthusiasm, biotech initial public offerings hit a record high in 2014 and the wider drug industry saw a flood of deals. That helped lift the Nasdaq Biotechnology Index and S&P 500 Health Care Index 34% and 23% respectively, though some fund managers are starting to question valuations as insurers take a tougher stance on prices. Pricing pressures have already taken a toll on older products like diabetes and respiratory medicines, where there are multiple options available, and the confrontation is now spreading to newer ones.
OBAMACARE ENROLLMENT SOARS -- About 6.5 million people signed up for health insurance using the federally run healthcare.gov system by Dec. 26, the U.S. government said. Including 633,000 people who signed up for Obamacare plans by Dec. 15 using enrollment systems run by 13 states, the total now in coverage under the Patient Protection and Affordable Care Act is at least 7.1 million. The state figures, reported separately by the Health and Human Services Department, don’t include people automatically renewed in their 2014 coverage in California, New York and six other states. Federal officials aim to have at least 9.1 million people paying for coverage sold under the law in 2015, up from 6.7 million in October. The 7.1 million signed up so far haven’t necessarily paid their first premium to their insurer, the final step in enrollment, and the figure doesn’t “fully capture the total number of plan selections for coverage beginning January 1st,” the government said. “With the latest enrollment figures, they are clearly within striking distance of their target,” Larry Levitt, a senior vice president at the Menlo Park, CA-based Kaiser Family Foundation, said. Coverage under the Affordable Care Act last year has eroded since May, when 8 million people had signed up. Some customers found alternative sources of insurance or became disenchanted with the program.
The Congressional Budget Office has estimated that 13 million people should be paying for plans sold under the law in 2015, a figure that would require “an enormous surge” of enrollment in the next six weeks, Levitt said. The Obama administration has said the CBO’s estimate is too high, and that the law’s coverage expansions will take more time than the budget agency expects to mature. Enrollment has been much smoother for 2015 than last year, when the government had only 2.2 million people signed up after three months as it struggled to salvage the Healthcare.gov system, which was crippled by software flaws. The Centers for Medicare and Medicaid Services, which oversees the enrollment website, awarded Dublin, Ireland-based Accenture Plc a five-year contract extension late last month, worth about $564 million, to continue running Healthcare.gov, according to federal records. Accenture was brought on in February to replace the company that built Healthcare.gov, CGI Federal Inc. (Fairfax VA).
TRACKING WASHINGTON -- The Obama administration reported a big increase in new customers signing up for health insurance in Florida, Texas and other states using the federal insurance marketplace. But in states running their own insurance exchanges, the numbers were more modest. Altogether, the administration said, in the first month of open enrollment for 2015 coverage, more than four million people signed up for the first time or re-enrolled through the federal and state insurance marketplaces. About 3.4 million of them were in the 37 states using HealthCare.gov, the website of the federal marketplace. More than two million consumers signed up for the first time, the administration reported, and 1.8 million of them did so through the federal marketplace. States with large numbers of new customers in the federal exchange included Florida (330,000), Texas (205,000), North Carolina (110,000), Georgia (103,000) and Pennsylvania (95,000). The report showed the importance of subsidies to people seeking coverage under the Affordable Care Act. Officials said that 87% of those selecting health plans for this year in the federal exchange had qualified for subsidies that would reduce their premiums.
Elsewhere, a startup insurance company loaned $145 million by the U.S. government under Obamacare is running out of money and being taken over by state officials in Iowa. The company, CoOportunity Health (W. Des Moines), which also serves Nebraska, was placed under Iowa Insurance Commissioner Nick Gerhart’s supervision last week and is no longer accepting new enrollees, according to a statement from his office. While Gerhart’s agency will operate the company for the time being, it’s urging policyholders to seek a new insurer. CoOportunity Health is a co-op, or Consumer Operated and Oriented Plan, one of 23 nonprofit health insurers providing coverage in 26 states. They were created under the Patient Protection and Affordable Care Act to increase competition. The fate of CoOportunity provides new fodder for Obamacare opponents who argue that the law wastes government money. The co-op’s troubles are a blow to an Obamacare program that had outperformed the direst predictions of Republicans. While Obamacare opponents had argued the companies would fail and squander government loans, some co-ops including CoOpportunity had outpaced forecasts for enrollment, growing five times faster than expected through March.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration announced that it would abandon a decades-old lifetime prohibition on blood donation by gay and bisexual men, a major stride toward ending what many had seen as a national policy of discrimination. However, the agency will continue to ban men who have had sex with a man in the last year, saying the barrier is necessary to keep the blood supply safe. The FDA enacted the ban in 1983, early in the AIDS epidemic. At the time, little was known about the human immunodeficiency virus, which causes the disease, and there was no quick test to determine whether somebody had it. But science--and the understanding of HIV in particular--has advanced in the intervening decades. The FDA acknowledged as much, lifting the lifetime ban.
Elsewhere, the FDA approved AbbVie Inc.’s (North Chicago) all-oral treatment for hepatitis C, and the company said the drug would cost $83,319 for a typical 12-week plan, slightly below its huge selling competitor Sovaldi from Gilead Sciences Inc. (Foster City CA). Gilead’s Sovaldi treatment made headlines last year with its $84,000 price tag and set off a national debate about whether drug prices have climbed too high. AbbVie’s newly approved regimen is also less costly than Gilead’s newest one-pill regimen that combines Sovaldi with another drug and costs $94,500 for 12 weeks. With Gilead’s newly improved Harvoni, some patients can take the treatment for just eight weeks, which sells for about $63,000.
The FDA approved a drug to treat dementia in Alzheimer’s patients that was developed by Actavis Plc (Dublin IRL) and Adamas Pharmaceuticals Inc. (Emeryville CA). The drug, Namzaric is designed to treat moderate-to-severe dementia in Alzheimer’s patients by combining in a single capsule memantine and donepezil--ingredients in two drugs that are often prescribed together. Memantine is the active ingredient in Actavis’s Namenda, while donepezil is the active ingredient in Pfizer Inc.’s (New York) Aricept. Both are in use for Alzheimer’s-related dementia. Actavis said it expects to launch Namzaric in two dosage strengths in the U.S. in the second quarter of 2015. Adamas will retain commercialization rights outside the U.S.
And the FDA approved BioCryst Pharmaceuticals Inc.’s (Durham NC) single-dose flu drug, in what the company says is the agency’s first ever approval for an intravenous drug to fight influenza. The drug is intended for adults with acute uncomplicated influenza who are unable to swallow pills such as Gilead Sciences Inc.’s (Foster City CA) Tamiflu or inhale GlaxoSmithKline Plc’s (London) Relenza because of upper respiratory problems. BioCryst’s peramivir injection, to be sold as Rapivab, is the first antiviral influenza treatment approved by the FDA in fifteen years, the company said. Rapivab inhibits the enzyme neuraminidase, which is critical to the spread of influenza.
MEDICAL STOCK SPOTLIGHT -- NephroGenex Inc. (Nasdaq) led advancing issues, exploding 119% over the week to $10.68 after the company announced that its lead drug, pyridorin, was shown to be safe in a late-stage cardiac safety study involving patients with diabetic nephropathy. The Raleigh, NC-based company, which focuses on innovative treatments for kidney disease, said an extensive QT/QTc (TQT) cardiac safety study had been conducted to check whether the drug affects the QT/QTc interval. The results showed that pyridorin was completely safe and did not affect the QT/QTc interval which, if affected for a prolonged period of time, could cause an irregular heartbeat or sudden cardiac death. The drug had also showed cardiac safety in phase I and II clinical trials. Pyridorin is being developed to treat diabetic nephropathy--a chronic, degenerative kidney disease resulting from diabetes, and often followed by heart disease.
Elsewhere, NeuroDerm Ltd. (Nasdaq) nearly doubled in value, rising $6.00, or 99%, to $12.06 after the company reported positive results in a small trial of a treatment for Parkinson’s disease. The Israeli company said continuous, subcutaneous delivery of two liquid product candidates had a positive effect on plasma levels, suggesting the high dose version that is aimed at severe sufferers of the disease may be an effective alternative to current treatments that require surgery. The higher dose candidate, known as ND0612H, “is designed to be delivered continuously, thus we believe it should offer a simple and effective treatment option that will minimize the need for surgical intervention in advanced Parkinson’s patients,” said Sheila Oren, vice president of clinical and regulatory affairs at the company.
And Brainstorm Cell Therapeutics Inc. (Nasdaq) surged $3.65, or 95%, to $7.50 ahead of the biotech company’s data release later today. Brainstorm intends to release the final results from its phase IIa trial of its stem-cell therapy NurOwn. The New York-based company describes NurOwn as an “autologous, adult stem cell therapy technology” designed to treat ALS, also known as Lou Gehrig’s Disease. “We are very excited to share the final results of this study,” said Brainstorm’s CEO Tony Fiorino, MD, PhD. “Professor Karussis presented a very positive and well-received interim analysis of this study at the Joint Congress of European Neurology in June 2014, and the final results include data from several additional subjects and analyses conducted by our independent statisticians.”
But MiMedx Group Inc. (Nasdaq) skidded 14% to $9.74 after the company announced it had received a subpoena from U.S. regulators. The Marietta, GA-based company, which specializes in regenerative medicine, said it received a subpoena from the Office of the Inspector General of the Department of Health and Human Services in connection with a civil investigation mostly tied to the company’s sales and marketing activities.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Entellus Medical Inc., which sells a minimally invasive balloon sinus dilation treatment to open obstructed sinus pathways, registered up to $69 million worth of common stock. The Plymouth, MN-based company, which was founded in 2006 and booked $45 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq Global Market under the symbol “ENTL.” BofA Merrill Lynch and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed.
December 22, 2014 ...
OBAMACARE'S BEST WEEK BRINGS ONE MILLION NEW SIGNUPS -- The Obama administration said that nearly 2.5 million people had selected health insurance plans through the federal marketplace in the first four weeks of open enrollment this fall. More than one million of those selections came in just one week, from Dec. 6 through Friday, Dec. 12. “Millions of Americans want access to affordable quality health insurance, and they came to the marketplace to find it,” Sylvia Mathews Burwell, the secretary of health and human services, said in reporting enrollment activity under the Affordable Care Act. Last Monday was the deadline for people to sign up for insurance taking effect on Jan. 1. Andrew M. Slavitt, the No. 2 official at the federal Centers for Medicare and Medicaid Services, said the new data did not include activity from Saturday through last Monday, when the website for the federal exchange was exceptionally busy. In those three days, Mr. Slavitt said, more than three million people used the site, HealthCare.gov, and the exchange received 1.6 million telephone calls. “Our call center and our technology have done their jobs so far,” Mr. Slavitt said. For about 90 minutes last Monday, officials said, they deployed an online waiting room for visitors to HealthCare.gov, but most users were not affected.
The number of people selecting plans in the first month of open enrollment this fall already exceeds the number who chose plans in the federal exchange in the first three months of enrollment last year, when Kathleen Sebelius was health secretary and the website often crashed or froze. The improved performance of the website may help the Obama administration fend off attacks on the healthcare law by Republicans in Congress, who won control of the Senate and expanded their House majority in elections last month. About half of those selecting health plans this fall, from Nov. 15 to Dec. 12, were new customers, and half were renewing coverage or switching to a different health plan. Millions of people who took no action to extend their coverage will automatically have it renewed. The Obama administration had urged people to return to HealthCare.gov, shop around and compare the options, saying they could often find a better deal. But it appears that many people did not take that advice.
S&P JOINS OTHER AGENCIES WITH PESSIMISTIC OUTLOOK FOR HOSPITALS -- The outlook for non-profit healthcare remains dreary for 2015, as hospital operating margins continue to face pressure from rising costs and weaker reimbursement, according to the three major credit ratings agencies. They were unanimous giving the healthcare and hospital sector a negative outlook next year, citing anticipated downgrades, declining operating cash flows, and on-going uncertainties surrounding the implementation of the Affordable Care Act. “The negative pressures facing most providers are widespread,” said Martin Arrick, services analyst with Standard & Poor’s Ratings. “Many providers will not be able to adapt.” S&P forecasted more downgrades than upgrades among not-for-profit healthcare providers for a third consecutive year, as operating margins are squeezed by rising costs. “There would likely have been more downgrades in 2014 if not for the high level of merger and acquisition activity which often precluded downgrades and in many cases led directly to upgrades,” S&P said in its 2015 outlook. Moody’s Investors Service anticipated another 12 to 18 months of weak performance, with large hospital systems faring better from economies of scale and the ability to drive revenue growth through expanded services. “The largest hospitals are getting stronger, while the smaller hospitals get weaker,” Moody’s senior analyst Daniel Steingart said.
Many hospitals have exhausted the low-hanging fruit for cost-cutting. At the same time, hospitals are expected to shift away from the traditional fee-for-service models, in which more patient services led to more revenue. The Affordable Care Act and purchasers of healthcare are now emphasizing preventative care and reduced hospital stays. That trend might be good news for the 43 million Americans grappling with overdue medical debt, according to the U.S. Consumer Financial Protection Bureau, but not so for hospitals that historically counted on healthcare spending to balance operating budgets. Fitch Ratings said more uncertainty is on the way, as Republicans with Congressional control vow to repeal or defund parts of the Affordable Care Act. That would “hamper the sector’s ability to adapt and plan,” Fitch said. The rating agency was closely following an upcoming U.S. Supreme Court decision in the King vs. Burwell case, in which the court could effectively invalidate insurance coverage purchased through federally operated state exchanges. “The hospital sector has navigated many challenging environments in the recent past, but the upcoming years represent a true transition as the core model of healthcare delivery and reimbursement is undergoing redesign,” said James LeBuhn, Fitch senior director.
TRACKING WASHINGTON -- The U.S. Supreme Court last week declined to approve tighter restrictions on abortion, turning away an appeal by Arizona officials defending a law that would restrict the use of drugs to end a pregnancy. The justices, without comment, left intact a ruling that blocks the 2012 Arizona law while a legal challenge plays out. The measure, described by opponents as the country’s most extreme, has the effect of barring medicinal abortions after the seventh week of pregnancy and perhaps earlier as well. Arizona says the law is a legitimate step to protect women’s health. The statute requires doctors to follow U.S. Food and Drug Administration instructions in dispensing abortion-inducing drugs. Abortion-rights advocates say the FDA-approved protocols no longer represent the safest approach and that doctors must be able to prescribe drugs “off label.” In blocking the law, a San Francisco-based federal appeals court said Arizona “has presented no evidence whatsoever that the law furthers any interest in women’s health.” Arizona argued that the state was being held to too high a standard. The appeal contended that the state needed to show only that it had a rational basis for believing the law would protect women’s health.
Elsewhere, the U.S. government canceled one of its most ambitious health research projects, an effort to follow 100,000 children from before birth through adolescence, after spending about $1.3 billion since 2007 without it ever really getting off the ground. Run by the National Institutes of Health, the study was to collect data on child health and development in the hope of discovering insights into autism and other maladies. Administrative difficulties and the project’s spiraling costs alarmed NIH Director Francis Collins, who ordered an evaluation of the study after the National Academy of Sciences raised concerns in a June 16 report. The project was authorized by Congress in 2000 yet never got past a small pilot study to test research methods. The study “as currently designed is not feasible,” Collins said in a statement on the NIH’s website. About $1.3 billion was poured into the project since 2007, though “the impact of this funding is unclear,” according to the internal NIH evaluation. Collins put the study on hold in June before announcing its cancellation last week.
FDA/EMA ROUNDUP -- Abbvie Inc. (North Chicago) and Enanta Pharmaceuticals Inc. (Watertown MA) won U.S. approval to sell a combination of pills to treat hepatitis C, bringing to market the first new competitor to Gilead Sciences Inc.’s (Foster City CA) drug to treat the liver virus. The Food and Drug Administration cleared the drug cocktail, which will be sold under the name Viekira Pak for patients with the U.S.’s most common strain of the virus, genotype 1. Like Gilead’s treatment, Viekira Pak is an all-oral medication that doesn’t require immune system-boosting shots that can have flu-like side effects and are used with older treatments. Unlike Gilead, AbbVie’s combination will require patients to take four to six pills a day. Viekira Pak could generate $2.9 billion in sales next year, according to the average of three analysts’ estimates compiled by Bloomberg.
Elsewhere, the FDA approved a device developed by Cerus Corp. (Concord CA) to reduce the risk of infections in blood plasma transmitted during transfusions, such as HIV, hepatitis and West Nile virus, sending company shares 32% higher on the week to $6.41. The Intercept Blood System for plasma uses ultraviolet light and a chemical called amotosalen that inactivates viral pathogens in the blood. The plasma is then purified to remove the chemical and its byproducts. While the Intercept Blood System for plasma has been shown to be effective in reducing a broad range of viral and bacterial pathogens that may be transmitted through transfusions, there is no inactivation process that has been shown to eliminate all pathogens, the FDA said.
Novartis AG (Basel CHE) announced that its drug Signifor LAR has been approved by the FDA to treat acromegaly in patients on whom prior treatments have not worked or for whom surgery is not an option. The FDA’s decision is based on the promising results demonstrated by the drug in two of its phase III trials, C2305 and C2402. In both of these trials, Signifor LAR, a next-generation somatostatin analog (SSA), proved superior to a first-generation SSA in achieving greater biochemical control in patients with acromegaly, a rare and life-threatening hormonal disease. Acromegaly is caused by a “non-cancerous tumor in the pituitary gland” as a result of an excess discharge of the growth hormone (GH) and “insulin-like growth factor-1 (IGF-1).” The disease can result in the swelling of various body parts such as feet, hands, and facial features.
And a new diet pill from Orexigen Therapeutics Inc. (La Jolla CA) has been recommended for approval in Europe, the European Medicines Agency (EMA) said on Friday. The drug, known as Contrave in the United States, will be marketed as Mysimba in Europe. The medicine won U.S. approval in September and is a combination of the antidepressant bupropion and Orexigen’s formulation of naltrexone, designed to prevent drug dependence. The EMA also gave a green light to a Parkinson’s drug called Xadago, or safinamide, from Newron Pharmaceuticals SpA (Bresso ITA) and its partner Zambon SpA (Milan), as well as a drug for controlling hyperphosphataemia from Sanofi SA’s (Paris) biotech unit Genzyme and a drug for skin infections from Durata. Recommendations for marketing approval by the EMA’s Committee for Medicinal Products for Human Use (CHMP) are normally endorsed by the European Commission within a couple of months.
MEDICAL STOCK SPOTLIGHT -- Auspex Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $28.47, or 114% over the week, to $53.37 after the drug developer said its product for treating chorea, or involuntary movement associated with Huntington’s disease, met the main goal in a late-stage study. Patients administered SD-809, Auspex’s lead drug, showed an improvement in a standardized score measuring involuntary movement, compared with those given a placebo. The drug also significantly improved the patients’ quality of life, lowering rates of depression and anxiety. About 90% of those suffering from Huntington’s disease develop chorea, characterized by involuntary, excessive movements that can impact all parts of the body and interfere with motor functions. The La Jolla, CA-based company said it was also running an additional trial to see if chorea management remained under control when patients were switched overnight to SD-809 from H. Lundbeck A/S’s tetrabenazine, the current standard of care.
Elsewhere, a medical breakthrough in the treatment of melanoma sent biotechnology firm Novogen Ltd. (Nasdaq) up 57% to $2.58, just two years after the company abandoned a push to dismantle Australian operations in favor of its New York-based subsidiary. The Hornsby-based company announced its brain cancer treatment Trilexium had been shown in pre-clinical studies to be highly effective against melanoma. Novogen will now attempt to secure funding for clinical trials and to take the therapy to market, the company’s executive director Graham Kelly said. “People have speculated for some time that there’s a link between melanoma and brain cancer, so a drug that could knock out both is an important scientific discovery,” Dr. Kelly said. “From a shareholder point of view, there are very few drugs that work against melanoma.”
And Thinly-traded nano cap TransEnterix Inc. (Nasdaq) surged $1.35, or 71%, to $3.24. The Durham, NC-based company announced the successful completion of four general surgery and urology procedures using its SurgiBot patient-side robotic surgery system. Its value proposition is ease of use and lower cost compared to currently available systems. “The SurgiBot system has the ability to offer multiple instruments and a camera through a single small incision. It is designed to limit surgical trauma while enabling the surgeon with advanced vision, dexterity and control,” said Dr. Juan Carlos Verdeja, a general surgeon and chief of general surgery at Baptist Health Medical Group in Miami, FL. Management also stated that the preparation of its FDA 510(k) filing is proceeding as planned, and affirmed prior guidance of its intention to submit the filing in mid-2015.
But Sophiris Bio Inc. (Nasdaq) plummeted 84% to $0.45 after the La Jolla, CA-based company announced disappointing data from an interim efficacy analysis of its ongoing phase III PLUS-1 study on PRX302 as a treatment for lower urinary tract symptoms of benign prostatic hyperplasia (BPH). The ongoing international, multicenter, randomized, double-blind, and vehicle-controlled PLUS-1 study is evaluating the safety and efficacy of a single intraprostatic administration of PRX302 in patients with BPH. The company stated that enrollment and dosing in the study were completed in September. The Independent Data Monitoring Committee reported that a predefined efficacy threshold in patients receiving PRX302 was not achieved.
IPO SECTOR – Juno Therapeutics Inc., which is developing T-cell therapies for lymphomas, leukemias and other cancers, raised $265 million by offering 11 million shares (all primary) at $24, above the range of $21 to $23. The Seattle, WA-based company had initially planned to offer 9.3 million shares at $15 to $18, before increasing its range on Tuesday. At $24, Juno Therapeutics will raise 73% greater proceeds than initially anticipated, and command a fully diluted market cap of $2.2 billion. Juno Therapeutics, which was founded in 2013, lists on the Nasdaq Global Market under the symbol “JUNO.” Morgan Stanley, J.P. Morgan and Goldman Sachs are the joint bookrunners on the deal. Shares closed the week up $11.00, or 46%, at $35.00.
December 15, 2014 ...
HEALTHCARE.GOV SIGNUPS GROW IN WEEK THREE OF 2015 ENROLLMENT -- A working website and more new customers than expected have Obamacare headed toward enrollment that will surpass the lowered projections of its managers. With the program’s first deadline looming today--when people who want coverage beginning Jan. 1 must sign up--little has gone wrong so far in the second enrollment season for the Patient Protection and Affordable Care Act. Technical problems have been scattered and largely resolved. Consumer interest is strong, with 1.4 million people signed up through Dec. 5 in 37 states using the federal healthcare.gov system. It’s a dramatic turnabout from a year ago, when the federal website was brought to a standstill by errors, requiring a two-month repair effort. The government will probably surpass a goal of 9.1 million signed up for private coverage by the time enrollment closes in February, said Larry Levitt, a senior vice president at the Kaiser Family Foundation (Washington DC). “They should meet their target quite comfortably,” he said. Caroline Pearson, a vice president at Avalere Health LLC (Washington DC), a consulting firm, predicted that as many as 5 million new customers will join about 6 million expected to renew their 2014 coverage. The final number may depend on President Barack Obama, who helped create a surge of business last March by personally promoting enrollment, Pearson said.
Obama appeared Dec. 8 on Comedy Central’s “The Colbert Report,” where he took the place of host Stephen Colbert for a regular segment called “The Word”--retitled “The Decree” for his appearance--to pitch enrollment to young viewers. “Most young people can get covered for less than $100,” Obama said, using lines purportedly meant for Colbert. “How is the president going to get that message out to the kids? He could try to appeal to them directly through a speech or a press conference, but young people don’t watch real news shows like this one. They watch comedy shows, and I just don’t see the president going on one of those.” The Congressional Budget Office, which has estimated the law’s impact on U.S. health insurance coverage, expects about 13 million people to be enrolled in private plans sold through government-run insurance exchanges next year. The Obama administration distanced itself from that projection in November, saying the law’s programs would take longer than the budget office expected to ramp up and that employers haven’t eliminated workers’ health benefits in the numbers once anticipated, which would have moved more people to the government’s marketplace.
AMERICAN NURSE EXPOSED TO EBOLA ARRIVES AT U.S. TREAMENT CENTER -- An American nurse who was exposed to Ebola while caring for patients in Sierra Leone arrived Thursday in the U.S. for treatment and monitoring after being evacuated, according to the U.S. National Institutes of Health. The nurse, who wasn’t named, was admitted to the NIH Clinical Center in Bethesda, MD, after being flown in by a chartered medical plane. “NIH is taking every precaution to ensure the safety of our patients, NIH staff and the public,” the institute said in a statement Thursday. NIH did not release any further information on the nurse, including when he or she might have been exposed to the virus, current medical condition or affiliation. The patient will be admitted “for observation and to enroll in a clinical protocol,” NIH said. The NIH clinical center is one of 35 institutions designated as Ebola treatment centers earlier this month by the U.S. government, and previously treated a nurse who contracted Ebola in Texas. The clinical studies unit is designed to provide high-level isolation capabilities and is staffed by infectious disease and critical care specialists.
The outbreak is currently at its worst in Sierra Leone, which along with Liberia and Guinea has been ravaged by the virus. In those countries, Ebola has infected more than 18,000 and killed at least 6,500. Its impact outside the region has been limited, however. Eight people treated in U.S. hospitals have been cured, and two have died. Last month Martin Salia, a physician infected with Ebola who had been evacuated to the U.S. from Sierra Leone, died despite treatment in the U.S. Nina Pham, the nurse who contracted the virus while treating a patient with Ebola in Dallas, was cured after being taken to the NIH center in October. The week prior, an American health worker who may have been infected was taken to Emory University Hospital (Atlanta) for testing and possible treatment. New treatment centers are being opened by the government and organizations like Doctors Without Borders to cope with the surge in infections in Sierra Leone.
TRACKING WASHINGTON -- President Barack Obama said the $1.01 trillion spending legislation that passed the House of Representatives Friday and appeared headed toward approval by the Senate contains funds necessary for the fight against Ebola. “We’ve got to stay on this,” he said of the Ebola outbreak in West Africa. “This is not a fight that is going to go away any time soon.” Congress plans to give the White House $5.48 billion to combat Ebola abroad and at home, meeting most of President Barack Obama’s request as the outbreak burns hot in Sierra Leone. Included in the funding is $2.72 billion for the U.S. Health and Human Services Department, primarily the Centers for Disease Control and Prevention, which is trying to contain the virus in West Africa and also prepare U.S. hospitals for new domestic cases. The State Department and the U.S. Agency for International Development would receive $2.53 billion and the Defense Department $112 million. The money comes close to Obama’s request for $6.2 billion to combat the outbreak, though without a $1.5 billion “contingency fund” he asked Congress to create. Instead, lawmakers will provide additional money for a public health fund at the health department.
Elsewhere, Republicans in the U.S. House of Representatives subpoenaed an MIT economist to demand records of his work on Obamacare for federal and state governments that they say will shed light on how the law was passed. The Massachusetts Institute of Technology economist, Jonathan Gruber, appeared before the Oversight and Government Reform Committee on Dec. 9 and in several contentious exchanges with Republicans refused to disclose how much he was paid for work on behalf of the Obama administration. Republicans have accused the executive branch of hiding details of the law’s creation and implementation, and see Gruber as holding answers. “He is in a unique position to shed light on the ‘lack of transparency’ surrounding the passage of the president’s healthcare law,” the oversight panel’s chairman, Republican Darrell Issa of California, said. At the Dec. 9 hearing, the panel asked Gruber to testify about public appearances in which he belittled voters and suggested that Democrats passed the Patient Protection and Affordable Care Act in 2010 by deceiving the public. Gruber downplayed his role and apologized for his past remarks, calling them “uninformed and glib.” Gruber said he had no comment on the subpoena.
FDA/EMA ROUNDUP -- Amgen Inc. (Thousand Oaks CA) announced that its drug XGEVA, used to treat bone-related diseases, has been approved by the U.S. Food and Drug Administration for the treatment of hypercalcemia of malignancy (HCM) in patients on whom bisphosphonate therapy did not work. HCM is a rare but serious condition that develops in advanced cancer patients because of increased bone resorption, a situation where bones get broken down by bone cell, resulting in calcium entering into the patient’s blood stream. HCM occurs mostly in patients suffering from squamous cell cancer--such as lung, head, and neck cancer—and kidney, breast cancer, myeloma, and lymphoma. HCM can cause coma, renal failure, progressive mental impairment, and eventually death. The FDA has also granted XGEVA Orphan Drug Designation, which is a status given to drugs that are designed to treat rare diseases which affect less than 200,000 individuals in the U.S. As per this designation, XGEVA will have seven years of marketing exclusivity for the said indication.
Merck & Co. (Whitehouse Station NJ) received FDA approval for an updated version of its Gardasil vaccine, which protects against the virus that causes most cases of cervical cancer. The agency approved Gardasil 9, which protects against nine strains of the virus called HPV, or human papillomavirus, up from four strains covered by the original vaccine approved in 2006. The FDA said the updated Gardasil had the potential to prevent roughly 90% of cervical, vulvar, vaginal and anal cancers. It is approved for use in males and females--ages 9 to 26 for females, and 9 to 15 in males. Vaccination requires three injections over six months. Regulators approved Gardasil 9 based on Merck studies of 13,000 patients. The most common side effects linked to the vaccine were related to the injection, including pain, swelling and redness.
Arca Biopharma Inc. (Westminster CO) said the FDA granted its experimental drug orphan drug status as a potential treatment for viral hemorrhagic fever after exposure to the Ebola virus. The company, whose stock rose 42% over the week, joins a list of drugmakers looking for ways to fight the largest Ebola outbreak on record, which has killed at least 6,300 so far. Securing this designation accords the developer with several incentives, including fee waivers and seven years of market exclusivity. Arca’s drug, rNAPc2, is a selective inhibitor of tissue factor (TF)--the protein responsible for initiating the primary coagulation mechanism in humans. The drug, which was originally being developed as a cardiovascular therapy for thrombosis among other indications, has shown effectiveness against the Ebola and Marburg virus in animal models. Shares closed the week up 50 cents at $1.02.
And the FDA lifted a clinical hold on Flexion Therapeutics Inc.’s (Burlington MA) chief experimental drug to relieve osteoarthritis-related pain, allowing the company to resume mid-stage trials. The agency had halted trials of the injectable drug, FX006, in September after one patient’s knee was infected. Flexion said it also plans to initiate a late-stage trial testing the drug early next year.
MEDICAL STOCK SPOTLIGHT -- Calithera Biosciences Inc. (Nasdaq), led advancing issues, soaring $19.28, or 184% over the week, to $29.85. The clinical stage biotechnology company focused on the development of novel cancer agents announced results of studies with primary human breast tumors that support glutaminase as a potential target in triple negative breast cancer. Using a novel pharmacodynamic assay designed to measure the extent of glutaminase inhibition in a single post-dose tumor biopsy sample, significant glutaminase inhibition was observed following oral administration of CB-839. These data were presented during the San Antonio Breast Cancer Symposium in San Antonio, TX. South San Francisco-based Calithera is developing CB-839, a potent, selective and orally bioavailable glutaminase inhibitor that is currently in phase I clinical trials in solid and hematological malignancies. The study results prove CB-839’s efficacy in reaching the tumor and inhibiting the target.
Elsewhere, Bluebird Bio Inc. (Nasdaq) rocketed $46.57, or 104%, to $91.28 after the company presented data that showed a cure for beta-thalassemia is within reach, prompting several brokerages to raise their price targets on the stock. One of the most common genetic blood disorders, beta-thalassemia, is characterized by a reduction in hemoglobin, and requires patients to take lifelong transfusions. If left untreated, those affected often die in their forties. Data presented at the American Society of Hematology meeting showed that four beta-thalassemia patients transplanted with Cambridge, MA-based Bluebird’s LentiGlobin product, including one with the most severe form of the disease, were essentially cured. The therapy resulted in sufficient hemoglobin production to reduce or eliminate the need for transfusion support, Bluebird said. Roth Capital Partner’s Debjit Chattopadhyay raised his price target on the stock to $90 from $50.
And Paratek Pharmaceuticals Inc. (Nasdaq) soared $11.80, or 68%, to $29.05 after hedge fund Baupost Group registered a filing showing it now owns 1.74 million shares, or 12.04%, of Paratek. Baupost said it did not acquire its position in Paratek “for the purpose of, or with the effect of changing or influencing the control of the company’s shares.” As a late-stage antibiotic company, Boston, MA-based Paratek is primarily focused on the development and commercialization of omadacycline--a broad-spectrum intravenous and oral once daily antibiotic candidate for serious community-acquired infections.
But Karyopharm Therapeutics Inc. (Nasdaq) skidded $9.99, or 22%, to $34.85. Zach’s Research says this slump shouldn’t be too much of a surprise to investors, as Karyopharm has seen four negative revisions in the past few weeks and its current year loss consensus has widened over the last 30 days. This suggests there may be more trouble down the road. Zachs Research said investors should make sure to “keep an eye on this stock going forward to see if this recent slump will continue, as the earnings picture definitely suggests that this might be the case.” Newton, MA-based Karyopharm develops and discovers drugs for the treatment of cancer, inflammation, and diseases related to cell proliferation through activity modulation of critical pathways.
IPO SECTOR – Connecture Inc., a cloud-based solution for online health insurance marketplaces, raised $53 million Friday by offering 6.6 million shares at $8, well below its $12-$14 range. The company sold 865,769 more shares than initially planned but raised 29% fewer proceeds. At $8, Brookfield, WI-based Connecture now commands a fully diluted market cap of $185 million (37% below proposed initial valuation). Connecture’s ten largest customers accounted for 60% of revenue during the nine months ended September 30, 2014, and its largest was Blue Cross and Blue Shield of Michigan. The company lists on the Nasdaq under the symbol “CNXR.” Morgan Stanley and J.P. Morgan acted as lead managers on the deal. Shares closed the week up 10% at $8.80.
December 8, 2014 ...
GROWTH IN U.S. HEALTH SPENDING THE LOWEST ON RECORD -- Spending on health care in the United States grew in 2013 at the lowest rate since the federal government began tracking it in 1960, the Obama administration said last week. It was the fifth straight year of exceptionally small increases in the closely watched indicator. The data defied critics who had said such slow growth would not continue for long once the recession ended in mid-2009. Health spending totaled $2.9 trillion last year, up 3.6% from 2012, the administration said. The share of the economy devoted to health care, which appeared to be growing inexorably for decades, has been the same since 2009. “The 3.6% increase in 2013 is the lowest increase on record in the national health expenditures going back to 1960,” said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services and lead author of the report, published in the journal Health Affairs. “The next lowest increase was 3.8% in 2009. These rates are within the range of the recent low rates of growth in healthcare spending, between 3.6% and 4.1% from 2009 to 2013.” Spending for health care in 2013 averaged $9,255 a person, government economists and statisticians reported. Health spending grew at about the same pace as the economy and accounted for 17.4% of the gross domestic product, which reflects the total output of goods and services.
Among factors restraining the growth of health spending, the administration pointed to new limits on Medicare payments to hospitals and health maintenance organizations; automatic across-the-board cuts in federal spending required by a 2011 law; and the proliferation of high-deductible health insurance plans, which tend to discourage the use of care by requiring consumers to pay more of the cost. Faster growth in Medicaid spending offset some of the slowdown in spending by Medicare and private insurance in 2013, officials said. The 2013 figures did not show the effects of major expansions in coverage that took effect this year. Moreover, the data did not answer a question hotly debated by health policy experts and economists: whether the recent slowdown in health spending was attributable to aftereffects of the recession or to cost-control features of the Affordable Care Act, signed by President Obama in 2010. The civil servants who wrote the report said some provisions of the law “exerted downward pressure” on health spending while others “exerted upward pressure.”
GLAXO TO LAY OFF HUNDREDS OF U.S. EMPLOYEES -- Hundreds of drugmaker GlaxoSmithKline Plc’s (London) 17,000 U.S.-based employees will lose their jobs by the end of next year under the pharmaceutical industry’s latest restructuring. Glaxo, best known for its widely used asthma inhaler Advair, is making changes worldwide that are meant to produce about $1.6 billion in annual savings within about three years--from units including research and development, manufacturing, sales and marketing, and support functions. The company also had considered selling off or otherwise divesting its European and U.S. established products--drugs that have lost patent protection and face cheaper generic competition. On Thursday, it issued a brief statement saying that after reviewing all the bids it received, it decided not to divest those medicines because that wouldn’t maximize shareholder value. The restructuring plan was announced on Oct. 22, when the company reported third-quarter results that included a 13% drop in global sales and a 62% plunge in net income. Details of the restructuring began emerging last week as Glaxo started informing U.S. staff of specific plans. In a statement, the company said it will eliminate about 900 jobs in marketing and research in Research Triangle Park, NC, though some cuts will be made through a hiring freeze and not filling vacant positions.
About 450 of the 900 employees losing jobs in research and development at Research Triangle Park will be offered positions at Parexel International Corp., which has offices nearby in Durham, NC. It provides contract research, consulting and other services to pharmaceutical companies. In addition, hundreds of sales and marketing jobs will be eliminated, in Philadelphia, Research Triangle Park and among sales representatives around the U.S. The moves are being made to streamline the company, part of an industry-wide trend to adjust to pressures including rising research costs, government and private health plans holding down and even reducing what they’ll pay for medicines, and the expiration of patents on drugs that had generated billions in annual sales. Glaxo’s U.S. shares closed the week off 1% at $46.04 in New York.
TRACKING WASHINGTON -- The second week of open enrollment in 2015 health insurance plans offered under President Barack Obama’s healthcare reform almost matched the pace of the first week, federal health officials said. In the week that included the Thanksgiving holiday, 303,010 people chose Obamacare plans from Healthcare.gov. Almost half, 49%, were new customers, while the others renewed 2014 policies. From Nov. 15-21, 462,125 people chose health plans; 48% were new customers. The federal website, which serves people in the 35 states that are not operating their own Obamacare exchange, has operated essentially without a hitch since it opened on Nov. 15, in dramatic contrast to the disastrous roll-out a year ago. Enrollment for 2015 coverage closes on Feb. 15. Current customers who do not actively sign up again by Dec. 15 will be automatically re-enrolled in their 2014 plan, though consumers might find a cheaper or better plan if they comparison shop on the exchange. “We’re encouraging everyone who is already covered through the Marketplace to come back and shop because there could be savings,” Health and Human Services Secretary Sylvia Burwell said. Last year, HHS, which runs Healthcare.gov, did not make enrollment data public for weeks. Under Burwell, who took up her new job in June, HHS has promised to release it weekly.
Elsewhere, in mounting the latest court challenge to the Affordable Care Act, House Republicans are focusing on a little-noticed provision of the law that offers financial assistance to low- and moderate-income people. Under this part of the law, insurance companies must reduce co-payments, deductibles and other out-of-pocket costs for some people in health plans purchased through the new public insurance exchanges. The federal government reimburses insurers for the “cost-sharing reductions.” In their lawsuit, House Republicans say the Obama administration needed, but never received, an appropriation to make these payments to insurance companies. As a result, they contend, the spending violates the Constitution, which says, “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.” President Obama requested the money as part of the budget he sent Congress in April 2013, but Congress did not act on the request. Seeing the issue as an urgent priority, the administration began making the payments early this year, using money from a separate account established for tax refunds and tax credits. The lawsuit, House of Representatives v. Burwell, is the latest battle in a political war over the Affordable Care Act, which was adopted in 2010 without any Republican votes.
FDA/EMA ROUNDUP -- Amgen Inc. (Thousand Oaks CA) won early U.S. approval for a drug that uses patients’ own immune systems to fight a rare form of leukemia as regulators seek to move quicker to provide potential treatments for unmet medical needs. The Food and Drug Administration cleared the immunotherapy, to be marketed as Blincyto, for patients with a form of acute lymphoblastic leukemia, according to a statement from the agency. The medicine was approved five months ahead of schedule after being designated a breakthrough therapy, which allowed Amgen additional access to FDA staff members to guide the drug through its review. The medicine is part of a class in one of the hottest areas of cancer research, known as immunotherapy because it stimulates patients’ immune systems to work more effectively against the disease. The price for Blincyto won’t be made public until the drug is available to patients in a few weeks, said Danielle Bertrand, a spokeswoman for Amgen’s Onyx Pharmaceuticals subsidiary, which will sell the drug in the U.S. Blincyto is approved for patients whose cancer returned after treatment or didn’t respond to previous therapy.
Regeneron Pharmaceuticals Inc. (Tarrytown NY) announced that the FDA has granted priority review to its supplemental biologics license application (sBLA) for the label expansion of its key drug Eylea, to treat diabetic retinopathy in patients with diabetic macular edema. The FDA’s priority review designation is awarded to applications for those drugs that target either a serious condition or a neglected disease. Under the designation, the standard ten-month review and approval period is reduced to six months. Therefore, as per the Prescription Drug User Fee Act, the expected approval date for the company’s application is March 30, 2015. Eylea had already received the breakthrough therapy designation for the same indication in September. The breakthrough therapy status allows expedited review and the FDA’s guidance for drug development, and is awarded to drugs that have shown pre-clinical activity against a certain disease.
Sanofi SA (Paris) announced that the FDA has approved its Priftin (rifapentine) tablets for the treatment of latent tuberculosis infection. The FDA, following a priority review, has approved Priftin, to be used in combination with isoniazid, for the new indication. The drug, first approved for sale in the U.S. in 1998 to treat active pulmonary tuberculosis, can now be administered to patients over 2 years of age at high risk of developing the disease. Sanofi said that Priftin must always be used in conjunction with isoniazid as a 12-week, once-a-week treatment for latent tuberculosis infection. The only sign that a person is infected with the disease is that of a positive reaction to the TB skin or blood test. Without treatment, however, about 5%-10% of those infected with latent tuberculosis infection will go on to develop TB at some point in their lives, with about 50% of these incidences occurring within the first two years of infection.
And the FDA lifted a clinical hold on Flexion Therapeutics Inc.’s (Burlington MA) chief experimental drug to relieve osteoarthritis-related pain, allowing the company to resume mid-stage trials. The agency had halted trials of the injectable drug, FX006, in September after one patient’s knee was infected. Flexion said it also plans to initiate a late-stage trial testing the drug early next year.
MEDICAL STOCK SPOTLIGHT -- Idera Pharmaceuticals Inc. (Nasdaq) led advancing issues, surging 30% over the week to $4.04. The company announced that its immunotherapy intratumoral injection candidate, IMO-2055, showed anti-tumor activity in combination with Bristol-Myers Squibb Co.’s Yervoy against a variety of cancer types in pre-clinical studies. During the pre-clinical trials, IMO-2055 successfully inhibited tumor growth. The combination of Yervoy and IMO-2055 injections exhibited greater and more sustained inhibition of the tumor, compared to both agents as a monotherapy. Cambridge, MA-based Idera had risen earlier in the week on news that the company had appointed Vincent J. Milano as its new CEO. Mr. Milano will replace Dr. Sudhir Agrawal, who will now take the position of president of research. Mr. Milano previously served as the chief executive of ViroPharma Incorporated, where he is credited with the successful acquisition of ViroPharma by Shire Plc for $4.2 billion this year.
Elsewhere, Sequenom Inc. (Nasdaq), a developer of genetic analysis solutions and molecular diagnostic tests, rocketed 26% to $3.77 after announcing that it had ended a long-standing patent dispute with Illumina Inc. The patent dispute arose about the use of intellectual property pertaining to the development of noninvasive prenatal diagnostic tests, or NIPTs. Under the terms of the agreement, Illumina gets the exclusive global rights to “utilize the pooled intellectual property to develop and sell in-vitro diagnostic kits for NIPT and to license third-party laboratories wishing to develop and sell their own laboratory-developed NIPT tests under the collection of pooled patents.” Both companies also are free to utilize the pooled patents to develop their own NIPT tests. In addition, both companies will share revenue derived from the patent pool, with Illumina paying San Diego-based Sequenom a royalty on sales of its in-vitro diagnostic kits for NIPT through 2020, as well as an upfront payment of $50 million.
And Foamix Pharmaceuticals Ltd. (Nasdaq) spiked up 25% to $6.60 on no particular company specific news. The Israel-based company has been the subject of a number of recent research reports. Analysts at Cowen & Co. initiated coverage on shares of Foamix in a research note setting an “Outperform” rating and a $30.00 price target on the stock. Separately, analysts at Barclays initiated coverage on shares of Foamix setting an “Overweight” rating and an $11.00 price target on the stock. Finally, analysts at Oppenheimer initiated coverage, setting an “Outperform” rating and a $15.00 price target on the stock. Two investment analysts have rated the stock with a “Hold” rating and three have assigned a “Buy” rating. The stock currently has an average rating of Buy and an average price target of $23.50. Foamix Pharmaceuticals is a clinical-stage specialty pharmaceutical company focused on developing and commercializing its minocycline foam for the treatment of acne, impetigo and other skin conditions.
But Puma Biotechnology Inc. (Nasdaq) fell $21.08, or 9%, to $205.94 after the company said it would delay filing for U.S. regulatory approval of its experimental breast-cancer treatment by as much as a year. Puma said it will file an application with the Food and Drug Administration in the first quarter of 2016, instead of the first half of 2015--the company’s previous plan. The company is applying to use the drug in early stage cancer patients as a follow-on treatment after initial therapy. The company said that the FDA wanted long-term data on whether the drug caused other cancers during pre-clinical tests in animals. Los Angeles-based Puma originally said it would apply to use neratinib for HER2-positive metastatic breast cancer, a sicker, higher-risk group, and now plans to apply first for extended adjuvant HER2-positive early stage breast cancer. HER2 is a genetic mutation that can drive a cancer’s growth. Neratinib is Puma’s only drug under development.
IPO SECTOR – Included among recent SEC filings for initial public offerings, VolitionRx Ltd., which is developing blood-based diagnostic tests that detect cancer, registered up to $12 million worth of common stock and uplist on the NYSE MKT. The company is currently traded on the OTCQB Marketplace under the symbol “VNRX,” and has a market value of about $50 million. The Singapore-based company aims to address the need for non-invasive, accurate, and cost-effective diagnostics for cancer and other conditions, with its “NuQ” suite of products. VolitionRx was established in 2010 when its team of scientists saw a chance to bring together the long-established ELISA diagnostic technology with cutting-edge nucleosome detection and analysis techniques. The company plans to list on the NYSE MKT under the symbol “VNRX.” National Securities and Lake Street Capital Markets are the joint bookrunners on the deal. No pricing terms were disclosed.
December 1, 2014 ...
IN FIRST WEEK, MORE THAN A MILLION APPLY FOR HEALTH INSURANCE ON FEDERAL WEBSITE -- Open enrollment for the second year of Obamacare individual health coverage brought in 462,125 people who chose their health plans in its first week, nearly half of whom were first-time customers, the U.S. government said. The U.S. Department of Health and Human Services has set a goal of 9 million people for 2015 individual plans. This new coverage was introduced in 2014 for the first time as part of President Barack Obama’s national healthcare law, often called Obamacare. After fixing the technology issues that last year contributed to a rocky start for enrollment in the program, more than 7 million people were enrolled in 2014 plans. “It’s still early and we have a long way to go, but we’re off to a solid start,” Secretary Sylvia Burwell said during a press conference to discuss the first week’s data for the 2015 enrollment period that opened on Nov. 15. Of the 462,125 people who selected one of the health plans sold on Healthcare.gov, 52% were individuals who had enrolled in a 2014 plans. The balance were new customers, including people in Oregon and Nevada who are using the federally run exchange for the first time. The federal exchange covers 35 states. The remaining states and Washington D.C. run their own exchanges and release their data separately. Oregon and Nevada moved their customers to Healthcare.gov because of technology problems.
Enrollment for 2015 coverage closes on Feb. 15 and current customers who do not actively sign up again by Dec. 15 will be automatically re-enrolled. Between Nov. 15 and Nov. 21, the website experienced no outages and its peak number of concurrent users was 55,000, HHS said. The site was built to withstand 250,000 concurrent users based on the government’s expectation for 9 million people to seek coverage for 2015. Healthcare.gov had 3,741,725 unique users and 1,032,129 applications were submitted, the agency said.
EBOLA VACCINE APPEARS SAFE IN EARLY TEST -- Researchers in the U.S. say they are a step closer to developing an Ebola vaccine, with a phase I trial showing promising results, but it will be months at the earliest before it can be used in the field. The news comes amid the worst ever outbreak of the hemorrhagic fever, which has killed nearly 5,700 people in West Africa, most of them in Guinea, Liberia and Sierra Leone. Pharmaceutical companies and health agencies are scrambling to fast-track experimental drugs and vaccines that could help fight the deadly disease. In the first phase of testing, all 20 healthy adults injected with a higher or lower dose of the vaccine developed antibodies needed to fight Ebola, said the National Institutes of Health (NIH), which conducted the study. Results were published last Wednesday in the New England Journal of Medicine. “The unprecedented scale of the current Ebola outbreak in West Africa has intensified efforts to develop safe and effective vaccines,” said Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID), which is developing the vaccine alongside GlaxoSmithKline Plc (London).
The vaccines under development “may play a role in bringing this epidemic to an end and undoubtedly will be critically important in preventing future large outbreaks,” Fauci said. “Based on these positive results from the first human trial of this candidate vaccine, we are continuing our accelerated plan for larger trials to determine if the vaccine is efficacious in preventing Ebola infection,” he added. The NIAID is “in active discussions with Liberian officials and other partners about next-stage vaccine testing in West Africa” for efficacy and safety, the NIH said, but no announcement on larger-scale trials was expected before early next year. The researchers reported no serious side effects. But two people who received the higher-dose vaccine briefly spiked fevers, one above 103 degrees Fahrenheit (39 Celsius), which disappeared within a day. Additional safety studies are under way in the U.S. and abroad. A different Canadian-made vaccine also has begun small safety studies.
TRACKING WASHINGTON -- A “culture of increased transparency” is needed at the U.S. Health and Human Services Department, Secretary Sylvia Mathews Burwell said, after Obamacare enrollment data were padded with dental plan customers in what she has called an error. The mistake was “unacceptable,” Burwell said in a memo sent to her senior managers last week, obtained by Bloomberg News. As a first step, she told them to convene meetings with staff to solicit suggestions to increase “transparency, ownership and accountability” at the 77,000-employee agency she runs. The number of people signed up for health insurance is a key measure of success for the Patient Protection and Affordable Care Act. The health department acknowledged Nov. 20 that it had double-counted about 393,000 people in dental plans when it announced that 7.3 million Americans were enrolled in August. Enrollment was revised downward as a result, to 6.9 million in August and 6.7 million in October. “One of our most important obligations to the American people is to report information and data accurately,” Burwell said in her memo. “We are working quickly to understand what happened and to improve our processes in order to prevent similar mistakes from occurring again.” Not surprisingly, Republicans have suggested the Obama administration intended to mislead the public by double-counting the dental plans.
Elsewhere, many immigrants who are in the United States illegally and who apply for work permits under President Barack Obama’s new executive actions would be eligible for Social Security and Medicare benefits upon reaching retirement age, according to the White House. Under Obama’s actions, immigrants who are spared deportation could obtain work permits and a Social Security number. As a result, they would pay into the Social Security system through payroll taxes. No such “lawfully present” immigrant, however, would be immediately entitled to the benefits because like all Social Security and Medicare recipients they would have to work 10 years to become eligible for retirement payments and health care. To remain qualified, either Congress or future administrations would have to extend Obama’s actions so that those immigrants would still be considered lawfully present in the country. None of the immigrants who would be spared deportation under Obama’s executive actions would be able to receive federal assistance such as welfare or food stamps, or other income-based aid. They also would not be eligible to purchase health insurance in federal exchanges set up by the new healthcare law and they would not be able to apply for tax credits that would lower the cost of their health insurance.
FDA/EMA ROUNDUP -- A medical device that destroys growths in a woman’s uterus may spread cancer and shouldn’t be used in the vast majority of patients, the Food and Drug Administration said. The devices, called laparoscopic power morcellators, help surgeons remove a woman’s uterus or fibroid growths by cutting tissue into pieces that can be taken out through a small incision in the abdomen. Uterine tissue, however, can contain unsuspected cancer cells, and the devices may spread the disease and “decrease the long-term survival of patients,” the FDA said. The agency will add a boxed warning--the agency’s strongest--to the devices’ labels to alert doctors and patients. Johnson & Johnson (New Brunswick NJ) suspended sales of its power morcellators in May following the initial announcement of a proposed boxed warning. After last week’s update, HCA Holdings Inc. (Nashville TN), which operates 280 hospitals and surgery centers in the U.S. and England, said it will stop the use of power morcellators.
Valeant Pharmaceuticals International Ltd. (Laval Quebec) announced that its gel ONEXTON has won approval by the FDA. The gel is designed as once-a-day treatment for comedonal (non-inflammatory) and inflammatory acne vulgaris for patients aged 12 and above. ONEXTON’s approval came on the heels of promising results exhibited by the drug in its phase III trial. The percentage of patients treated successfully with ONEXTON stood at 35%, being double of 17% success achieved by placebo treatment. Success of the treatment was defined as “at least 2 grade improvement in the Evaluator Global Severity (EGS) score from baseline.”
The FDA rejected Avanir Pharmaceuticals Inc.’s (Aliso Viejo CA) migraine drug device, a few weeks after the regulator had raised questions regarding some data submitted as part of the marketing application. Last month the FDA had asked Avanir to assess the root cause of errors observed in the data from the drugmaker’s human factors study, which assesses if patients can use a device safely and effectively. The product, AVP-825, delivers a low-dose sumatriptan powder--the most commonly prescribed migraine medicine--through the nose. Avanir said it would conduct a new human factors study and respond to the FDA’s complete response letter in the first half of next year.
Across the Atlantic, Alexion Pharmaceuticals Inc. (Cheshire CT) received a positive recommendation from the National Institute for Health and Care Excellence (NICE) for its drug Soliris for the treatment of atypical hemolytic-uremic syndrome (aHUS). NICE is a cost regulatory body that recommends the drugs to be used by the U.K. National Health Services based on a cost-benefit analysis. aHUS is a rare autoimmune disorder characterized by the formation of blood clots and eventual organ failure. The number of aHUS patients in the U.K. is estimated to be just over 170. However, Soliris’ high price of $540,000 for a complete treatment makes it one of the world’s most expensive treatments, rendering NICE’s recommendation all the more important for patients who cannot afford the drug.
MEDICAL STOCK SPOTLIGHT -- Prosensa Holding NV (Nasdaq) led advancing issues, soaring $8.33, or 73% for the week, to $19.77. BioMarin Pharmaceutical Inc. agreed to pay $680 million to buy Prosensa to add a potential treatment for Duchenne muscular dystrophy to its rare-diseases portfolio. BioMarin may also make two payments of about $80 million each if U.S. and European approvals for drisapersen occur by certain dates, the California-based company said. BioMarin will pay $17.75 a share for Leiden, Netherlands-based Prosensa, or 55% more than its closing share price on Nov. 21. Prosensa’s drisapersen is a “potential first-to-market and best-in-class product for treating a large population of patients with a rare, fatal genetic disease,” BioMarin said. The medicine may be appropriate for as many as 10,000 patients, while follow-on products could serve 35,000 people in BioMarin’s commercial regions, it said.
Elsewhere, Bio Blast Pharma Ltd. (Nasdaq) rocketed $2.35, or 52%, to $6.90 after brokerage Oppenheimer reissued their “Outperform” rating on shares of the Tel Aviv-based company. They currently have a $32.00 target price on the stock. Bio Blast has a 1-year low of $4.50 and a 1-year high of $11.00. Bio Blast last released its earnings data on Friday, November 21st. The company reported ($0.16) earnings per share for the quarter, missing analysts’ estimates of ($0.09) by $0.07. Analysts expect that Bio Blast Pharma will post $-0.45 EPS for the current fiscal year. Bio Blast Pharma is a development-stage biopharmaceutical company that identifies, licenses, acquires, develops and distributes drugs for rare and ultra-rare genetic and metabolic diseases.
Five Prime Therapeutics Inc. (Nasdaq) surged $4.81, or 31%, to $20.56 after the company announced it has entered into a collaborative agreement with Bristol-Myers Squibb Co. to evaluate the safety, tolerability and preliminary efficacy of Bristol-Myers’ Opdivo, an investigational PD-1 (programmed death-1) immune checkpoint inhibitor, in combination with Five Prime’s FPA008, a colony stimulating factor-1 receptor (CSF1R) inhibitor. The Opdivo and FPA008 combination will be evaluated in a phase Ia/Ib study for several cancer indications including non-small cell lung cancer (NSCLC), melanoma, head and neck cancer, pancreatic cancer, colorectal cancer and malignant glioma. Per terms of the agreement, Bristol-Myers will make a one-time payment of $30 million to South San Francisco-based Five Prime.
But BIND Therapeutics Inc. (Nasdaq) skidded $1.05, or 14%, to $6.50--a new 52-week low after plummeting 26% the previous week. Analysts say investor sentiment has turned bearish after BIND posted its quarterly earnings results on November 6th. The company reported ($0.44) earnings per share for the quarter, missing analysts’ consensus estimate of ($0.31) by $0.13. Analysts expect that BIND will post $-1.90 EPS for the current fiscal year. Cambridge, MA-based BIND Therapeutics is a clinical-stage nanomedicine platform company. Its focus is developing Accurins, its targeted and programmable therapeutics that are designed to activate pharmaceutical ingredients in diseased tissues.
IPO SECTOR -- S1 Biopharma Inc. (Jersey City NJ), which is developing a combined therapy of existing drugs for female sexual dysfunction, lowered the proposed deal size for its upcoming IPO last Wednesday. The New York, NY-based company now plans to raise $23 million by offering 1.8 million units, which include one common share as well as one Series A and one Series B warrant, at a price range of $12 to $14. The company had previously filed to offer 2.8 million common shares at a range of $12 to $14. At the midpoint of the revised range, S1 Biopharma will raise 36% fewer proceeds than previously anticipated and now commands a market cap of $106 million. S1 Biopharma, which was founded in 2010, plans to list its common shares on the Nasdaq under the symbol “SXB.” MLV & Co. is the sole bookrunner on the deal.
November 24, 2014 ...
ACTAVIS TO BUY ALLERGAN FOR $66 BILLION, TOPPING VALEANT BID -- Botox maker Allergan Inc. (Irvine CA) accepted a $66 billion takeover bid from Actavis Plc (Dublin IRL), ending a seven-month hostile pursuit by activist investor William Ackman and Valeant Pharmaceuticals International Ltd. (Laval Quebec). Actavis offered $219 per share in cash and stock, amounting to billions more than Canada’s Valeant was prepared to pay. Valeant said it would walk away from its Allergan campaign shortly after the deal was announced. The deal marks a surprise win for Allergan, which had fought the Valeant-Ackman alliance in court and among shareholders in one of the healthcare sector’s most complex takeover efforts. Allergan had argued that the Valeant cash-and-stock offer, most recently worth about $54 billion, would hurt its shareholders, given the Canadian drugmaker’s history of cutting research and development spending at companies it acquires. In addition to the higher price tag, the Actavis deal came with only $400 million in R&D cuts for Allergan, far less than the $900 million decrease that Valeant had proposed, the companies said to investors. Actavis’s approach may help the two companies integrate their operations and ensure some of Allergan’s promising experimental eye treatments for macular degeneration and glaucoma remain in the pipeline.
“If these bets turn out well, Actavis will be seen as a better call,” said Morningstar analyst Michael Waterhouse. Ackman in late April disclosed a nearly 10% stake in Allergan and plans to bid for the company together with Valeant. Despite losing his takeover target, Ackman’s Pershing Square Capital Management LP (New York) will earn at least $2.3 billion from Allergan’s buyout by Actavis. The $18 billion hedge fund has roughly 30% of its capital invested in Allergan, whose share price has nearly doubled from the $126.54 it paid earlier this year. Valeant, meanwhile, may find new acquisition targets more willing to push back on its overtures, some of its investors said. Actavis CEO Brent Saunders said that he had reached out to Allergan CEO David Pyott many times during the Valeant-Ackman campaign to express his interest in a combination. The new company will operate from both California, where Allergan is based, and New Jersey. Its tax rate will be 15% compared with Allergan’s current rate of about 26%. Allergan closed the week up 5% at $209.09. Actavis gained 7% to $259.75. Valeant jumped 8% to $145.37.
U.S. WANTS MORE CLINICAL TRIAL RESULTS MADE PUBLIC -- Pharmaceutical companies, medical device makers and academic medical centers would no longer be able to withhold the results of clinical trials under rules proposed by the U.S. Department of Health and Human Services. While millions of Americans participate in trials of experimental drugs and devices to help find new treatments for themselves and others, the findings often aren’t made public, said Harlan Krumholz, a cardiologist and health policy professor at Yale University in New Haven, CT, and head of the Yale-New Haven Hospital Center for Outcomes Research and Evaluation. Under the proposed regulations, any person or company getting funding from the U.S. National Institutes of Health would have to make their clinical trial results available on clinicaltrials.gov, an online database of experiments. Better access to clinical trial findings will help scientists focus on the most important research, reduce duplicative efforts, streamline the development of new therapies and help identify products that are unsafe or ineffective, Margaret Hamburg, Food and Drug Administration commissioner, said in a statement. It would also make sure the efforts of study volunteers are put to the best use possible, she said.
“We owe it to every participant and the public at large to support the maximal use of this knowledge for the greatest benefit to human health,” said NIH Director Francis S. Collins. “This important commitment from researchers to research participants must be upheld.” Trials that aren’t registered in advance can’t be published in major medical journals, or used to win approval of products, according to current rules. As a result, most trials are registered on the clinicaltrials.gov website, which is run by the National Library of Medicine, part of the NIH. While the online database lists about 178,000 trials, only about 15,000 include summaries of the results, according to NIH. That should change with the proposed rules, Krumholz said. “Many people have been doing experiments on people and not sharing the results, even with federal dollars,” Krumholz said. The proposed rules would require companies and investigators to submit summary results even for products that aren’t currently approved or licensed in the U.S. The regulations, crafted by the NIH and the FDA, expand and detail the information required, including the main results of the study and two tables of side effects that result from treatment. The NIH is accepting comments on the proposal for 90 days.
TRACKING WASHINGTON -- House Republicans filed a long-threatened lawsuit Friday against the Obama administration over unilateral actions on the health care law that they say are abuses of the president’s executive authority. The lawsuit--filed against the secretaries of the Health and Human Services and Treasury Departments--focuses on two crucial aspects of the way the administration has put the Affordable Care Act into effect. The suit accuses the Obama administration of unlawfully postponing a requirement that larger employers offer health coverage to their full-time employees or pay penalties. (Larger companies are defined as those with 50 or more employees.) In July 2013, the administration deferred that requirement until 2015. Seven months later, the administration announced a further delay, until 2016, for employers with 50 to 99 employees. The suit also challenges what it says is President Obama’s unlawful giveaway of roughly $175 billion to insurance companies under the law. According to the Congressional Budget Office, the administration will pay that amount to the companies over the next 10 years, though the funds have not been appropriated by Congress. The lawsuit argues that it is an unlawful transfer of funds. Democrats have cast the legal challenge as strange. Republicans, they say, are attacking Mr. Obama for delaying enforcement of a law that they vehemently oppose.
Elsewhere, the Department of Justice announced on Friday it recovered $5.69 billion in civil settlements and judgments under the False Claims Act in fiscal year 2014, with $2.3 billion resulting from false claims cases against federal healthcare programs. The 2014 fiscal year marked the fifth consecutive year the DOJ has recovered more than $2 billion in false claims cases against federal healthcare programs. The continually high recoveries are partially attributable to the Obama administration’s focus on fighting healthcare fraud, including the creation of the Health Care Fraud Prevention and Enforcement Action Team--an interagency task force focused on criminal and civil enforcement of healthcare fraud cases. There were many substantial healthcare fraud settlements in FY 2014 involving the pharmaceutical industry, including the $1.1 billion settlement Johnson & Johnson (New Brunswick NJ) entered into to resolve False Claims Act accusations relating to the company’s promotion and marketing of three of its prescription drugs. False Claims Act cases involving hospitals led to $333 million in recoveries in FY 2014, with Community Health Systems Inc. (Franklin TN) paying $98.15 million to settle allegations it billed Medicare, Medicaid and TRICARE for inpatient care services that should have been provided in an outpatient or observation setting.
FDA/EMA ROUNDUP -- Purdue Pharma LP (Stamford CT) won approval for an extended-release pure hydrocodone painkiller, the first to hit the market deemed to deter abuse. The Food and Drug Administration said it cleared the drug Hysingla ER with a label that indicates the tablet is difficult to abuse via injection or snorting. Closely held Purdue’s Hysingla will compete with the only other approved pure hydrocodone medicine, Zogenix Inc.’s Zohydro. The drugs are intended to be liver-friendly alternatives to drugs including Vicodin that mix hydrocodone with less-potent medicines such as acetaminophen. Prescription opioid painkiller abuse was linked to 17,000 deaths in the U.S. in 2011, according to the Substance Abuse and Mental Health Services Administration. The FDA has pushed companies to develop painkillers that are harder to abuse by recreational users.
Swiss drugmaker Roche Holding AG (Basel) said on Friday that the FDA had approved its drug Avastin as a treatment for ovarian cancer. Roche said regulators had approved Avastin in combination with chemotherapy as a treatment for recurrent cases of cancer that are resistant to platinum-based chemotherapy. Avastin is used to treat different cancer types, including cancers of the colon, lung and kidney. Roche reported $6.25 billion in revenue from the drug in 2013.
Sanofi SA’s (Paris) Lemtrada has finally gained FDA approval for the treatment of patients suffering from relapsing forms of multiple sclerosis (MS). The drug’s U.S. indication, however, is restricted to patients who have responded inadequately to two or more MS drugs. Lemtrada’s label in the U.S. comes with a boxed warning stating that there is a risk of serious, sometimes fatal autoimmune conditions as well as serious and life-threatening infusion reactions. The drug may also cause an increased risk of malignancies including thyroid cancer, melanoma and lymphoproliferative disorders. Some analysts are concerned about the boxed warning and other limitations that may restrict the drug’s sales in the U.S. Moreover, Lemtrada, an intravenously administered drug, will be entering the highly crowded MS market which currently has several oral treatments available like Biogen Idec Inc.’s Tecfidera and Novartis AG’s Gilenya.
Elsewhere, Novartis AG (Basel CHE) won European backing for a treatment against psoriasis that will compete with Amgen Inc.’s Enbrel and may garner more than $1 billion in annual sales. Novartis’s secukinumab, which the company plans to sell under the brand name Cosentyx, was recommended by the European Medicine Agency’s Committee for Medicinal Products for Human Use, for the treatment of moderate-to-severe plaque psoriasis in adult patients, the drugmaker said in a statement. The European Commission, the EU’s executive arm, usually follows the panel’s advice. The drug is the first in a class of therapies called interleukin-17A inhibitors to be recommended as a first-line treatment for the skin disease, a malady that afflicts more than 125 million people globally. Cosentyx may earn Novartis $1.1 billion in sales in 2020, according to analysts’ estimates compiled by Bloomberg.
MEDICAL STOCK SPOTLIGHT -- Can Fite Biopharma Ltd. (Amex) led advancing issues, doubling over the week to $4.80. Analysts at brokerage H.C. Wainwright initiated coverage on shares, setting a “Buy” rating and a $7.00 price target. In addition, Can Fite announced several upcoming and near-term milestones on its CF101 and CF102 indications for liver cancer, rheumatoid arthritis, psoriasis, glaucoma and the development of a business biomarker blood test kit for the A3 adenosine receptor. This latter receptor plays a critical role in the modulation of ischemic diseases as well as in inflammatory and autoimmune pathologies. Analysts expect that Can Fite Biopharma will post $-0.59 earnings per share for the current fiscal year. The Petach Tikva, Israel-based company develops treatments for autoimmune diseases and cancer.
Elsewhere, Celldex Therapeutics Inc. (Nasdaq) surged $6.67, or 47%, to $20.83 after the company announced positive results of its immunotherapy in treating a certain type of brain tumor. The company reported that its experimental, targeted immunotherapy called rindopepimut, combined with Roche Holding AG’s Avastin, delayed tumor growth and extended survival in patients with a specific kind of recurring brain tumor. The interim results came from a mid-stage trial, and the data was presented during a medical meeting on Friday. Needham, MA-based Celldex uses applications of immunology to prevent and treat diseases. The company’s products treat autoimmune diseases, cardiovascular diseases, cancer, and inflammation, as well as infectious diseases and organ transplant rejection.
And Agios Pharmaceuticals Inc. (Nasdaq) shot up $10.78, or 13%, to $94.84 after equities research analysts at Canaccord Genuity upped their target price on shares from $97.00 to $111.00. The brokerage currently has a “Buy” rating on the stock. One research analyst has rated the stock with a “Hold” rating and three have assigned a “Buy” rating to the company. The stock currently has a consensus rating of “Buy” and a consensus price target of $73.50. Analysts expect that Agios will post $-1.42 EPS for the current fiscal year. Cambridge, MA-based Agios discovers and develops therapeutics in the field of cancer metabolism.
But NeoStem Inc. (Nasdaq) skidded $2.13, or 35%, to $4.04 after the biotech company announced poor results from a trial of its proprietary cardiac stem-cell therapy. NBS10 missed two primary endpoints in the study to test the therapy’s efficacy. The stem-cell therapy comes from a patient’s own bone marrow and is injected into patients after a heart attack. The stem cells are then supposed to help blood flow and build cardiac muscle. NeoStem’s trial used non-invasive imaging to monitor blood flow through the heart six months after one dose of NBS10 or a placebo. The study showed no difference between NBS and placebo, NeoStem said. The New York-based company announced the data at the American Heart Association annual meeting last week. NeoStem develops and manufactures cell therapies.
IPO SECTOR -- Second Sight Medical Products Inc. (Sylmar CA), which sells camera-based retinal implants that restore partial vision to the blind, raised $32 million by offering 3.5 million shares at $9, as expected. Second Sight Medical lists on the Nasdaq under the symbol “EYES.” MDB Capital Group acted as the sole bookrunner on the deal. The company’s devices provide electrical stimulation of the retina to induce visual perception in blind individuals. The device is currently only approved for individuals with retinitis pigmentosa, a hereditary eye disease that can cause blindness and affects an estimated 1.5 million people worldwide and 100,000 in the U.S. It received marketing approval in Europe in 2011 and in the U.S. in 2013. Primary shareholders include co-founder and Chairman Alfred Mann, who founded MannKind Inc. Second Sight shares were snapped up, closing the week $12.14 higher, or 235%, at $21.14.
November 17, 2014 ...
U.S. RELEASES LOWER 2015 OBAMACARE ENROLLMENT FORECAST -- The Obama administration last week forecast that as many as 9.9 million people will sign up for health coverage under Obamacare this year, 3 million below a previous estimate from the Congressional Budget Office. Employers aren’t dropping their health benefits in the numbers once anticipated, and programs created by the Patient Protection and Affordable Care Act will be slower to reach full enrollment than the budget office expects, the Department of Health and Human Services said in a report. That equates to between 9 million and 9.9 million people enrolled through new government-run insurance markets created by the law. Coming in below the CBO estimate would undermine the Obama administration’s effort to convince the public that its signature domestic policy initiative is working. It’s possible the administration is just giving itself an easier goal to beat, said Dan Mendelson, the CEO of Avalere Health LLC, a Washington consulting firm. “If you set low expectations, you’re less likely to disappoint,” he said. “To me, these are low expectations. We expect the numbers to come in higher.” The insurance markets, called exchanges, are designed to allow people who don’t have coverage through an employer to compare prices and buy a health plan, often with the assistance of government subsidies for monthly premiums.
Enrollment opened for 2015 on Saturday and closes Feb. 15, a window that is three months shorter than last year. Sylvia Mathews Burwell, the HHS secretary, said she’ll consider enrollment to be a success this year if the U.S. uninsured rate continues to decline. About 13.4% of Americans are without coverage this year, according to Gallup Inc. (Washington DC), the lowest rate the organization has reported since it started tracking the figure in 2008. “We want to make progress on that fundamental number of reducing the uninsured,” Burwell said. “We do have a shorter period of time and we’re moving to a group of people that will be harder to reach.” At least three out of four people who sign up for the exchanges for the first time this year will have been previously uninsured, according to the administration’s projection. HHS expects 83% of the 7.1 million people covered as of last month to re-enroll this year, Burwell said.
NEW YORK EBOLA PATIENT CRAIG SPENCER GOES HOME -- Craig Spencer, the New York City doctor who contracted Ebola while treating patients in Guinea, was declared free of the virus and released from Bellevue Hospital Center last week after 20 days of treatment. “Today I am healthy and no longer infectious,” Spencer said at a news briefing at the city-run hospital in Manhattan, where he was joined by Mayor Bill de Blasio and local health officials. “My early detection, reporting and now recovery from Ebola speaks to the effectiveness of the protocols that are in place for health staff returning from West Africa.” After being swarmed by a throng of photographers, Spencer, 33, received hugs from the mayor and his wife, Chirlane McCray, reserving the longest embrace for his physician, Laura Evans, who supervised his care. “The hugs were both because we developed strong bonds with him during his nearly three weeks in the hospital, and the care team really feels very close to him,” Evans, the associate chief of medicine at Bellevue, said after the briefing. “The hugs are mostly for that and also to dispel some of these false rumors about Ebola” that don’t take into account how difficult is it for humans to transmit the disease.
Spencer served as a volunteer with Doctors Without Borders (Geneva CHE), an aid group that has sent medical professionals to fight the outbreak at its West African source. He fell ill on Oct. 23, six days after returning to New York from the outbreak zone, and was rushed to Bellevue and put in a special isolation unit. About nine hours later, officials confirmed the infection. His treatment included brincidofovir, an experimental drug made by Chimerix Inc. (Durham NC), as well as a blood transfusion from another Ebola survivor, which can boost virus-fighting antibodies in a patient. “Dr. Spencer poses no public health risk,” the city’s Health and Hospitals Corp., the agency that operates Bellevue, said. He received a “rigorous course of treatment and testing,” the agency said. The Ebola outbreak, concentrated in Liberia, Guinea and Sierra Leone, has infected more than 13,000 worldwide and killed more than 4,800, according to the World Health Organization.
TRACKING WASHINGTON -- Republicans in the U.S. Congress will soon move to kill a medical device tax imposed less than two years ago under President Barack Obama’s healthcare law, congressional aides and analysts said last week. The 2.3% excise tax on sales of most medical devices sold in the United States helps fund the law and applies to products ranging from bedpans to heart pacemakers. It took effect in January 2013 and is projected to raise about $30 billion a year in government revenue over 10 years. Though no full-scale repeal of Obamacare is expected, even with the Senate now under Republican control, the move against the tax is part of efforts to gradually chip away at the law. The recent elections will elevate Republican Senator Orrin Hatch, a long-standing opponent of the tax, to the chairmanship of the tax-writing finance committee in the Senate. “The senator will continue to examine and support every viable opportunity to permanently repeal Obamacare’s onerous tax on medical devices,” said his spokeswoman Julia Lawless. The Senate in March 2013 approved a symbolic resolution calling for repeal of the tax, with more than 30 Democrats joining Republicans in support of the non-binding measure.
Elsewhere, Medicare will cover annual screenings for lung cancer for older Americans with long histories of heavy smoking, the federal government said in a proposal that would cover an estimated four million people, many of whom are at greatest risk for the disease. Last week’s draft decision by the Centers for Medicare and Medicaid Services would extend coverage for CT scans to Medicare beneficiaries who smoked at least a pack a day for 30 years or the equivalent, even if they quit as long as 15 years ago. Scans would cost recipients nothing; the coverage would apply to beneficiaries through age 74. The proposal follows a more sweeping recommendation last year by an influential government health panel that such smokers ages 55 to 80 get annual screenings, a policy shift that experts said had the potential to save 20,000 lives a year. That recommendation focused on current and former smokers at highest risk, a population of about 10 million Americans. Under the Affordable Care Act, private insurers must cover such screenings. But the law was silent on whether Medicare had to do so. Last week’s proposal made it clear that high-risk Medicare recipients would be included.
FDA/EMA ROUNDUP -- An advisory panel to the U.S. Food and Drug Administration recommended for the first time that the 31-year ban preventing gay and bisexual men from donating blood should be partially ended, placing the nation’s policy in line with other countries. Men who had sex with men anytime since 1977 are barred from giving blood in the U.S., a policy that dates back to 1983 because of concern that the AIDS virus could be transmitted through blood transfusions. Groups like the American Red Cross say that risk is infinitesimal in many cases, not enough to justify a full ban that prevents much-needed donations. Doctors and blood-donation advocates who advise the U.S. Department of Health and Human Services voted 16-2 to suggest that men who have had sex with men should be able to give blood after being abstinent for one year. Their recommendation will be considered by a group of advisers to the FDA in a Dec. 2 meeting. While the FDA doesn’t have to follow either panel’s advice, their recommendations are considered influential.
Elsewhere, West Pharmaceutical Services Inc. (Exton PA) won FDA clearance for its innovative NovaGuard SA safety system that prevents needle-sticks by providing a mechanism that can be activated to cover the needle immediately after injection. It has an indicator if the shield has been damaged and will become non-functional if that happens to make sure it’s disposed of properly. The device is compatible with prefilled ISO standard glass syringes.
In the wake of a decision by Sarepta Therapeutics Inc. (Cambridge MA) to delay submission of a new drug application (NDA) for eteplirsen, its promising new experimental agent for Duchenne muscular dystrophy (DMD), until the middle of next year, the FDA has taken the unusual step of issuing a statement explaining its position. According to Sarepta, the delay in seeking drug approval is necessary to accommodate inclusion of additional data requested by the FDA. However, the delay is raising concerns among patients and clinicians who were anticipating the drug application to be submitted by the end of this year. In its statement, the FDA said it understands “the dire urgency of the situation and the importance of our actions to the DMD community.” It also said that since April, it “has been working intensively to help Sarepta provide the additional data and analyses needed to support an NDA.” If approved, the drug is expected to treat about 13% of patients with DMD in the United States.
And the European Medicines Agency’s choice of Guido Rasi as executive director three years ago was overturned by a European Union panel, placing the leadership of the EU’s drug regulator in limbo. Emil Hristov, a former executive director of the Bulgarian Drug Agency who also applied for the job, appealed to the European Union Civil Service Tribunal in 2012, saying there were conflicts of interest in the decision to hire Rasi, according to a document posted on the website of the E.U. Court of Justice. The tribunal on Friday annulled the European Commission decision to adopt a short list of candidates that included Rasi and left out Hristov, the London-based EMA said. As a result, the EMA board’s choice of Rasi on Oct. 6, 2011, has been annulled, the agency said. Hristov said the selection committee shouldn’t have included two members of the board, of which Rasi also was a member. The agency and the commission, which is the E.U.’s executive branch, are getting legal advice, according to the EMA statement.
MEDICAL STOCK SPOTLIGHT -- Orexigen Therapeutics Inc. (Nasdaq) led advancing issues, rocketing $1.75, or 45% over the week, to $5.65, following strong third-quarter results. Revenue for the quarter came in at $30.9 million, up 350% from last year’s quarter and crushed analysts’ estimates of $10.2 million. Earnings per share were up 147% to 9 cents, well above analysts’ estimates of an EPS loss of 12.5 cents. The robust gain in revenue is attributed to the recent approval of the company’s anti-obesity drug Contrave by U.S. regulators, and its launch by marketing partner Takeda Pharmaceuticals. Orexigen CEO Michael Narachi said: “In addition to strong commercial resourcing, Takeda is bringing innovative approaches to the Contrave launch by supporting the patient’s complete approach to weight management with companion programs, such as a weight loss program called Scale Down as well as Contrave Direct Save.” La Jolla, CA-based Orexigen also expects Contrave to be granted approval in Europe.
Elsewhere, Achillion Pharmaceuticals Inc. (Nasdaq) surged $3.86, or 38%, to $13.97. At last week’s Annual Meeting for the Study of Liver Diseases in Boston, Achillion gave poster presentations on its hepatitis C virus (HCV) product candidates. In a phase II pilot study evaluating eight-week treatment of its NS5A inhibitor, ACH-3102, in combination with Gilead Sciences Inc.’s Sovaldi (sofosbuvir) in treatment-naive HCV genotype 1 patients, the interferon-free, ribavirin-free regimen demonstrated 100% sustained viral response in 12 patients after completion of therapy. Sustained viral response 12 weeks after the completion of therapy (SVR12) is considered cured. Sovaldi’s SVR12 (in combination with peg-interferon alfa and ribavirin) is 90% for HCV-1. Gilead’s Harvoni’s (sofosbuvir plus ledipasvir) is 94%-99%.
And ICU Medical Inc. (Nasdaq) climbed $14.55, or 20%, to $85.71. Brokerage Trade-Ideas LLC identified San Clemente, CA-based ICU Medical as a “strong and under the radar candidate.” Such stocks tend to be worthwhile to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others “discover” how good the stock is performing. ICU Medical develops, manufactures, and sells medical devices used in infusion therapy, oncology, and critical care applications. Currently 4 analysts that rate ICU Medical a “Buy,” no analysts rate it a “Sell,” and none rate it a “Hold.”
But Baxano Surgical Inc. (Nasdaq) plunged 86% to $0.03 after announcing it has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. The bankruptcy filing was done in order to facilitate a going concern sale of Baxano’s minimally invasive products under Section 363 of the Bankruptcy Code. “We believe this is the best course of action for the company at this point in time and is in the best interests of all of our stakeholders,” stated Ken Reali, President and CEO of Wilmington, NC-based Baxano. “As we move through this transaction process we will continue to focus on supporting our commercial business and the surgeons and hospitals that use our products.”
IPO SECTOR -- Fibrogen Inc. (San Francisco), at work on an oral anemia therapy and an antibody for idiopathic pulmonary fibrosis (IPF), priced 8.1 million shares at $18 each Friday, coming through near the top of its expected range and grossing $146 million. Israel’s NeuroDerm Ltd. (Rehovot), on the other hand, came in well below its previously expected $13 to $16 a share, moving 4.5 million units at $10 each to bring in $45 million for its Parkinson’s disease treatments. For Fibrogen, the new cash will support the development of FG-3019, an antibody for connective tissue growth factor, which is integral to the fibrosis process. The treatment is in the midst of a phase II trial on IPF, a deadly disease that leaves scars on the lungs, and would compete with recently approved drugs from Boehringer Ingelheim GmbH and Roche Holding AG in what is expected to be a blockbuster market. The biotech’s most advanced asset is roxadustat (FG-4592), a phase III pill for anemia whose promise convinced AstraZeneca Plc to commit as much as $1.6 billion in exchange for U.S. and Chinese rights and Astellas Pharma Inc. to promise up to $917.6 million in an agreement that covers Japan, Europe and the Middle East. Fibrogen’s shares list on the Nasdaq under the symbol “FGEN.” Goldman Sachs, Citi and Leerink Partners acted as lead managers on the deal. Shares closed the week up 22% at $22.00.
November 10, 2014 ...
OBAMA SEEKS $6.2 BILLION TO COMBAT EBOLA -- President Barack Obama last week asked Congress for $6.2 billion in emergency funding to combat the spread of Ebola in West Africa and reduce risks for U.S. citizens. The funding will include about $4.6 billion for immediate actions and $1.5 billion in a contingency fund to assure access to resources as needed, according to a 28-page request to House and Senate leaders from the Office of Management and Budget. The request is “to ensure that our doctors, scientists and troops have the resources that they need to combat the spread of Ebola in Africa and to increase our preparedness for any future cases here at home,” Obama said at a White House news conference. In the U.S., the request would boost public health systems with the funding of 50 Ebola treatment centers, improve readiness with states and increase monitoring of travelers, according to documents from the budget office. Overseas, the goal is to “contain and mitigate the outbreak in West Africa, speed efforts to obtain and test vaccines and therapeutics, and further reduce risks to Americans by helping vulnerable countries” contain the virus, the budget office said. The World Health Organization and Doctors Without Borders say the current global Ebola response has been inadequate. More health workers and supplies are urgently needed to prevent the disease from spiraling out of control, the groups have said.
The request seeks $2.4 billion for the Department of Health and Human Services for domestic public health services, infection control, labs, tracking contacts and related needs. Another $2.1 billion is for the State Department and its Agency for International Development, $112 million for the Pentagon’s research agency to develop a vaccine for temporary immunity to Ebola, and $1.5 billion in a contingency fund, split between Health and Human Services, and the State Department and its international assistance programs. As of Oct. 24, the U.S. has committed more than $400 million to fight Ebola, the budget office said. “Today’s administration request for additional funding will be considered thoroughly over the next month, in the context of negotiations on annual appropriations legislation to fund the entire federal government by Dec. 11,” Jennifer Hing, spokesman for House Appropriations Committee Chairman Hal Rogers, said. By comparison, Obama requested $30.4 billion to fight the HIV virus in his fiscal 2015 budget, according to the Kaiser Family Foundation (Menlo Park CA). There are 35 million people world-wide infected with HIV, said the WHO.
ALLERGAN SAID TO BE TALKING WITH ACTAVIS -- Allergan Inc. (Irvine CA), the Botox maker seeking to fend off a hostile takeover by Valeant Pharmaceuticals International Inc. (Laval Quebec), is in active talks with Actavis Inc. (Dublin IRL) on a potential alternative deal, people with knowledge of the matter said. The discussions may not lead to an agreement, said the people, who asked not to be identified because the talks are private. Allergan said in a filing last week that it’s in talks with a third party that may lead to merger negotiations, without providing further information. Allergan has been trying to fend off what’s been valued as a $54 billion hostile bid by Valeant. Allergan has called the offer “grossly inadequate” and alleged that the Canadian company would gut its research and development budget and use its cash flow to pay down debt accumulated from previous acquisitions. Actavis isn’t likely to make a formal offer for Allergan unless it thinks Allergan’s shareholders will probably approve it, one of the people said. That approval may be tougher to get after a court ruling last week allowed hedge-fund investor Bill Ackman, Allergan’s largest shareholder, to vote on any acquisition, the person said. Ackman has been battling the company in court over a plan to oust directors opposed to Valeant’s acquisition.
Ackman now wants Allergan to run an auction since it’s in talks with a third party. “Now that the company is seriously considering a sale, it is incumbent upon the board to maximize shareholder value by running a sale process that will generate the highest value,” Ackman said in a letter to Allergan’s board Friday. “We believe that Valeant can pay substantially more for Allergan” than Actavis, he said. Ackman’s fund, Pershing Square Capital Management LP (New York), took a 9.7% stake in Allergan this year to try and force a deal with Valeant. The billionaire investor has called for the replacement of Allergan board members opposed to a merger. Allergan could further its goal of fending off Valeant by merging with another company. Actavis CEO Brent Saunders declined to comment directly on whether his company had approached Allergan. “Allergan is a terrific company with great assets and a great team of people,” he said Friday. Mergers remain a priority for Actavis, Saunders said. Allergan shares closed the week up 3% at $196.00, above Valeant’s current cash-and-stock offer of about $180. Valeant slid 5% to $126.11. The Canada-based company has said it’s prepared to raise its bid to at least $200 a share. Actavis, which makes generic drugs and products like Alzheimer’s treatment Namenda, rose 1% to $245.91.
TRACKING WASHINGTON -- The re-election of four Republican governors means that the future of Medicaid expansion under the Affordable Care Act is unlikely to change course. Republicans in Florida, Wisconsin, Maine and Kansas won their bids for re-election. Three of them--Scott Walker in Wisconsin, Sam Brownback in Kansas and Paul LePage in Maine--oppose expansion of the program. Rick Scott, the Republican governor of Florida, has endorsed the expansion, which would extend coverage to an estimated 848,000 people, but has never advocated for it forcefully, and he is not expected to now. And one state that has expanded its program might reverse course. In Arkansas, the legislature has to reauthorize the program every year with a three-quarters majority, leaving the expansion vulnerable to political shifts. Asa Hutchinson, a Republican who appears to be unenthusiastic about the expansion, was elected governor. And opponents of expansion picked up two critical votes in the state Senate. Alaska remains the one state where the election could lead to further expansion of the program. The health law sought to expand Medicaid to every resident earning below an income threshold of about $16,000. But a 2012 Supreme Court decision made the expansion optional.
Elsewhere, the Supreme Court agreed Friday to hear a new challenge to President Barack Obama’s healthcare law. The justices said they will decide whether the law authorizes subsidies that help millions of low- and middle-income people afford their health insurance premiums. A federal appeals court upheld Internal Revenue Service regulations that allow health-insurance tax credits under the Affordable Care Act (ACA) for consumers in all 50 states. Opponents argue that most of the subsidies are illegal. The long-running political and legal campaign to overturn or limit the 2010 health overhaul will be making its second appearance at the Supreme Court. The justices upheld the heart of the law in a 5-4 decision in 2012 in which Chief Justice John Roberts provided the decisive vote. In the appeal accepted Friday, opponents of the subsidies argued that the court should resolve the issue now because it involves billions of dollars in public money. The court rarely steps into a case when there is no disagreement among federal appellate courts, unless a law or regulation has been ruled invalid. But at least four justices, needed to grant review, apparently agreed with the challengers that the issue is important enough to decide now.
FDA/EMA ROUNDUP -- Johnson & Johnson (New Brunswick NJ) won U.S. Food and Drug Administration approval for its hepatitis C drug Olysio to be used in combination with Gilead Sciences Inc.’s (Foster City CA) Sovaldi, making it the second all-oral treatment available for the most common form of the virus. The FDA cleared the once-daily treatment for patients with hepatitis C genotype 1, J&J said in a statement. The combination allows Olysio to be used without the standard therapies including ribavirin and interferon, which are injections that have flu-like side effects. The price of hepatitis C treatments has been criticized by insurers and lawmakers since Gilead’s Sovaldi was approved in December with an $84,000 price tag for a full course of treatment. The FDA on Oct. 10 cleared Gilead’s Harvoni, a once-daily pill that treats patients with the most common form of the virus without ribavirin or interferon at an estimated cost of $94,500 for 12 weeks.
Elsewhere, Rockwell Medical Inc. (Wixom MI) stock soared last week after the FDA’s advisory committee approved its Triferic drug on Thursday. The drug in question is used for the treatment of iron deficiency and hemoglobin maintenance in patients who have stage 5 chronic kidney disease. Triferic went through two phase III trials to determine its efficacy. Roughly 1,400 patients were treated under the clinical trials, and the drug’s safety results were identical to the placebo groups’. The advisory committee voted 8 to 3 in favor of the drug, which reaffirmed that Triferic’s benefits outweigh its adverse effects. However, another trial needs to be conducted to determine whether or not Triferic can reduce erythropoiesis stimulating agent in adult hemodialysis-dependent patients. Rockwell shares closed the week up 21% at $10.55.
Some Ebola patients need to forgo potentially life-saving treatments so researchers can see how they fare compared to people who get the experimental drugs, an FDA official said. The idea of using placebos in West Africa, where many of the trials may be done, has created an ethical debate pitting one of the world’s deadliest pathogens against the need to better understand exactly which drugs are most effective. While randomized trials would be “challenging,” they’re needed to understand whether or how well the medicines work, said Edward Cox, director of the FDA’s Office of Antimicrobial Products. Trials would compare “the best supportive care versus the best supportive care with a drug,” he said. The agency has a meeting this week to hear from companies making experimental treatments, Cox said. He declined to name the companies, saying “those products are out there in the news.” Chimerix Inc. (Durham NC), Mapp Biopharmaceutical Inc. (San Diego CA), Tekmira Pharmaceuticals Corp. (Burnaby BC) and FujiFilm Holdings Corp. (Minatu-Ku JPN) are among the firms developing medicines.
And Geron Corp. (Menlo Park CA) said the FDA had lifted the clinical hold on the new drug application (NDA) for the company’s cancer therapy candidate, imetelstat. The significance of termination of the clinical hold lies in the fact that imetelstat is the only drug in the clinical-stage company’s pipeline, making it the sole driver of the biotech’s future gains. Imetelstat is a “first-in-class” telomerase inhibitor being studied as a treatment for hematologic myeloid malignancies. The FDA had placed the clinical hold on imetelstat’s investigational new drug application in March due to the drug’s adverse effect of low-grade liver function test (LFT) abnormalities in subjects with essential thrombocythemia (ET) or polycythemia vera (PV) being tested in a phase II study.
MEDICAL STOCK SPOTLIGHT -- Atara Biotherapeutics Inc. (Nasdaq) led advancing issues, soaring $9.57, or 50% over the week, to $28.75 after rallying 29% recently after pricing its IPO well below its target range, raising $55 million. The Brisbane, CA-based company, led by Dr. Isaac Ciechanover, on Oct. 23 sold 5 million shares at $11 each. It had been expected to sell its stock for between $14 and $16 each. Shares began trading on the Nasdaq at $10.57, more than 4% below their IPO price. Atara was actually on the IPO calendar back in late July, but delayed its offering after getting new results about an ovarian cancer drug that it had to disclose before it could go public. Atara was launched two years ago by Amgen Inc. and Kleiner Perkins Caufield & Byers with six drugs that Amgen licensed to the company that targeted kidney diseases, cancer and other conditions.
Elsewhere, ANI Pharmaceuticals Inc. (Nasdaq) surged $12.04, or 35%, to $46.00 after being upgraded by Zacks from a “Neutral” rating to an “Outperform” rating. The company released its earnings data last week, reporting $0.66 of earnings per share (EPS) for the latest quarter, beating the consensus estimate of $0.46 by $0.20. The company had revenue of $17.40 million for the quarter, compared to the consensus estimate of $14.60 million. The company’s revenue for the quarter was up 123% on a year-over-year basis. The company provided EPS guidance of $0.60-$0.65 for the fourth quarter, compared to analysts’ estimates of $0.42. The company issued revenue guidance of $17-18 million, compared to the consensus estimate of $15 million. West Baudedtte MN-based ANI Pharma is an integrated specialty pharmaceutical company developing, manufacturing and marketing branded and generic prescription pharmaceuticals.
And Applied Genetics Technologies Corp. (Nasdaq) shot up $6.10, or 30%, on no particular news. The Alachua, FL-based company develops cures for rare lung and eye diseases. AGTC was founded by five scientific leaders in the use of viral vectors for gene therapy and began operations in 2001. They subsequently secured rights to a portfolio of strategically vital intellectual property in the application of Adeno-Associated Virus (AAV) to gene therapy. Since that time the company has signed licenses to over 40 U.S. and foreign patents, raised over $45 million in venture financing from blue chip investors and has five products in active development, one of which is partnered to Genzyme Corp.
But Nymox Pharmaceutical Corp. (Nasdaq) plunged 85% to 75 cents after the biopharmaceutical company announced that two phase III studies of its prostate enlargement treatment failed to produce the desired results. The drug, NX-1207, is supposed to treat benign prostatic hyperplasia and was the company’s main developmental focus. The trials did not show a significant improvement in patients’ conditions when compared to a placebo, though the treatment did show promising results for certain types of low-grade, localized prostate cancer, according to the St. Laurent, Canada-based company.
IPO SECTOR -- INC Research Holdings Inc. (Raleigh NC), a contract research organization specializing in central nervous system, cancer and complex diseases, raised $150 million Friday by offering 8.1 million shares at $18.50, the midpoint of its $17 to $20 range. INC Research lists on the Nasdaq under the symbol “INCR.” Goldman Sachs and Credit Suisse acted as joint bookrunners on the deal. INC Research provides phase I to phase IV clinical development services for biopharmaceutical and medical device companies. It estimates the addressable global clinical development market to be $56 billion, of which nearly $21 billion is outsourced, representing a 37% penetration rate which it expects to grow to 46% by 2018. Shares closed the week up 11% at $20.49.
November 3, 2014 ...
OBAMA DEFENDS CDC'S EBOLA RULES AS SENSIBLE; BASED IN SCIENCE -- President Obama said that new Ebola guidelines from the Centers for Disease Control and Prevention were “sensible, based in science” and would help keep Americans safe while not discouraging volunteers from traveling to West Africa to battle the disease at its source. The President then said the U.S. must keep sending health workers to West Africa to “snuff out” Ebola at its source, warning on Friday for the second straight day that travel bans and quarantines won’t keep the U.S. safe. The President hosted at the White House medical professionals who have returned from the Ebola-stricken region or are about to go there. The meeting was part of a strategy to push back against a patchwork of responses by state and local officials that he said would discourage doctors and nurses from assisting in the battle against the deadly disease. “We can’t hermetically seal ourselves off,” Obama said. “As long as Ebola exists in the world, no one can promise that there won’t be any more cases in America or anyplace else.” The President said he was frustrated by reactions by public officials, whom he didn’t name, that amount to “hiding under the covers.” Discouraging doctors, nurses and public health specialists from visiting Africa by imposing unnecessary quarantines upon their return raises the risk of Ebola spreading, he said.
Obama spoke hours after Defense Secretary Chuck Hagel ordered all U.S. troops to be held for 21 days for monitoring after their duty in the Ebola region, adding to conflicting messages about the government’s response. The White House and the U.S. Centers for Disease Control and Prevention have advocated against a blanket quarantine for those who don’t show any symptoms of the deadly virus. State and local authorities have power to act on their own and they are using it. Governors Andrew Cuomo of New York, Chris Christie of New Jersey and Pat Quinn of Illinois have established mandatory quarantine policies with varying degrees of strictness. Meanwhile, Craig Spencer, the New York doctor with Ebola, is now in stable condition after more than a week of treatment at Bellevue Hospital Center in Manhattan. Spencer’s improvement from his previous condition of “serious but stable” is based on his “clinical progress and response to treatment,” according to a statement Saturday from the New York City Health and Hospitals Corp., the network that includes Bellevue.
PFIZER'S 3Q BEATS ESTIMATES ON EMERGING MARKET GROWTH -- Pfizer Inc.’s (New York) earnings topped analysts’ expectations last week, helped by demand for its cancer drugs and medicines in emerging markets. The company did not, however, signal any acquisition plans in the wake of its recent failed efforts to buy rival British drugmaker AstraZeneca Plc (London). Following the report, Pfizer’s shares rose the remainder of the week. The company’s third-quarter earnings slipped to 57 cents per share from 58 cents a share in the year-earlier period. Sales fell 2% to $12.36 billion, hurt by generic competition and expiration of a longstanding deal with Amgen Inc. (Thousand Oaks CA) to co-market its Enbrel arthritis drug. But they topped Wall Street’s expectations of $12.24 billion. Analysts had expected the company to post quarterly earnings of 55 cents a share on revenue of $12.24 billion. Pfizer tightened its full-year earnings forecast to between $2.23 and $2.27 per share from its prior outlook of $2.20 to $2.30. The company officially gave up its six-month pursuit of AstraZeneca after its final $118 billion bid was rejected on May 26. It had hoped to base the combined company in Britain, which has lower taxes than the United States, a maneuver called tax inversion. Under U.K. takeover rules, Pfizer can make another run at AstraZeneca later this month, but the company did not mention its intentions in last week’s earnings report.
U.S. drugmaker AbbVie Inc. (North Chicago) two weeks ago gave up its $55 billion quest to buy Dublin drugmaker Shire Plc, another tax-inversion deal, because of new U.S. Treasury tax rules that made the deal less attractive. “Now that (AbbVie) has canceled its deal, it’s less likely that Pfizer will move ahead” with its own attempt at AstraZeneca, said Edward Jones analyst Ashtyn Evans. But given Pfizer’s predicted lack of growth over the next few years because of patent expirations, Evans said Pfizer “will still have to do something, like breaking up the company or making a big acquisition.” In the next four years, generic rivals will challenge blockbuster Pfizer products such as painkiller Celebrex, nerve pain treatment Lyrica and anti-impotence drug Viagra. The three drugs, with combined annual sales of almost $10 billion, generate about 20% of current company sales. Lyrica sales jumped 16% to $1.32 billion in the latest quarter, while Viagra sales fell 7% to $427 million due to generic competition in Europe. Sales of Celebrex, which goes generic in the United States in December, rose 2% to $764 million. The company stressed that its board had authorized a new $11 billion share repurchase program over time. Pfizer closed the week up 3% at $29.95.
TRACKING WASHINGTON -- Support for President Barack Obama’s signature healthcare law has declined among Americans, and the outcome of the November midterm elections will likely shape the future direction of Obamacare, a Harvard University analysis shows. The review by the Harvard School of Public Health of 27 public opinion polls by 14 organizations, published last week in the New England Journal of Medicine, showed support for the Affordable Care Act was deeply divided along political lines. Some 56% of likely Republican voters said they want the next Congress to repeal the law, while an additional 27% of such conservative likely voters favor scaling it back, the analysis found. Meanwhile, 74% of Democrats expected to vote Nov. 4 said they want lawmakers to move forward with Obamacare next year. Of those, 30% of respondents said they backed implementing the current law, while 44% said they supported expanding its scope. “The polling results point clearly to why the election outcome will matter for the ACA,” said Robert Blendon, a Harvard School of Public Health professor and co-author of the report. Public support for the law fell to 40% in 2014 from 44% in 2012 and 42% in 2010, while opposition to the measure rose to 51% from 45% in both 2012 and 2010, according to the review.
Elsewhere, a peculiar bureaucratic rule led Medicare’s prescription drug program to pay for costly medications even after the patients were dead. That curious policy is now getting a second look. A report released Friday by the Health and Human Services Department’s Inspector General said the Medicare rule allows payment for prescriptions filled up to 32 days after a patient’s death--at odds with the program’s basic principles, not to mention common sense. “Drugs for deceased beneficiaries are clearly not medically indicated, which is a requirement for (Medicare) coverage,” the IG report said. It urged immediate changes to eliminate or restrict the payment policy. Investigators examined claims from 2012 for a tiny sliver of Medicare drugs--medications to treat HIV, the virus that causes AIDS--and then cross-referenced them with death records. They found that the program paid for drugs for 158 beneficiaries after they were already dead. The cost to taxpayers: $292,381, an average of $1,850 for each beneficiary. Medicare’s “current practices allowed most of these payments to occur,” said the report. It underscored that the problem extends beyond HIV drugs. Medicare said it’s working on a fix. Source: Associated Press
FDA/EMA ROUNDUP -- AstraZeneca Plc (London) announced that it has received the U.S. Food and Drug Administration’s approval for its experimental drug Xigduo XR as a “daily treatment for type 2 diabetes” for individuals 18 years of age or older. The drug, which is a combination of “glucose-lowering agents dapagliflozin and metformin hydrochloride,” has previously been approved for sale in Australia for the same indication, while Xigduo, which uses an “immediate-release form of metformin,” is authorized for sale in the European Union. Xigduo XR, which combines sodium-glucose cotransporter 2 (SGLT2) inhibitor and metformin, is the first tablet of its kind to win the FDA’s approval for the indication. SGLT2 inhibitors are a fairly new category of medicines that work by removing glucose from the body through the patient’s kidneys.
Elsewhere, the FDA approved a vaccine for a dangerous strain of meningitis that caused outbreaks last year at Princeton University and the University of California, Santa Barbara. The vaccine, which is made by Pfizer Inc. (New York) and is to be called Trumenba, is aimed at preventing a variety of bacterial meningitis known as serogroup B. Because the bacteria spread through close physical contact like coughing, kissing and sharing eating utensils, outbreaks--though rare--have occurred on college campuses and other places where people live in close quarters. Pfizer had been in a race with the Swiss drugmaker Novartis AG to win approval in the United States of a vaccine for serogroup B meningitis.
The FDA authorized use of two new diagnostic tests for Ebola that can produce results in two hours, compared with what can usually take four hours. The agency said it was giving emergency use approvals to two tests from BioFire Defense LLC (Murray UT), one for use in hospitals and commercial laboratories, the other only in labs designated by the U.S. Department of Defense. The commercial product is called the FilmArray Biothreat-E test. The test is used with an instrument available in many laboratories. Under the federal emergency use authorization power, the FDA has the ability to make such medical products available in the case of chemical or biological threats. This includes public health emergencies, such as the current one involving thousands of Ebola cases in West Africa and the appearance of a small number in the U.S.
And a panel of advisers to the FDA voted 9-1 in favor of approving Japanese drugmaker Daiichi Sankyo Co.’s (Tokyo) blood thinner for use in some patients with atrial fibrillation. The drug, edoxaban, is a once-daily anticoagulant that inhibits Factor Xa, a protein that plays a central role in blood-clotting. If approved, it would compete with three other medicines already vying to displace a decades-old treatment. Edoxaban is a potential treatment for non-valvular atrial fibrillation, a particular form of a condition characterized by a rapid, irregular heartbeat that is often the cause of strokes. According to late-stage trial data submitted by Daiichi, the drug is as effective--and safer than--warfarin, an anticoagulant that has been on the market for more than half a century. The FDA is not obligated to follow the recommendations of its advisory panels, although it typically does so.
MEDICAL STOCK SPOTLIGHT -- Receptos Inc. (Nasdaq) led advancing issues, soaring $36.25, or 54% for the week, to $103.65, and the company got multiple price-target increases after its bowel-disease drug succeeded in a midstage trial. San Diego-based Receptos announced that its drug RPC1063 had proven significantly better than a placebo in patients with ulcerative colitis (UC), a disease involving inflammation and ulcers in the colon. At the end of eight weeks, 58% of patients on the one-milligram dose had responded to the drug, and 16% were in clinical remission. The company’s press release noted that these results were consistent with those for RPC1063 in multiple sclerosis, which caused something of a sensation in September. Expectations on Wall Street for the bowel-disease tests, though, had been fairly low.
Elsewhere, Vitae Pharmaceuticals Inc. (Nasdaq) rocketed $4.13, or an additional 45%, to $13.24 after rising 45% the previous week. The clinical-stage biotechnology company recently announced positive top-line results from clinical trials in treatment and prevention of Alzheimer’s disease. The studies were part of Fort Washington, PA-based Vitae’s collaboration with German pharmaceutical firm Boehringer Ingelheim GmbH. The two phase I clinical trials of BI1181181/VTP-37948, an orally active beta secretase (BACE) inhibitor, were randomized, placebo-controlled, single-dose studies that involved a total of 68 healthy volunteers. In the study, BI1181181/VTP-37948 was safe and generally well-tolerated across all dose levels tested. The drug demonstrated greater than 80% reduction of an Alzheimer’s Disease biomarker--the cerebral spinal fluid Amyloid Beta levels.
Omeros Corp. (Nasdaq), a biopharmaceutical company focused on developing therapies to treat disorders and/or inflammation associated with the central nervous system, leaped $4.36, or 36%, to $16.57 after Omidria was granted “pass-through” reimbursement status by the Centers for Medicare & Medicaid Services. According to Seattle-based Omeros, Omidria is a medication administered during cataract surgery or intraocular lens replacement and designed to prevent pupil constriction and reduce postoperative pain. The pass-through designation will allow ambulatory surgery centers and other outpatient facilities to bill Medicare and other insurance providers for the drug. The pass-through will remain in effect for about two to three years after which the CMS and insurers will offer a new reimbursement amount. It will officially begin on Jan. 1, 2015 and Omeros will be reimbursed based on the drugs’ wholesale acquisition cost of $400 to $500 per single-use vial.
But Pfizer Inc. ended an agreement with Pain Therapeutics Inc. (Nasdaq) to develop and market Durect Corp.’s (Nasdaq) pain drug, Remoxy, sending the stocks of the two smaller drugmakers plummeting. Durect’s shares fell 47% over the week to 73 cents, while Pain Therapeutics stock plunged 58% to $1.74. Austin, TX-based Pain Therapeutics, which since 2002 has the license to develop and commercialize Remoxy, would now have to develop the drug on its own or find a new partner, Cupertino, CA-based Durect said in a statement. Remoxy, a long-term opiod treatment for patients who find alternative treatments inadequate, is not Durect’s only drug candidate to be in trouble. Durect’s post-operative pain relief drug, Posidur, is also under the spotlight after the U.S. Food and Drug Administration rejected the drug in February, indicating that additional safety studies would be needed.
IPO SECTOR -- FibroGen Inc. (San Francisco), which is developing treatments for anemia and fibrosis using a protein inhibitor platform, announced terms for its IPO on Thursday. The company plans to raise $124 million by offering 7.1 million shares at a price range of $16 to $19. At the midpoint of the proposed range, it would command a fully diluted market value of $1.1 billion. FibroGen’s lead candidate, roxadustat, is an oral small molecule inhibitor of HIF prolyl hydroxylases, or HIF-PHs, in phase III trials for the treatment of anemia in chronic kidney disease, or CKD. FibroGen, which was founded in 1993 and booked $134 million in license, milestone and collaboration revenue for the 12 months ended September 30, 2014, plans to list on the Nasdaq under the symbol “FGEN.” Goldman Sachs, Citi and Leerink Partners are the joint bookrunners on the deal. It is expected to price during the week of November 10, 2014.
October 27, 2014 ...
NEW YORK DOCTOR TESTS POSITIVE FOR EBOLA -- Authorities on Friday retraced the steps of an American doctor with Ebola, who was listed in stable condition at a New York hospital’s isolation unit, while seeking to reassure a jittery public that the threat from the virus was limited. Dr. Craig Spencer, 33, who was infected after working with Ebola patients in West Africa, on Thursday became the fourth person diagnosed with the disease in the United States and the first in its largest city. Health officials said that while Dr. Spencer remained awake and communicative, his condition worsened on Saturday with the appearance of gastrointestinal symptoms. Meanwhile, Nina Pham, one of two nurses from a Dallas hospital infected with Ebola after treating the first patient diagnosed with the disease in the U.S., was declared virus-free. She walked out smiling and unassisted from the Maryland hospital where she had been treated. Later Friday, President Barack Obama met Pham in the Oval Office and gave her a hug. An Atlanta hospital and federal health officials also confirmed that the other nurse, Amber Vinson, no longer had detectable levels of virus but did not set a date for her to leave that facility. Spencer was quarantined at Bellevue Hospital six days after returning from Guinea, unnerving financial markets amid concern the virus may spread in the city. The three previous cases diagnosed in the U.S. were in Dallas.
New York City Mayor Bill de Blasio said health officials are retracing all the steps taken by Spencer, but urged New Yorkers not to worry and to stick with their daily routines. Three people who had close contact with Spencer, a physician who volunteered for the humanitarian group Doctors Without Borders, were quarantined for observation. The doctor’s fiancée was among them and isolated at the same hospital, and all three were still healthy, officials said. U.S. stock markets shook off Ebola fears on Friday, with the S&P 500 rising 0.7% to 1,964.58. The first person quarantined under strict new rules in the New York City area for people with a high risk of Ebola tested negative, New Jersey officials said on Saturday, as President Obama said the response to the deadly disease needed to be based on “facts, not fear.” The White House is pressuring the governors of New York and New Jersey to reverse their orders imposing a quarantine on all medical workers returning from West Africa who had contacts with Ebola patients, the New York Times reported on Sunday. The worst Ebola outbreak on record has killed at least 4,877 people and perhaps as many as 15,000, mostly in Liberia, Sierra Leone and Guinea, according to the World Health Organization (WHO).
GLAXO PLEDGES TO CUT COSTS AFTER EARNINGS BEAT ESTIMATES -- GlaxoSmithKline Plc announced new cost savings, plans to explore a partial listing of its ViiV Healthcare business, and better-than-expected earnings last week as the beleaguered drugmaker responds to pressures in the U.S. that continue to drag down its sales. Glaxo’s sales fell 10% to 5.65 billion pounds ($9.1 billion) in the third quarter, disappointing analysts, as revenue from Advair, the company’s single best-selling drug, continued its sharp decline. CEO Andrew Witty said that the third quarter had been “particularly painful” for Advair—which treats respiratory conditions—after Glaxo cut its price in the U.S. but that he expected a sharp uptick in sales volume at the beginning of next year. Sales of Glaxo’s two new respiratory drugs, Breo and Anoro, which it developed partly to make up for falling sales of Advair, remained disappointingly modest at 15 million and 1 million pounds, respectively, for the quarter. Mr. Witty said the launches had made a slow start but expressed confidence that sales would increase in 2015. Despite falling sales, operational efficiencies helped Glaxo maintain its core measure of earnings per share--which strip out divestments--roughly flat on last year, at 27.9 pence, well ahead of a 24-pence estimate of analysts.
Net income attributable to shareholders for the quarter fell to 401 million pounds, from 969 million pounds in the same quarter of the previous year, partly as a result of divestments. Analysts had cut earnings expectations after the second quarter, when Glaxo said its previously targeted growth in core earnings for the year wouldn’t materialize. In the wake of weak U.S. sales, and a series of asset swaps valued at more than $20 billion signed with Novartis AG (Basel CHE) and Eli Lilly & Co. (Indianapolis IN) in April to reshape its business, Glaxo said it was targeting 1 billion pounds of cost savings in its prescription-drug division in the next three years. Cuts will be made across commercial operations, support functions, manufacturing, and research and development, the company added, with roughly half expected to be delivered in 2016. Glaxo said it is considering a partial float of its ViiV Healthcare business, which develops HIV drugs and which Glaxo owns together with Pfizer Inc. (New York) and Japan’s Shionogi & Co. (See IPO Sector.) Glaxo shares closed the week up 5% at 1,415.5 pence in London, after falling roughly 14% for the year to date.
TRACKING WASHINGTON -- President Barack Obama’s response to Ebola ran into fresh criticism from Republicans in Congress on Friday, as the emergence of a fourth U.S. case in New York City heightened public anxiety about the potential spread of the virus. Darrell Issa, the California Republican who chairs the House Oversight Committee, blasted what he described as a “bumbling” administration response characterized by missteps and ill-considered procedures to protect U.S. healthcare workers at home and troops in West Africa. “It would be a major mistake to underestimate what Ebola could do to populations around the world, and any further fumbles, bumbles or missteps can no longer be tolerated,” Issa told a hearing that required lawmakers to return to Washington from the campaign trail. The federal Ebola response has emerged as an issue in congressional election campaigns across the country, less than two weeks before a Nov. 4 ballot that will give Republicans an opportunity to take control of the Senate from Democrats. Ebola’s first appearance on U.S. soil last month with the arrival of Liberian patient Thomas Eric Duncan led to a series of public health missteps, including the spread of infection to two Dallas nurses.
Elsewhere, HealthCare.gov’s simpler online application is being touted as a big win for consumers. But it can’t be used by legal immigrants and naturalized U.S. citizens, who represent millions of potential new health insurance customers. That’s prompting worries that many Hispanics and Asians will end up in long enrollment queues when the second sign-up season for coverage under President Barack Obama’s healthcare law gets underway Nov. 15. The administration says immigrants are not being overlooked, and points to other improvements in the application process. Officials say what they can do is limited by the law’s requirements. Advocates aren’t buying that explanation. “The whole idea was that HealthCare.gov was going to be a seamless and easy process, but that doesn’t seem to be the case for immigrants,” said Alvaro Huerta, an attorney at the National Immigration Law Center in Los Angeles. “I think this is happening because the federal government hasn’t taken the steps necessary to resolve issues with their verification system.” The White House wants more Latinos to sign up under the healthcare law for 2015. As the nation’s largest minority group, Hispanics tend to be younger and more likely to be uninsured.
FDA/EMA ROUNDUP -- Baxter International Inc. (Deerfield IL) said the U.S. Food and Drug Administration had approved its drug for treating bleeding episodes in adults with a rare bleeding disorder. The drug, Obizur, has been approved for use in patients with acquired hemophilia A, which usually affects older adults, Baxter said in a statement. The drug will be launched in the United States in the coming months and is being reviewed by European and Canadian regulators, the company said. Obizur will compete with Biogen Idec Inc.’s Eloctate, which was approved in June. Both the drugs are long-acting treatments. Hemophilia A is a rare blood-clotting disorder that can lead to prolonged bleeding, bruising and joint and tissue damage. It is caused by a deficiency of factor VIII, a protein needed to clot the blood. The rarer form of the condition is hemophilia B, caused by deficiency to another protein, factor IX. The FDA in March approved Biogen’s hemophilia B treatment, Alprolix, a bioengineered version of factor IX.
Elsewhere, Novartis AG (Basel CHE) announced that the Dermatologic and Ophthalmic Drugs Advisory Committee to the FDA has unanimously recommended the use of Novartis’s AIN457 in adults who are suffering from moderate-to-severe plaque psoriasis. The recommendation came on the back of positive results of 10 phase II/III studies conducted on over 4,000 psoriasis-afflicted patients. The FDA usually accepts the committee’s recommendation but is not obliged to do so. Patients suffering from moderate-to-severe psoriasis experience lesions on their skin that cause itching, scaling and severe pain. Novartis’s AIN457--or secukinumab injection--is an inhibitor of interleukin-17A (IL-17A), which is an inflammation-causing protein. The drug is expected to garner $701 million in sales by 2020, according to analysts at Kepler Chevreux.
And an FDA advisory committee has recommended approval of Vertex Pharmaceuticals Inc.’s (Boston MA) cystic fibrosis drug to patients age 6 and older with the R117H mutation. The FDA’s pulmonary-allergy drugs advisory committee voted 13-2 to recommend approval of Kalydeco, which targets the defective CFTR protein, the underlying cause of cystic fibrosis. The drug, whose wholesale price is $311,000 a year per patient, is already approved in the U.S. to treat those with nine other mutations. The FDA isn’t bound by the group’s recommendations but typically follows them. A decision is expected by Dec. 30. Cystic fibrosis is a serious genetic disorder that affects the lungs and other organs, ultimately leading to an early death, according to the FDA. An estimated 30,000 people in the U.S. have CF. Vertex closed the week up 7% at $109.91.
Across the pond, AstraZeneca Plc (London) won backing from a European Union regulator for an ovarian-cancer drug, one of the experimental medicines the company cited as a reason for fending off Pfizer Inc.’s $117 billion takeover offer this year. The treatment, olaparib, should receive a marketing authorization for use in patients with a mutation in one of two genes called BRCA, the European Medicines Agency’s Committee for Medicinal Products for Human Use said in a statement Friday. The European Commission usually follows the committee’s recommendation. The drug will be marketed under the name Lynparza. Advisers to the U.S. Food and Drug Administration voted 11-2 in June that the company should complete a study to confirm the drug’s benefit, before the agency considers approving it. The FDA is expected to decide whether to approve olaparib by Jan. 3.
MEDICAL STOCK SPOTLIGHT -- Regulus Therapeutics Inc. (Nasdaq) led advancing issues, more than doubling over the week to $17.33. The San Diego-based biopharmaceutical company focused on the development of therapies utilizing its proprietary microRNA product platform saw its shares skyrocket 161% after announcing the interim results for its human “proof-of-concept” trial for its early stage hepatitis C drug RG-101. According to Regulus’s press release, RG-101 was safe and well-tolerated, and delivered sustained and significant viral load reductions with a single subcutaneous treatment in a varied group of hepatitis C genotypes, including hard-to-treat genotypes, and those who had experienced a viral relapse. Although there isn’t yet a substantial amount of empirical data on cure rates, aside from the six out of 14 patients that had no detectable levels of disease by day 29, the allure of RG-101 is that it could cure varying types of HCV in a single dose.
Elsewhere, Vitae Pharmaceuticals Inc. (Nasdaq) surged $2.81, or 45%, to $9.11 after the clinical-stage biotechnology company announced positive top-line results from clinical trials in treatment and prevention of Alzheimer’s disease. The studies were part of Fort Washington, PA-based Vitae’s collaboration with German pharmaceutical firm Boehringer Ingelheim GmbH. The two phase I clinical trials of BI1181181/VTP-37948, an orally active beta secretase (BACE) inhibitor, were randomized, placebo-controlled, single-dose studies that involved a total of 68 healthy volunteers. In the study, BI1181181/VTP-37948 was safe and generally well-tolerated across all dose levels tested. The drug demonstrated greater than 80% reduction of an Alzheimer’s Disease biomarker--the cerebral spinal fluid Amyloid Beta levels. Based on the results of both of these trials, the companies expect to initiate additional phase I studies.
And Merit Medical Systems Inc. (Nasdaq) jumped $2.32, or 18%, to $14.89 after reporting earnings of $7.8 million in its third quarter. The South Jordan, UT-based company said it had net income of 18 cents per share. Earnings, adjusted for one-time gains and costs, were 25 cents per share, 9 cents better than analysts’ estimates. Revenue for the quarter came in at $128.8 million versus the consensus estimate of $128.4 million. Previously, the maker of disposable medical devices had seen its shares fall 18% since the beginning of the year.
But Alcobra Ltd. (Nasdaq) tanked 33% to $3.63 on news that the company’s experimental attention deficit hyperactivity disorder (ADHD) drug Metadoxine failed to demonstrate clinically viable results in the trials. The phase IIb clinical trials evaluated the drug’s efficacy in treating ADHD compared to the placebo arm. Tel Aviv-based Alcobra had earlier specified that the experimental drug in question had only met the primary endpoint if data obtained from patients who had a positive response to the placebo pills were eliminated from the sample. Analysts said news of the drug’s failure has potentially wiped out speculation that nano-cap Alcobra may be bought out by larger pharmaceutical giants.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Connecture Inc. (Brookfield WI), which powers over 30 public and private online health insurance marketplaces, registered up to $86 million worth of common stock. Connecture’s products are sold to health insurance marketplace operators (health plans, brokers, exchange operators) and were used by over 20 million shoppers in 2013, facilitating over $130 billion of annual plan premiums. As of June 30, its customer base included more than 70 health plans. Revenue increased 83% to $35 million during the six months ended June 30, 2014 as revenue from commercial enterprise customers spiked and the company began selling to state customers. The company, which was founded in 1999, plans to list on the Nasdaq Global Market. Morgan Stanley and J.P. Morgan are the joint bookrunners on the deal. No pricing terms were disclosed and the company has not selected a ticker.
October 20, 2014 ...
RON KLAIN, CHIEF OF STAFF TO 2 VICE PRESIDENTS, IS NAMED EBOLA “CZAR.” -- President Barack Obama on Friday named former White House official Ron Klain to coordinate the U.S. response to the deadly Ebola virus amid rising public concern about the disease and his administration’s response. The appointment of Klain, 53, a former chief of staff to Vice Presidents Joe Biden and Al Gore, comes on the heels of congressional criticism over the government’s handling of the first three cases of the disease to emerge in the U.S. Obama on Thursday said he was open to naming a single person to coordinate government efforts, after initially saying when the first infection was diagnosed that his existing staff of advisers could handle it. “It’s not that they haven’t been doing an outstanding job really working hard on this issue, but they also are responsible for a whole bunch of other stuff,” Obama said at the White House. Republican lawmakers have faulted the response by the U.S. Centers for Disease Control and Prevention in trying to keep Ebola infections contained and in informing the public. After a Liberian man visiting Dallas died of Ebola the previous week, two nurses who treated him became the first people infected with the virus in the U.S. Representative Tim Murphy (R-PA) said at a House hearing Thursday that trust in the administration is “waning as the American public loses confidence each day with demonstrated failures of the current strategy.”
Klain will report to National Security Adviser Susan Rice and Obama’s homeland security adviser, Lisa Monaco. He is a lawyer with a long background in politics, including representing Gore in the Florida recount in 2000, and his official biography lists no experience in public health. Pedro Greer, a Miami doctor who won the Presidential Medal of Freedom in 2009 for treating the poor and teaches at Florida International University’s medical school, said Klain’s lack of background in public health isn’t necessarily a deficit for the job of a coordinator. “You have all the scientists and experts at the CDC but what you need is a manager,” Greer said. The death toll in the Ebola outbreak has risen to 4,546 out of 9,191 known cases in Guinea, Liberia and Sierra Leone, the World Health Organization (WHO) said on Friday. Obama said he continues to oppose banning entry to the U.S. by people from the affected countries. While saying he has no “philosophical objection necessarily to a travel ban,” the president cited specialists in disease control as recommending against it because it may lead to a worse outcome.
ABBVIE DROPS TAX INVERSION DEAL WITH SHIRE -- Shire Plc (Dublin) stock plunged Thursday for a second day after AbbVie Inc.’s (N. Chicago) board recommended that shareholders vote against a 32.5 billion-pound ($52 billion) takeover of the maker of rare-disease treatments, citing a change in tax rules that would undermine the deal’s rationale. Shire stock lost 22% after AbbVie said it was reconsidering support for the acquisition. The cash-and-stock offer valued Shire at about 55.07 pounds a share based on last Wednesday’s closing price for AbbVie. “The deal is dead,” Navid Malik, a London-based industry analyst at Cenkos Securities, said. “If the board recommends that shareholders don’t vote for the deal, there’s no way it can be resurrected.” The merger would be the largest casualty yet of rules announced last month by the Treasury Department to make tax inversion deals more difficult. In such transactions, U.S. companies seek to lower their tax bill by moving their legal address abroad, often after buying a foreign company. President Barack Obama’s administration has said the rules are necessary to prevent the erosion of the U.S. corporate tax base. Shire closed the week down 28% at 37.75 pounds in London. AbbVie slipped 3% to $53.37 in New York.
“Although the strategic rationale of combining our two companies remains strong, the agreed-upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed,” AbbVie CEO Richard A. Gonzalez said in a statement. AbbVie has also been concerned about the potential for more changes to U.S. laws, whether through executive-branch action or legislation in Congress, that will increase future tax bills, people familiar with the matter have said. The price AbbVie agreed to pay for Shire was the highest that it was able to offer, and the loss of some tax benefits and the related prospect of having to borrow more for the merger have eroded its attractiveness, the people said. Shire said in a statement it is considering the situation and will make a further announcement “in due course.” Assuming the transaction is now “dead,” Shire’s fundamentals appear strong and we would buy when the dust has settled,” Peter Welford, an analyst at Jefferies LLC in London, said. Shire will be able to use the $1.6 billion breakup fee that it will receive from AbbVie to resume its pursuit of acquisitions, Welford added.
TRACKING WASHINGTON -- President Barack Obama on Thursday authorized the Defense Department to mobilize military reserve troops who may have special skills to assist operations to stem the spread of Ebola in West Africa. The order furthers Obama’s attempt to keep a focus on dealing with the Ebola outbreak in Africa, where at least 4,400 people have died, even as the government responds to three cases diagnosed in the U.S. If the virus “rages out of control in West Africa,” Obama said, “it will spread globally, in an age of frequent travel and the kind of constant interactions that people have across borders.” Obama and federal health officials have said repeatedly that there’s little chance of widespread infection in the U.S. The U.S. has committed almost $1 billion to the effort in Africa and the Pentagon is prepared to send as many as 4,000 personnel there, mostly to set up a system to carry personnel and supplies to patients in Liberia, Guinea and Sierra Leone. U.S. troops are also building medical facilities to treat victims and training healthcare workers.
The order doesn’t activate any reserve or National Guard units. It gives military commanders authority to call up troops not on active duty to serve in Africa to provide special skills, such as medical doctors, or replace active duty personnel.
FDA/EMA ROUNDUP -- The first two drugs that can slow the progression of a fatal lung disease won approval from the Food and Drug Administration last week, a decision that could open a new era for patients but also a new chapter in the controversy over high drug prices. The drugs, Roche Holdings AG’s (Basel CHE) Esbriet and Boehringer Ingelheim GmbH’s (Ingelheim DEU) Ofev, are meant to treat idiopathic pulmonary fibrosis, a scarring of the lungs that affects roughly 100,000 Americans and kills many of them in three to five years. The drugs do not make people better, but slow the rate at which lung function declines in some patients. “It’s very exciting to have two approved therapies now for a disease for which there were no approved therapies,” said Daniel M. Rose, CEO of the Pulmonary Fibrosis Foundation, an advocacy group that gets some funding from drug companies. But he said he was concerned about how readily insurers would pay for the drugs. Roche said the wholesale price of Esbriet would be about $7,800 a month, or about $94,000 a year--two to three times what the drug sells for in Canada and Europe. Boehringer executives said they would not disclose the price of Ofev until the drug became available, which they said would be in about a week.
Elsewhere, Chimerix Inc. (Durham NC) plans to test its experimental antiviral drug in patients who have Ebola, after getting authorization from the FDA. Chimerix said Thursday that it has received FDA clearance to proceed with a trial examining the safety and effectiveness of its brincidofovir tablets in patients who have the virus. The company said in a statement that the drug is available for immediate use in testing. With the FDA’s permission, the drugmaker previously made the drug available to the first Ebola patient diagnosed in the U.S., who died in Dallas two weeks ago. The FDA does not publicly confirm when it has granted companies permission to begin testing. The agency has not approved any drugs as safe and effective in treating Ebola.
Insys Therapeutics Inc. (Chandler AZ) said the FDA issued a “Refusal to File” letter to the company for its Dronabinol oral solution. The FDA stated that Insys had submitted an incomplete study plan for assessing Dronabinol’s safety and efficacy in pediatric patients, and that this was the primary reason behind the decision to issue the letter. The company had filed the New Drug Application (NDA) for the oral solution in August 2014. Insys maintains that it does not need to conduct further clinical studies as it already has the additional information that the regulatory body has demanded. It also plans to work closely with the FDA so that it can resubmit the NDA for Dronabinol as soon as possible. Dronabinol is an orally administered liquid formulation of the drug cannabinoid dronabinol, which is a synthetic form of tetrahydrocannabinol (THC). The oral solution is expected to be prescribed to AIDS patients who are suffering from Anorexia.
Tekmira Pharmaceuticals Corp. (Burnaby BC) reported that the FDA and Health Canada have allowed the emergency use of its Ebola drug, TKM-Ebola. The FDA has allowed the administration of the drug to patients with a confirmed or suspected diagnosis under its expanded access protocols. The Ebola outbreak started in December last year, and has hit many West African countries, with Sierra Leone and Liberia being the worst-hit. It has affected over 5,000 people and has claimed over 2,500 lives. The situation was worsened due to the lack of a cure, until now. TKM-Ebola, an RNAi therapeutic, is now the only FDA-approved treatment for Ebola. The approval does not come as a surprise since the drug was not only a leading candidate, but also the furthest along in terms of clinical development. Tekmira had already been awarded a Fast Track designation by the FDA, and was in phase I human trials. GlaxoSmithKline Plc (London) became the only other company to start testing its Ebola vaccine on humans when it started human trials at the start of this month.
MEDICAL STOCK SPOTLIGHT -- Stocks of two of the biotech companies involved in the battle against Ebola were outpacing their peers last week, climbing by triple and double digits on prospects they may have a leg up on the competition. As public health officials struggle, and sometimes stumble, to contain the deadly virus, investors on any given day, depending on the news, are flocking to any of a handful of companies developing a therapy or a vaccine. Recent movement in two stocks, iBio Inc. (NYSE) and NewLink Genetics Corp. (Nasdaq) indicate they may be staking a claim in the nascent industry. Whether it’s a long-term trend is anyone’s guess. Newark, DE-based IBio made the biggest splash, more than doubling over the week to $3.21. The company confirmed in a statement that it has the means to quickly manufacture mass quantities of treatments for Ebola in conjunction with privately held Caliber Biotherapeutics LLC. Investors are beginning to think the ability to produce mass quantities of a treatment--whatever it may be--will come in handy.
For Ames, IA-based NewLink Genetics Corp., the gain wasn’t as high percentage-wise, but the actual payoff was much bigger. Shares closed the week up $11.22, or 62%, to $29.35. The government of Canada has a licensing agreement with NewLink to sell an Ebola vaccine designed to prevent infection in healthy humans. Canada said earlier in the week that it’s conducting phase I clinical trials of its vaccine and hopes to have results by December. Trials are being held at the Walter Reed Army Institute of Research in Maryland. Canadian Health Minister Rona Ambrose said that if the vaccine it has developed proves as effective in humans as it has in tests on animals, then “we could literally stop this outbreak.” Canada contracted with NewLink and its BioProtection Systems subsidiary because it was the only company which provided “a viable offer of commercialization, given the limited market.”
Elsewhere, Prosensa Holding NV (Nasdaq) surged 29% to $11.35. KBC Partners upgraded shares of the Leiden, Netherlands-based company from an “Accumulate” rating to a “Buy” rating in a report issued last Monday. They currently have a $17.00 target price on the stock, up from their previous target price of $11.00. A number of other analysts have also recently weighed in on Prosensa. Analysts at Zacks upgraded shares from a “Neutral” rating to an “Outperform” rating. The company has a 52-week low of $3.43 and a 52-week high of $13.32. Prosensa is a biotechnology company engaged in the discovery and development of ribonucleic acid-modulating therapeutics for the treatment of genetic disorders.
But Repros Therapeutics Inc. (Nasdaq) plunged $2.99, or 32%, to $6.31 after saying it was notified by the U.S. Food and Drug Administration that there isn’t enough clinical information to hold a planned pre-investigational new drug application meeting in November. The stock had already lost more than half its value through Thursday’s close in the past 12 months. The Woodlands, TX-based company in September said it had been granted a “type B,” pre-investigational new-drug application meeting with the FDA in the first half of November, when Repros planned to seek guidance on its planned new drug application for Androxal for the treatment of secondary hypogonadism. At the time, it said it expected to file the new drug application for Androxal around the end of this year. Instead, the company said it will have a “type C” guidance meeting with the FDA next month. A “type C” meeting is ordinarily used to help a stalled product-development program proceed.
IPO SECTOR -- Forward Pharma A/S (Copenhagen DNK), which is developing an alternative to and challenging the IPO of Biogen Idec Inc.’s multi-billion dollar Tecfidera treatment for MS, raised $221 million and finished its first day down 17% from the offer price of $21.00. It was the year’s 7th-worst, first-day performance out of 226 IPOs. It was the largest biotech IPO in over ten years. If the company wins its interference proceeding against Biogen and completes phase III trials, the stock price should skyrocket (or if Biogen attempts an acquisition), but investors were unwilling to place that bet on Wednesday. Forward's case revolves around FP187, a phase III MS treatment using a proprietary formulation of dimethyl fumarate (DMF), the same active ingredient in Biogen’s drug. On the clinical side, the company plans to begin a late-stage trial testing FP187 against relapsing-remitting MS this year, earmarking $80 million of its IPO haul for that purpose. From there, Forward expects to launch a phase III psoriasis study on the drug in 2015 and spend another $12 million on its preclinical assets. Forward, which lists on the Nasdaq under the symbol “FWP,” closed the week down 5% at $19.99.
October 13, 2014 ...
INCREASINGLY VIGILANT U.S. WILL SCREEN FLIERS FOR EBOLA -- As Ebola continues to ravage West Africa and fears grow that the virus will spread around the globe, enhanced screenings began on Saturday at Kennedy Airport in New York. Kennedy was the first of five American airports to introduce Ebola screening protocols, and the new measures were the latest indication of the risk that the disease presented. The extra screening probably wouldn’t have singled out Thomas Eric Duncan when he arrived from hard-hit Liberia last month, because he had no symptoms while traveling. Duncan, the first person to be diagnosed with Ebola in the U.S., died last Wednesday in Dallas. A hospital worker there who helped treat the Liberian man has tested positive for the disease, even though the worker was wearing a gown, gloves, mask and other protective gear when coming into contact with the victim, officials said Sunday. The case, following the failure to recognize the Liberian man as a potential Ebola patient when he first sought treatment at the hospital, raises further questions about whether hospitals in the United States are prepared to deal with the disease. Dr. Thomas R. Frieden, director of the Centers for Disease Control and Prevention, said on Sunday that his agency was considering the idea that Ebola patients should be transferred to hospitals with special containment units and experience in treating the disease. It’s the first time someone is known to have contracted Ebola inside U.S. borders, and only the second known case of an infection outside Africa.
On Friday, U.S. lawmakers agreed to use $750 million in war funds to fight Ebola in West Africa and seven more people in Spain were admitted to the hospital where an infected nurse lay seriously ill on Friday, as global concern grew about the virus spreading. Countries from Macedonia to the Czech Republic to Brazil dealt with a rash of unlikely cases while Europe, the United States and the United Nations focused on trying to contain Ebola, which has killed thousands in West Africa. A top U.N. official said response to a $1 billion funding appeal had been slow and that a surge in trained healthcare personnel was needed to tackle the crisis in Liberia, Sierra Leone and Guinea. The World Health Organization on Friday updated its death toll for the worst Ebola outbreak on record to 4,033 people out of 8,399 confirmed, probable, and suspected cases in seven countries by the end of Oct. 8. The death toll includes 2,316 in Liberia, 930 in Sierra Leone, 778 in Guinea, eight in Nigeria and 1 in the United States. An unrelated Ebola outbreak in Democratic Republic of the Congo has killed an additional 43 people.
BECTON DICKINSON TO ACQUIRE CAREFUSION FOR $12.2 BILLION -- Becton Dickinson & Co. (Franklin Lakes NJ) agreed to buy CareFusion Corp. (San Diego) for $12.2 billion in a cash-and-stock deal that will enhance the company’s role in providing drug management and patient safety services to hospitals. CareFusion stockholders will get $49 in cash and 0.0777 of a Becton Dickinson share for each share they own, Becton Dickinson said in a statement. Based on Becton Dickinson’s Oct. 3 price, the deal’s value of $58 a share is a 26% premium for investors in CareFusion. The transaction is expected to close in the first half of 2015. The merged company will be the leader in the medication management sector, offering a “one-stop-shop” option for hospitals looking to improve efficiency, said Vijay Kumar, an analyst with ISI Group LLC in New York. Becton Dickinson will also be able to expand sales of CareFusion’s products in international markets, which now make up only 22% sales, he said. There have been $470 billion worth of pending or closed deals in the healthcare industry so far this year, according to data compiled by Bloomberg, as companies in medical devices, drugs and biotechnology combine to take advantage of economies of scale, leave their U.S. addresses for tax reasons, and acquire new products from competitors.
“There has never been so much merger and acquisition activity in the medical technology industry,” said Jason McGorman, an analyst at Bloomberg Intelligence in Princeton, NJ. “It could be driven by desire to have more products for the hospital.” Pricing pressures on hospitals have led them to crack down on outside purchases, with many turning to bulk orders to cut costs and increase volume. Medtronic Inc. (Minneapolis MN) agreed to buy Covidien Plc (Dublin) in June in an agreement deal that was also intended to broaden offerings to hospitals. The CareFusion deal will let Becton Dickinson offer a range of medication services, from drug preparation and delivery to patients on the hospital floor, to monitoring how they subsequently fare. The global medication management market is worth $20 billion, Becton Dickinson CEO Vincent Forlenza said in the statement. Becton Dickinson first approached CareFusion several months ago as part of the two-year-old effort to refocus the company on the consumer, Forlenza said. He will remain at the helm of the combined company. CareFusion CEO Kieran Gallahue will stay until the deal closes. CareFusion’s shares closed the week up 24% at $57.22. Becton Dickinson jumped 10% to $127.87.
TRACKING WASHINGTON -- The Obama administration unveiled a new version of HealthCare.gov last week, with some improvements as well as at least one early mistake and a new challenge. Officials also said that HealthCare.gov won’t display premiums for 2015 until the second week of November. Open enrollment season runs Nov. 15 through Feb. 15. Coverage can start as early as Jan. 1. On the plus side, the health insurance website will feature a streamlined application for most of those signing up for the first time. Seventy-six screens in the online application have been reduced to 16, officials said. The site has been also optimized for mobile devices. The blunder is a mistranslation on the home page of the Spanish-language version of the site. It’s the very first word on the page. Trying to translate “get ready,” someone came up with the wrong word in Spanish. The Spanish-language site had problems aplenty last year, ranging from technology issues to clunky translations that left some native speakers puzzled. The administration struggled to sign up Hispanics, the nation’s largest minority and more likely to be uninsured than other ethnic groups. HealthCare.gov is the online portal to subsidized private health insurance for consumers who don’t have access to a job-based plan. It served 36 states last open enrollment season, while the remaining states ran their own insurance exchanges.
Elsewhere, an ongoing feud between the pharmaceutical industry and a federal agency over a discount drug program for certain hospitals is back in court. The industry trade group--the Pharmaceutical Research and Manufacturers of America--has filed another lawsuit trying to block the U.S. Health Resources and Services Administration from enforcing a rule that allows so-called safety net hospitals and clinics to obtain orphan drugs at a discount. Orphan drugs are used to treat rare diseases. Under this program, which is called 340B, drugmakers must offer discounts of up to 50% on all outpatient drugs to hospitals and clinics that serve indigent populations. There are roughly 2,000 such institutions, although the number was expanded thanks to the Affordable Care Act. Two months ago, however, the HRSA issued a rule that angered drugmakers, because safety-net institutions are allowed to obtain orphan drugs at a discount, but only if these medicines are prescribed to treat a condition other than the disease for which orphan status was granted. The distinction was made by Congress as part of a balancing act--maintaining incentives for drugmakers to pursue orphan designations, which can provide marketing exclusivity, while also providing hospitals and clinics with the ability to obtain needed medicines at affordable prices.
FDA/EMA ROUNDUP -- Gilead Sciences Inc. (Foster City CA) won U.S. approval for the first all-oral hepatitis C treatment for the majority of people infected with the virus. The Food and Drug Administration cleared Gilead’s once-daily medicine that combines the active ingredient in the company’s Sovaldi with a drug called ledipasvir, the agency said Friday in a statement. The therapy was studied for its ability to cure patients in 12 weeks, four times faster than less effective older treatments. The FDA approved the pill, which Gilead will call Harvoni, for patients with genotype 1 hepatitis C, the most common form that infects about 75% of people with the virus. Drugmakers are competing to develop hepatitis C therapies that don’t require use of interferon injections that can cause flu-like symptoms. Gilead’s Harvoni is the first that can treat the vast majority of patients without injections or another standard therapy called ribavirin, the FDA said.
Elsewhere, Genentech, which is a unit of Roche Holding Ltd. (Basel CHE), announced that the FDA has accepted the company’s supplemental Biologics License Application (sBLA) for its drug Lucentis. The FDA also granted a priority review designation to Lucentis or “ranibizumab injection,” which is used for treatment of diabetic retinopathy, the most common eye disease among diabetes patients. A priority review designation is given to a drug only if it is capable of providing significant improvement in “safety or effectiveness” of the diagnosis, prevention, or treatment of a serious disease after an approval by the FDA, compared to other “standard applications.” The agency is expected to take an action on February 6, 2015 regarding Lucentis’ sBLA filed by the company.
An advisory panel to the Food and Drug Administration offered a mixed view of Boston Scientific Corp.’s (Marlborough MA) Watchman heart device, concluding it is probably safe but not particularly effective in reducing the risk of stroke in patients with a certain type of irregular heart beat. Despite the lack of likely effectiveness, the panel voted 6-5, with one abstention, that the benefits outweigh the risks, with some panelists saying it should be an option for patients. The FDA is not obliged to follow the advice of its advisory panels but typically does so. Boston Scientific is seeking approval of the device to reduce the risk of stroke and blood clots in patients with non-valvular atrial fibrillation who would typically be treated with warfarin, a standard oral treatment that has some limitations.
Tekmira Pharmaceuticals Corp. (Burnaby BC) reported that the FDA and Health Canada have allowed the emergency use of its Ebola drug, TKM-Ebola. The FDA has allowed the administration of the drug to patients with a confirmed or suspected diagnosis under its expanded access protocols. The Ebola outbreak started in December last year, and has hit many West African countries, with Sierra Leone and Liberia being the worst-hit. It has affected over 5,000 people and has claimed over 2,500 lives. The situation was worsened due to the lack of a cure, until now. TKM-Ebola, an RNAi therapeutic, is now the only FDA-approved treatment for Ebola. The approval does not come as a surprise since the drug was not only a leading candidate, but also the furthest along in terms of clinical development. Tekmira had already been awarded a Fast Track designation by the FDA, and was in phase I human trials. GlaxoSmithKline Plc (London) became the only other company to start testing its Ebola vaccine on humans when it started human trials at the start of this month.
MEDICAL STOCK SPOTLIGHT -- Allied Healthcare Products Inc. (Nasdaq) led a small group of advancing issues, soaring $1.31, or 66% for the week, to $3.30, but it’s unclear what caused the surprise rally. Trading volume skyrocketed to 3.8 million shares Friday, the equivalent of nearly half of the company’s outstanding shares. It’s also the stock’s heaviest trading volume ever. The average trading volume for the past four weeks was about 11,900 shares. “Today, for whatever reason, it’s really being traded,” Gregg Mueller, controller for Allied, said. “I really can’t explain it.” St. Louis, MO-based Allied Healthcare makes respiratory therapy and emergency medical equipment that is primarily sold to hospitals.
Elsewhere, Exact Sciences Corp. (Nasdaq) surged $5.25, or 27%, to $24.60 after announcing that the Centers for Medicare & Medicaid Services (CMS) issued its final National Coverage Determination (NCD) for Cologuard, making it the first and only Food and Drug Administration-approved stool DNA test for the detection of colorectal cancer and precancer covered by Medicare. Coverage will go into effect immediately. Madison, WI-based Exact Sciences is still awaiting a preliminary pricing determination from CMS.
And Impax Laboratories Inc. (Nasdaq) raced 12% to $27.24 after the specialty pharmaceutical company bought Lineage Therapeutics and Tower Holdings for $700 million. With the purchases, Hayward, CA-based Impax gains access to the lucrative anti-allergen injection, epinephrine, which is used to treat sudden allergic reactions. Lineage Therapeutics makes a generic version of the drug. The move strengthens Impax’s standing in the nearly $1 billion anti-allergen market which is dominated by Pfizer Inc.’s EpiPen product.
But Sunesis Pharmaceuticals Inc. (Nasdaq) plunged $5.59, or 84%, to $1.05 after announcing results from the pivotal phase III VALOR trial, a randomized, double-blind, placebo-controlled trial of vosaroxin and cytarabine in patients with first relapsed or refractory acute myeloid leukemia (AML). At more than 100 international sites, the trial enrolled 711 patients, who were stratified for age, geography and disease status. The trial did not meet its primary endpoint of demonstrating a statistically significant improvement in overall survival, with a median overall survival of 7.5 months for vosaroxin and cytarabine compared to 6.1 months for placebo and cytarabine. Shares of South San Francisco-based Sunesis have been given an average rating of “Hold” by the seven ratings firms that are currently covering the stock, StockRatingsNetwork.com reports.
IPO SECTOR -- Diplomat Pharmacy Inc. (Flint MI), which operates the fourth largest specialty pharmacy in the U.S., raised $173 million by offering 13.3 million shares at $13, below the range of $14 to $16. Flint, MI-based Diplomat lists on the NYSE under the symbol “DPLO.” Credit Suisse, Morgan Stanley, J.P. Morgan and Wells Fargo Securities acted as lead managers on the deal. Shares closed the week up 23% at $16.02.
October 6, 2014 ...
CDC CONFIRMS FIRST EBOLA CASE DIAGNOSED IN THE UNITED STATES -- U.S. health officials last week said the first patient infected with the deadly Ebola virus had been diagnosed in the country. The U.S. Centers for Disease Control and Prevention confirmed the diagnosis. On Thursday, more than a week after a Liberian man fell ill with Ebola and four days after he was placed in isolation at a hospital in Dallas, TX, the apartment where he was staying with four other people had not been cleaned and the sheets and dirty towels he used while sick remained in the home, health officials acknowledged. Even as the authorities were reaching out to at least 80 people who may have had contact--either directly or indirectly--with the patient, Thomas E. Duncan, while he was contagious, they were scrambling to find medical workers to safely clean the apartment. The four family members who are living there are among a handful who have been directed by the authorities to remain in isolation, following what officials said was a failure to comply with an order to stay home. Texas health officials hand-delivered orders to residents of the apartment requiring them not to leave their home and not to allow any visitors inside until their roughly three-week incubation periods have passed. The orders--known as communicable disease control orders--are permitted under the state’s health code.
But even as the Texas orders were being issued, there were concerns about the conditions in the home where the residents were being ordered to stay. The woman who was hosting Mr. Duncan told CNN that she had been with him the first time he sought treatment at the hospital and that she had twice told workers there he had been in Liberia. Still they sent him back with only some antibiotics to the apartment, where the woman was staying with one of her children and two nephews. On Friday, Howard University Hospital in Washington said it admitted a patient with symptoms “that could be associated with Ebola,” hospital spokeswoman Kerry-Ann Hamilton said. The patient, who was not named, recently traveled to Nigeria and presented with the symptoms upon his or her return, she said. The patient is in stable condition. “In an abundance of caution, we have activated the appropriate infection control protocols, including isolating the patient,” Hamilton said. “Our medical team continues to evaluate and monitor progress in close collaboration with the CDC and the Department of Health.”
DOCTORS NET BILLIONS FROM DRUG FIRMS -- U.S. doctors and teaching hospitals received $3.5 billion from pharmaceutical companies and medical device makers in the last five months of 2013, according to the most extensive data trove on such payments ever made public. The payments, disclosed last week by the Centers for Medicare and Medicaid Services (CMS), include consulting and speaking fees, travel, meals, entertainment and research grants. The names of the recipients of about 40% of the payments reported by companies were withheld because CMS had concerns about data inconsistencies. Some 546,000 individual providers including physicians, dentists and osteopaths and 1,360 teaching hospitals received 4.4 million separate payments from healthcare companies. The companies were required by President Barack Obama’s 2010 healthcare reform law to disclose to CMS by March all payments of $10 or more made from August to December 2013. Even payments that physicians requested be sent to a charity were required to be reported. The American Medical Association (AMA) and other physician groups had asked CMS to delay the release of the data by six months, saying that errors could create a false impression about the influence of industry on individual doctors.
The extent of the industry payments, which came to $23 million a day, was in line with years of research. A 2007 study found that 83% of physicians received gifts from drug or device companies, and 28% received payments for consulting or research. Both Democratic and Republican lawmakers supported the Physician Payments Sunshine provision of Obamacare, arguing that making industry payments public would increase transparency. When patients are aware of potential financial conflicts of interest, they might question why their doctors are prescribing a drug or device from a manufacturer that pays them, for instance. And doctors will know whether experts who recommend practice guidelines were paid by companies that could benefit from them. Of the physicians who reported receiving industry money even before the Sunshine provision, 40% had been involved in creating clinical practice guidelines, according to a 2009 report by the Institute of Medicine, an arm of the National Academy of Sciences.
TRACKING WASHINGTON -- The U.S. government has shelved plans to move the HealthCare.gov insurance website to a new host, the Wall Street Journal reported last week. The decision represented “the best path forward to ensure a successful second open enrollment period. It was made in order to improve the consumer experience and have sufficient time for testing,” the Journal reported, citing Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services. The agency signed a contract last November to replace Verizon Communications Inc. (New York) with Hewlett-Packard Co. (Palo Alto CA) as the host of the HealthCare.gov website. Verizon, which was blamed for the outages last year, has upgraded its servers and brought in additional staff to handle the load when open enrollment begins, the Journal said, citing people familiar with the situation. Albright also said the agency was taking other steps to manage peak traffic, including transferring around 75% of newcomers visiting the site to a portion hosted by Amazon Web Services. Testing so far suggested that the capacity for this portion of the site had grown significantly, but was still likely to be maxed out at certain points, forcing users into virtual “waiting rooms,” the Journal quoted one person familiar with the matter as saying.
Elsewhere, a federal judge in Oklahoma ruled that tax subsidies vital to the implementation of President Barack Obama’s signature healthcare law are unlawful, giving a boost to opponents of the measure known as Obamacare. U.S. District Judge Ronald White found that the Internal Revenue Service rule that the Obama administration issued to set up tax-credit subsidies to help people afford insurance premiums under Obamacare was “an invalid implementation” of the law based on his interpretation of it. White, who was appointed by Republican President George W. Bush, put his ruling on hold pending an appeal. A U.S. Justice Department spokesman said the Obama administration will appeal the decision. The issue of whether the subsidies are legal is being fought in several courts across the country and could end up being decided by the U.S. Supreme Court. The outcome of the legal challenge will determine whether the subsidies will be available in all 50 states or only in some.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration last week announced its recommendations regarding cybersecurity for medical devices. The FDA-issued guidelines urge medical device-makers to demonstrate that their devices are not vulnerable to cyber threats. Manufacturers are also required to outline the necessary steps that will be taken if their devices are indeed found to be vulnerable to data breaches. Suzanne Schwartz, the director of “emergency preparedness” at the Center for Devices and Radiological Health (CDRH), believes that the FDA regulations are justified and will work to curtail the widespread belief that “there is no such thing as a threat-proof medical device.” These rules will force manufacturers to carefully evaluate their devices, and to implement measures that can work to control data-breach related threats, which according to experts can also lead to patients’ deaths in some cases. Device-makers have always been a victim of cyber-attacks; however, the hazards of such attacks have magnified recently, owing to an increase in digital connectivity via Internet and hospital networks. Devices that are highly vulnerable to cyber-attacks generally include implantable heart defibrillators, insulin pumps, and diagnostic equipment in hospitals, such as magnetic-resonance imaging (MRI) systems.
One of the key challenges for medical device-makers now is to develop a system or device that can be used by patients without entering a password to ensure its utility in emergency situations. The FDA recommendations are non-binding for now. Various experts, however, believe that companies may face severe consequences if these rules are sidelined, or if their devices are hacked. On the other hand, compliance may lead to positive recommendations and pre-market approvals for medical devices in the U.S. in the future.
Elsewhere, Ariad Pharmaceuticals Inc. (Cambridge MA) announced it received “Breakthrough Therapy” status from the Food and Drug Administration for its lung-cancer drug, AP26113. The drug is being developed to treat patients with anaplastic lymphoma kinase positive (ALK+) metastatic non-small cell lung cancer (NSCLC). Patients have previously been administered Crizotinib, which is marketed by Pfizer Inc. (New York) as Xalkori. The status was granted based on the phase I/II data provided by the company, which showed statistically better results, including for those patients whose cancer metastasized to the brain. The trial--which is ongoing--had 137 patients enrolled in the U.K. and the U.S. The trial took 72 subjects to test for a response, out of which 72% showed an objective response with a median duration of 49 weeks. The progression-free survival, the period in which the disease doesn’t worsen and is a key endpoint, was 56 weeks. Given the drug’s new designation, Ariad is now looking to expedite patient enrollment into the study and is also “planning a front-line trial of AP26113 in treatment-naive patients.”
Tekmira Pharmaceuticals Corp. (Burnaby BC) reported that the FDA and Health Canada have allowed the emergency use of its Ebola drug, TKM-Ebola. The FDA has allowed the administration of the drug to patients with a confirmed or suspected diagnosis under its expanded access protocols. The Ebola outbreak started in December last year, and has hit many West African countries, with Sierra Leone and Liberia being the worst-hit. It has affected over 5,000 people and has claimed over 2,500 lives. The situation was worsened due to the lack of a cure, until now. TKM-Ebola, an RNAi therapeutic, is now the only FDA-approved treatment for Ebola. The approval does not come as a surprise since the drug was not only a leading candidate, but also the furthest along in terms of clinical development. Tekmira had already been awarded a Fast Track designation by the FDA, and was in phase I human trials. GlaxoSmithKline Plc (London) became the only other company to start testing its Ebola vaccine on humans when it started human trials at the start of this month.
MEDICAL STOCK SPOTLIGHT -- Ardelyx Inc. (Nasdaq) led advancing issues, soaring $8.34, or 59% for the week, to $22.48. The big upward move came after the Fremont, CA-based company announced positive phase-IIb trial results for its drug, Tenapanor. The drug is being developed to treat constipation-predominant irritable bowel syndrome (IBS-C). The trial had 371 patients enrolled, who were administered three different doses of Tenapanor. The results showed that the 50mg dose of the drug successfully increased the complete spontaneous bowel movement (CSBM) responder rate. The patients in the trial were screened for two weeks to see if their disease was active. The subjects were given either a placebo or the drug twice a day for a 12-week period, followed by a 4-week period of monitoring. The best results were achieved in the 50mg group for which over 65% of the subject population expressed satisfaction, compared to the 38% in the placebo arm of the group.
Elsewhere, Eli Lilly & Co. said it would stop the development of its drug to treat the autoimmune disorder lupus, after it was found to be not effective enough in late-stage trials. While Lilly’s shares hardly budged on the news, the ADRs of Israel-based XTL Biopharmaceuticals Ltd. (Nasdaq), which is developing its own lupus treatment, soared 44% to $2.90. Lupus is a condition in which the body’s immune system starts attacking healthy tissues, causing inflammation, pain and, in extreme cases, death. About 1.5 million people in the United States are estimated to suffer from lupus, according to the U.S. Centers of Disease Control and Prevention. XTL said last month that it would start mid-stage studies of its lupus drug in mid 2015 and planned to meet FDA officials at the end of this year to discuss trial design.
And AMAG Pharmaceuticals Inc. (Nasdaq) gained $9.09, or 39%, to $32.27 following news that it will buy Lumara Health’s maternal health business. The Waltham, MA-based company will buy the maternal health business for $675 million in cash and stock, according to the Wall Street Journal. The goal of the acquisition is to diversify AMAG’s drug portfolio. The flagship drug in the sale is Makena, which helps reduce the risk of preterm birth in pregnant women. Lumara sold more than $130 million worth of Makena in the past year, according to AMAG.
But Tonix Pharmaceuticals Holding Corp. (Nasdaq) plummeted $7.26, or 52%, to $6.70 after the company announced its lead drug candidate for treating fibromyalgia came up short of the primary goal in a mid-stage trial. New York-based Tonix’s drug TNX-102 missed the mark in the study, which tested if the drug reduced patients’ pain by the 12th week of the trial. TNX-102 did, however, improve sleep quality in patients, which was one of the important secondary goals of the trial, Tonix said. Fibromyalgia is a chronic disease that causes widespread pain and lack of sleep in patients.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, S1 Biopharma Inc. (Jersey City NJ), a biotech developing a combined therapy of existing drugs for female sexual dysfunction, registered up to $40 million worth of common stock. S1 Biopharma is entering phase IIb trials for its lead candidate, which targets female hypoactive sexual desire disorder (HSDD), a lack or absence of sexual desire causing marked distress and interpersonal difficulties. Its oral drug combines two antidepressants, bupropion and trazodone, meaning it could achieve approval through the shortened 505(b)(2) NDA pathway. S1 also has a drug candidate in phase IIa trials for male HSDD. Primary shareholders include management and directors. The company, which was founded in 2010, plans to list on the Nasdaq under the symbol “SXB.” S1 Biopharma initially filed confidentially on July 25, 2014. MLV & Co. is the sole bookrunner on the deal. No pricing terms were disclosed.
September 29, 2014 ...
GOVT'S INVERSION DEAL CRACKDOWN SLAMS HEALTHCARE STOCKS -- The U.S. government has been promising a crackdown on tax inversion deals for months. Yet the measures announced last week may not be enough of a disincentive for companies like Pfizer Inc. (New York) or AbbVie Inc. (North Chicago), which are tempted by the savings involved in snapping up smaller foreign rivals and re-domiciling themselves to avoid America’s labyrinthine tax system. The new rules, aimed at “when possible, stopping” inversion deals, according to the U.S. Treasury Secretary, Jack Lew, hope to close a number of tax loopholes that make inversion deals possible. One element will stop companies using so-called “hopscotch” loans, which allow a redomiciled parent company to access earnings from its foreign subsidiaries in the U.S. without raising its tax bill. Another would stop inverted companies from transferring cash or property from a “controlled foreign corporation” to their new parent company to avoid U.S. tax. A further measure stops companies using special dividends and other one-off payments to make sure they come in under the threshold of 80% of the combined company, which is needed to make an inversion happen. These new regulations are an example of efforts across the world to clamp down on companies redomiciling to avoid paying tax in their home country.
Yet questions remain over whether the measures will have the effect Treasury Secretary Lew desires--making some already proposed deals “no longer make sense.” Still, the downdraft in the share prices of AstraZeneca Plc (London) and Smith & Nephew Plc (London)--both potential or actual targets for tax inversion-related deals--in trading suggests some investors fear the deals may not go as planned. Pfizer, which this year attempted to buy AstraZeneca and move abroad, fell 2% for the week to $29.72 in New York. AstraZeneca slipped 4% to 4,408.50 pence in London. AbbVie has agreed to buy Shire and move to the U.K. Its shares fell to $59.19 in New York. “Clearly the prospects for an inversion transaction are now less likely,” Alex Arfaei, a New York-based analyst at BMO Capital Markets, said of Pfizer. To execute a so-called tax inversion, U.S. companies need to buy a foreign operation, and the shareholders of the non-U.S. company need to make up at least 20% of the combined operation.
MERCK KGAA TO BUY SIGMA-ALDRICH FOR $17 BILLION -- Drugs and chemicals maker Merck KGaA (Darmstadt DEU) agreed to acquire Sigma-Aldrich Corp. (St. Louis MO) for $17 billion in cash to boost its lab supplies business, the biggest takeover in the German group’s history. The deal helps Merck, 70% controlled by the descendants of its 17th century founder, to focus more on supplying drugmakers and academic institutions with chemicals and services, and is seen as offering a steadier income stream than drug development. “With this acquisition we have the opportunity to turn one of our most reliable businesses into a core earnings contributor,” said finance chief Marcus Kuhnert. Merck, which has been hit by several drug development failures, said it was happy for its own pharmaceuticals business to remain a medium-sized entity. The deal was approved by Sigma-Aldrich’s management but still needs acceptance from more than 50% of the target’s shareholders. Merck said it will acquire Sigma-Aldrich shares for $140 each, a 36% premium over the one-month average closing price and 37% more than the closing price prior to news of the deal. Sigma had 2013 sales of $2.7 billion and provides big pharma groups including Pfizer Inc. (New York) and b (Basel CHE) with lab substances such as cell culture substrates. It also makes chemicals for the technology sector and food testing products.
The combined lab supplies business of the two companies would gain more exposure in North America and Asia, taking on global players such as Thermo Fisher Scientific Inc. (Waltham MA). The deal would immediately top-up adjusted earnings per share. The move comes as healthcare companies strike deals at a record pace, with year-to-date activity in the sector topping $380 billion, well over double the year-ago level, according to Thomson Reuters data. It represents the second major transatlantic deal for a German company in the space of a few hours, after Siemens AG (Munich) agreed to buy oilfield equipment maker Dresser-Rand Group Inc. (Houston TX) for $7.6 billion. Shares in Merck, which initially turned negative on the news, closed the week up 6% at 73.46 euros in Frankfurt. Sigma closed up 34% at $136.77 in New York.
TRACKING WASHINGTON -- The federal government’s Obamacare enrollment system has cost about $2.1 billion so far, according to a Bloomberg Government analysis of contracts related to the project. Spending for healthcare.gov and related programs, including at the Internal Revenue Service and other federal agencies, exceeds cost estimates provided by the Obama administration, the analysis found. The government’s most recent estimate, limited to spending on computer systems by the agency that runs the site, through February, is $834 million. Healthcare.gov and its associated programs are the main portal for millions of Americans to sign up for coverage under the Patient Protection and Affordable Care Act. Spending for the system has been a matter of dispute between the administration and Republican opponents in Congress, who have tried to block funding for the law. “The way in which Obamacare has been rolled out has been very messy,” with spending scattered across dozens of contracts, many of them predating the law and amended afterward, said Peter Gosselin, a senior healthcare analyst at Bloomberg Government and lead author of study. “One of the reasons it has been implemented in the way it has been, financially, is precisely to deny opponents of the law a clear target.” The construction of healthcare.gov involved 60 companies, supervised by the Centers for Medicare and Medicaid Services.
Elsewhere, the Obama administration issued new guidelines intended to strengthen the oversight of federally funded biology research that could inadvertently produce bioweapons. The new policy shifts the burden of finding and disclosing the dangerous aspects of research from the funding agency--usually the National Institutes of Health--to the scientists who receive the grants and the universities or other institutions where they work. The director of the NIH, Dr. Francis S. Collins, said the rules would “preserve the benefits of life-science research while minimizing the risk of misuse.” Critics who oppose dangerous research dismissed the new rules as weak. The policy, a codification of draft rules issued in early 2013, does not take effect for another year--an aspect that was also ridiculed by critics, who argue that dangerous work, such as making flu viruses more lethal, has been allowed to proceed while federal officials debate how to regulate it. The critics also complained that the rules applied only to federally funded research and that the harshest penalty, loss of funding, was not very harsh and was rarely applied.
FDA/EMA ROUNDUP -- AbbVie Inc. (North Chicago) said Thursday that the Food and Drug Administration approved its drug Humira as a treatment for Crohn’s disease in children. IMS Health says Humira is the biggest-selling brand-name drug in the world. It is approved to treat conditions including Crohn’s disease, rheumatoid arthritis, ulcerative colitis, and plaque psoriasis. The FDA cleared Humira as a treatment for moderate to severe Crohn’s disease in children ages 6 and older when those children haven’t been helped by other treatments, AbbVie said. The company said Humira can be administered at home, unlike similar drugs used to treat the condition. During the second quarter, revenue from Humira jumped 26% to $3.29 billion.
Elsewhere, Celgene Corp. (Summit NJ) won FDA approval for its drug to treat the skin disease psoriasis, a medicine that will compete with injections that now generate billions of dollars in sales each year. The agency cleared Otezla for people with moderate to severe psoriasis, Celgene said in a statement. Psoriasis is the most common autoimmune disease in the U.S., affecting 7.5 million Americans, according to the National Psoriasis Foundation. The agency in March authorized the treatment, also known as apremilast, to combat a related condition. “Otezla offers an important new treatment option for patients whose symptoms are not adequately improving with their current treatments,” M. Shane Chapman, section chief of dermatology at Dartmouth-Hitchcock Medical Center (Hanover NH), said in the statement.
New government-approved labeling on Pfizer Inc.’s (New York) drug Chantix suggests that the anti-smoking medication may not carry the risks of suicidal behavior that first earned it the Food and Drug Administration’s strongest warning more than five years ago. The FDA updated the drug’s label last week to include data from a number of recent studies that found little to no evidence of psychiatric problems or suicidal tendencies in patients taking the twice-a-day tablet. The new labeling represents a victory for Pfizer, which requested the update. Company executives say they will now ask the FDA to completely remove the drug’s so-called “black box” label--the strongest type--which warns prescribers of links to hostility, agitation, depression and suicidal behavior.
MEDICAL STOCK SPOTLIGHT -- LipoScience Inc. (Nasdaq) led advancing issues, soaring $2.02, or 64% over the week, to $5.19. The Raleigh, NC-based company and Lab Corp. announced that they entered into a definitive merger agreement under which LabCorp would acquire LipoScience for a purchase price of $5.25 per share in cash, or a transaction value of $85.3 million which represents a total enterprise value of approximately $63 million. The Board of Directors of LipoScience has unanimously approved the agreement and recommended approval of the transaction by LipoScience’s stockholders.
Elsewhere, Galmed Pharma Ltd. (Nasdaq) surged $2.36, or 36%, to $8.95. The Tel Aviv-based company announced that the U.S. Food and Drug Administration approved its request for “Fast Track Designation” of its product candidate, aramchol, for the treatment of Non-Alcoholic Steato-Hepatitis, or NASH.
And Agios Pharmaceuticals Inc. (Nasdaq) shares hit a new 52-week high, leaping $14.85, or 30%, to $63.76. Analysts at Citigroup Inc. initiated coverage on shares of Cambridge, MA-based Agios, setting a Buy rating on the stock. Agios announced that clinical data from a phase I study of its AG-120, an orally available, selective inhibitor of the mutated IDH1 protein, will be highlighted in a presentation at the 26th Symposium on Molecular Targets and Cancer Therapeutics taking place November 18-21 in Barcelona, Spain.
But Atossa Genetics Inc. (Nasdaq) plunged 44% to $1.41 after announcing that the U.S. Food and Drug Administration has issued a determination that the company’s ForeCYTE Breast Aspirator is “not substantially equivalent” to its predicate device. The ForeCYTE Breast Aspirator is, therefore, not cleared by the FDA for marketing in the United States. Seattle, WA-based Atossa now plans to commercialize in the U.S. an alternative breast aspirator, called the FullCYTE Breast Aspirator. The FullCYTE Breast Aspirator is an FDA-cleared device that was acquired by Atossa in 2012.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Exagen Diagnostics Inc. (Vista CA), which sells diagnostic blood tests that detect lupus and rheumatoid arthritis, registered up to $69 million worth of common stock. The company, which was founded in 2002 and booked $6 million in sales for the 12 months ended June 30, 2014, plans to list on the Nasdaq Global Market under the symbol “EXDX.” Leerink Partners and Baird are the joint bookrunners on the deal. No pricing terms were disclosed.
September 22, 2014 ...
ADMINISTRATION SAYS OBAMACARE ENROLLMENT IS 7.3 MILLION -- The Obama administration on Thursday said 7.3 million people were up to date on their monthly premiums for private health plans under President Barack Obama’s healthcare law as of Aug. 15. Republicans have long sought the number of Obamacare enrollees who have paid premiums as potential evidence that the administration’s initial enrollment figures were exaggerated. The figure, which administration officials stressed was not an estimate of actual enrollment, could show that lower-income Obamacare enrollees are proving better than initially expected at retaining private health coverage acquired through new insurance marketplaces set up in all 50 states. “We are encouraged by the number of consumers who paid their premiums,” Marilyn Tavenner, a top U.S. healthcare official, said in testimony before a congressional oversight panel. The Department of Health and Human Services announced earlier this year that 8 million people had signed up for 2014 coverage during an open enrollment period that ended in April. Officials and independent experts speculated that 80% to 85%, or 6.4 million to 6.8 million people, would actually make premium payments. The 7.3 million figure would represent a 91% premium payment rate. It is also a larger number than the nonpartisan Congressional Budget Office’s enrollment forecast of 6 million for the Obamacare marketplace.
HHS officials cautioned against comparisons with earlier estimates, saying marketplace enrollment fluctuates in time as people change jobs, marry or experience other life-changing events. The administration had no overall enrollment estimate but said the number would probably be higher than 7.3 million because of enrollees who might have made monthly payments after Aug. 15. Thursday’s figure also did not include people who enrolled in a marketplace plan and either failed to pay their premiums or paid but then discontinued coverage, according to the administration.
CHINA FINES GLAXO NEARLY $500 MILLION, ENDING BRIBERY PROBE -- China on Friday fined GlaxoSmithKline Plc (London) a record 297 million pounds ($489 million) and imposed a suspended prison sentence on an executive for bribing doctors, capping a 15-month investigation that curbed the U.K. drugmaker’s sales. The vast country that has coaxed the world into investing billions of dollars over the past decade with the prospect of selling to 1.4 billion people, sent its strongest signal yet of a harsher climate for multinational companies. After a one-day trial held in secrecy, the court also sentenced Glaxo’s British former country manager, Mark Reilly, and four other company managers to potential prison terms of up to four years. The sentences were suspended, allowing the defendants to avoid incarceration if they stay out of trouble, according to Xinhua, the official news agency. The verdict indicated that Mr. Reilly could be promptly deported. The report said they had pleaded guilty and would not appeal. Glaxo said in a statement that it “fully accepts the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities.”
The scale of the $487 million fine dwarfs previous criminal penalties on companies doing business in China. It comes at a time when numerous automakers, technology companies and other multinationals are also under investigation by the Chinese authorities and are nervously watching for what penalties might be imposed on them. Previous large fines against foreign companies include $40.5 million on the Audi unit of Volkswagen AG (Wolfsburg DEU) the week prior and a total of $200 million in fines levied last month on a dozen Japanese auto parts and bearing manufacturers. The latter fines were for violations of antitrust laws. Glaxo’s case was unusual in that it involved accusations of criminal bribery by the company to persuade hospitals and doctors to administer or sell Glaxo pharmaceuticals to their patients. The company said it was contrite. “GSK sincerely apologizes to the Chinese patients, doctors and hospitals, and to the Chinese Government and the Chinese people,” the company said.
TRACKING WASHINGTON -- Healthcare.gov lacks several basic cybersecurity controls--including strong passwords and consistent security patching--nearly a year after the troubled launch of the insurance-shopping website, a government auditor said. The website, a centerpiece of the 2010 insurance reform package the Affordable Care Act, does not have a complete system security plan in place, said a report released Thursday by the U.S. Government Accountability Office. The U.S. Department of Health and Human Services, which operates Healthcare.gov, has not completed security testing at the site and allows some outside systems that connect to the website to access the Internet, “increasing the risk that unauthorized users could access data” from Healthcare.gov’s insurance marketplace, the report said. The HHS Centers for Medicare and Medicaid Services hasn’t required passwords of sufficient length or complexity on systems supporting the Healthcare.gov insurance marketplace, and the agency didn’t consistently apply security patches, the GAO report said. “Several critical systems had not been patched or were no longer supported by their vendors,” the report said.
Elsewhere, the White House unveiled new measures on Thursday to try to preserve the effectiveness of infection-fighting drugs as strains of bacteria become increasingly resistant to the existing arsenal of antibiotics. The moves signal a growing concern over drug-resistant infections, which are linked to two million illnesses and 23,000 deaths in the U.S. each year, according to the Centers for Disease Control and Prevention. Some infections are almost entirely untreatable because the appropriate antibiotics have been rendered powerless. The new national strategy calls for specific steps to prevent the spread of the drug-resistant bacteria and to accelerate the research and development of new antibiotics by 2020. An executive order signed by President Barack Obama creates a task force whose job is to submit a detailed plan by February to implement the national strategy. The rollout of the measures coincides with the release of a report by the President’s Council of Advisors on Science and Technology, or PCAST that reiterates that bacteria are growing resistant to antibiotics in large part because the drugs are being used too frequently in humans and also perhaps in animals raised for food.
FDA/EMA ROUNDUP -- The Food and Drug Administration has approved a new injectable diabetes drug from Eli Lilly & Co. (Indianapolis IN) for adults with Type 2, the most common form of the disease. The agency on Thursday cleared the drug, Trulicity, as a weekly injection to improve blood sugar control in patients with Type 2 diabetes, which affects over 26 million Americans or about 90% of the cases in the United States. The drug is part of a new class of medicines called GLP-1 agonists, which spur the pancreas to create extra insulin after meals. The drug will bear a boxed warning highlighting that rats tested with Trulicity had cases of thyroid cancer, though it is unclear whether they were caused by the drug. Lilly will be required to conduct follow-up studies.
Elsewhere, Nektar Therapeutics Inc. (San Francisco) said the FDA approved its drug Movantik, a once-per-day treatment for constipation caused by opioid painkillers. Movantik, or naloxegol, is approved for adults who have chronic pain that is not caused by cancer. British drugmaker GlaxoSmithKline Plc (London) will market the drug, and it has also filed for regulatory approval in the European Union and Canada. Constipation is a common side effect of the painkillers, which include morphine, Oxycontin and Vicodin.
The FDA approved a new label for Vivus Inc.’s (Mountain View CA) impotence drug, stating that it becomes effective in half the time that the previous label had stated. Shares jumped 3% over the week. The label on Stendra now reads that the drug can be taken approximately 15 minutes before sex. Previously approved prescribing information recommended that patients take the drug about 30 minutes before. Rival drugs used to treat erectile dysfunction, such as Pfizer Inc.’s Viagra, are supposed to be taken at least 30 minutes before sex. The FDA approved Stendra in April 2012 with that 30-minute label. But Vivus has sought a new label after finding in studies that some patients were able to have sex as little as 15 minutes. Shares of Vivus closed the week up at $4.16.
Across the pond, the European Commission has granted Gilead Sciences Inc. (Foster City CA) marketing authorization for its cancer drug, Zydelig. Following the approval, the drug will be launched for two blood cancer indications, follicular lymphoma (FL) and chronic lymphocytic leukemia (CLL). The drug was also approved in the U.S. for treatment of three forms of cancer, CLL, FL, and relapsed small lymphocytic lymphoma (SLL), in July this year.
MEDICAL STOCK SPOTLIGHT -- Avanir Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $4.30, or 64% for the week, to $11.04. The upward move came after the Aliso Viejo, CA-based company reported positive phase II trial results for its drug, AVP-923. The goal of the trial was to study the safety and efficacy of the drug in reducing agitation and aggression in Alzheimer’s disease patients. The primary endpoint, in which the trial measured the reduction in agitation in patients based on the Neuropsychiatric Inventory (NPI), was achieved as compared to the placebo arm of the trial. Some analysts said the surge in the stock price is justified as there is no other drug on the market for the treatment of Alzheimer’s patients experiencing agitation.
Elsewhere, Concert Pharmaceuticals Inc. (Nasdaq), which is developing drugs via deuterium substitution for spasticity and kidney disease, surged $3.94, or 39%, to $14.00. Wells Fargo initiated coverage with an Outperform and a price target range of $21-$23. Biotechnology Value Fund LP reported a 6.7% passive stake in Lexington, MA-based Concert Pharmaceuticals.
And PTC Therapeutics Inc. (Nasdaq) reached an all-time high, leaping $8.21, or 25%, to $40.93. Deutsche Bank initiated coverage on shares of PTC Therapeutics with a Buy rating. The South Plainfield, NJ-based biopharmaceutical company focuses on the discovery and development of orally administered, proprietary small-molecule drugs that target post-transcriptional control processes, or “PTC.” Post-transcriptional control processes are the regulatory events that occur in cells after a messenger RNA, or mRNA, molecule is copied, or transcribed, from DNA.
But Oncolytics Biotech Inc. (Nasdaq) plunged 43% to $0.73 after announcing overall patient data from its phase II pancreatic cancer study. It was a two-arm randomized study of carboplatin, paclitaxel plus its drug REOLYSIN (test arm) versus carboplatin and paclitaxel alone (control arm) for the first line treatment of patients with recurrent or metastatic pancreatic cancer. The overall objective of the study that missed analysts’ expectations and disappointed investors was to determine the progression free survival of the overall patient population and the patient population according to KRAS mutation status. (Mutations in the Kirsten Ras (KRAS) oncogene are common in certain types of cancer.) Oncolytics is a Canadian company headquartered in Calgary, Alberta, that focuses on the development of pharmaceutical products for the treatment of human cancers.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Kolltan Pharmaceuticals Inc. (New Haven CT), an early-stage biotech developing antibodies to treat solid tumors, registered up to $86 million worth of common stock. Kolltan is in phase I trials for its antibody-based drugs that target receptor tyrosine kinases (RTKs). The company licenses IP from MedImmune, which has the option to receive future payments based on the value of Kolltan’s lead drug candidate. Kolltan is also in preclinical development of certain inflammatory diseases and other cancers. The company, which was founded in 2007, plans to list on the Nasdaq Global Market under the symbol “KLTN.” Leerink Partners and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
September 15, 2014 ...
U.S. SECOND-QUARTER GROWTH SEEN HIGHER ON HEALTHCARE SPENDING -- The sprawling U.S. healthcare industry saw revenue rebound last quarter, a sign that stronger spending at hospitals and medical offices could help boost U.S. economic growth to its highest level in eight years. Total revenue at healthcare and social-assistance firms rose 3% in the second quarter from the first three months of the year, the Commerce Department said Thursday in its Quarterly Services Survey (QSS). Hospital revenue rose 2.8% from the first quarter and revenue at physician offices jumped 4.1%. Thursday’s report showed “modest acceleration in health spending” in the second quarter, driven likely by both “more people insured under the Affordable Care Act and the recovering economy putting some upward pressure on healthcare costs,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation (Menlo Park CA). Economists have predicted the rollout of the Affordable Care Act this year will lead to higher healthcare spending as millions of Americans obtain insurance coverage and begin using it. The Centers for Medicare and Medicaid Services recently projected healthcare spending would grow 5.6% this year, up from an estimated 3.6% in 2013. But that spending surge didn’t materialize in the first quarter, when revenue at healthcare and social-assistance firms fell 2% from the fourth quarter.
U.S. spending on healthcare services, adjusted for inflation, fell at a 1.4% pace and dragged down overall economic growth, the Commerce Department estimated. Mr. Levitt said many newly insured Americans signed up for coverage in late March, and “those people didn’t actually get their insurance cards until May. The real increase in health insurance came in the second quarter, and this is when you’d expect to see the effects.” From a year earlier, healthcare and social-assistance revenue rose 3.7% last quarter, up from 2.9% annual growth in the first quarter. The figures weren’t adjusted for seasonal variation or price changes. Consumer spending generates more than two-thirds of U.S. economic output, and stronger spending on health care and other services should bolster overall growth. The Commerce Department last month said gross domestic product expanded at a 4.2% seasonally adjusted annual rate in the second quarter, rebounding from an unexpected first-quarter contraction. That estimate assumed inflation-adjusted healthcare spending rose last quarter at a modest 0.5% pace. Wall Street economists believe the government will revise spending higher based on the QSS report, in turn boosting GDP growth. The government is set to release its third estimate of second-quarter GDP on Sept. 26.
THIRD AMERICAN INFECTED WITH EBOLA IN STABLE CONDITION -- The third American to be treated for Ebola in the United States is showing “remarkable improvement” after receiving an infusion of plasma from U.S. Ebola survivor Dr. Kent Brantly, as well as an undisclosed experimental drug, his doctors said on Thursday. Dr. Rick Sacra, 51, who is being treated in a special biocontainment unit at the University of Nebraska Medical Center in Omaha, received two doses of plasma from Brantly, which doctors are calling a convalescent serum, and has been given nightly doses of an undisclosed experimental drug, Dr. Phil Smith, one of Sacra’s doctors, said. “I don’t know how much of his recovery is due to the drug, how much is due to the convalescent serum and how much to the aggressive intravenous fluids,” Smith said. Brantly’s blood likely contains protective antibodies that may help buy Sacra some time while his body tries to fight off the infection, Smith said. The hospital tried a number of potential donors, but Brantly’s blood type turned out to be a match for his friend and fellow missionary Sacra. “It really meant a lot to us that he was willing to give that donation so soon after his recovery,” Debbie Sacra, the patient’s wife, told the briefing. “I spoke to his (Brantly’s) wife. We marveled that they had the same blood,” she said. Smith said he has been asked not to disclose the name of the experimental drug Sacra is receiving.
The number of new Ebola cases in West Africa is growing faster than authorities can manage them, the World Health Organization (WHO) said on Friday, renewing a call for health workers from around the world to go to the region to help. As the death toll rose to more than 2,400 people out of 4,784 cases, WHO director general Margaret Chan told a news conference in Geneva the vast nature of the outbreak--particularly in the three hardest-hit countries of Guinea, Liberia and Sierra Leone--required a massive emergency response. Sarah Crowe, a spokeswoman for UNICEF, said the U.N. children’s agency was using innovative ways to tackle the epidemic, including telling people to “use whatever means they have, such as plastic bags, to cover themselves if they have to deal with sick members of their family”. She added, “The Ebola treatment centers are full, there are only three in the country. Families need help in finding new ways to deal with this and deal with their loved ones and give them care without exposing themselves to this infection.” Cuban Health Minister Roberto Morales Ojeda said his country would send 165 healthcare workers to help in the fight--the largest contingent of foreign doctors and nurses to be committed so far.
TRACKING WASHINGTON -- The Federal Trade Commission last week sued AbbVie Inc. (North Chicago) and other drug companies over allegations they unlawfully sought to delay generic competition for AbbVie’s blockbuster testosterone-replacement drug AndroGel. The commission’s lawsuit was the first of its kind since a Supreme Court ruling last year boosted FTC efforts to challenge certain agreements between drugmakers that can postpone the introduction of generic drugs. The FTC, in a lawsuit filed in a Pennsylvania federal court, alleges AbbVie and partner Besins Healthcare SA (Brussels BEL) filed baseless patent-infringement litigation against potential generic-drug competitors to delay generic versions of AndroGel, a drug that has generated more than $1 billion annually in U.S. sales. The commission also sued the U.S. unit of Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) over a legal settlement it reached with AbbVie. The FTC alleges AbbVie paid Teva to back away from legal claims that could have led to a lower-priced generic version of AndroGel. The FTC alleged AbbVie compensated Teva not with a monetary payment but instead with a supply agreement for an authorized generic version of an unrelated drug: the cholesterol medication Tricor.
Elsewhere, Sylvia Mathews Burwell, the secretary of Health and Human Services, said in her first major speech last week that she wanted to move beyond the politics of health care and work with members of both parties to improve the management and operation of HealthCare.gov, the website used by millions of people to sign up for insurance coverage. “What I’ve told my team,” she said, “is that we’re not here to fight last year’s battles. We’re here to fight for affordability, access and quality.” With midterm elections two months away, Ms. Burwell said she wanted to shift the conversation to areas of potential agreement. Polls consistently show that the public remains more negative than positive on the Affordable Care Act, but that Americans want Congress to improve the law rather than to repeal it. “The American people are sending a very clear message that they want us to work together on health care,” Ms. Burwell said. Ms. Burwell said that since she took office in June she has heard the same message from many people: “Enough already with the back-and-forth on the Affordable Care Act. We just want to move forward.” The next open enrollment period begins in 10 weeks, on Nov. 15, and runs through Feb. 15, half as long as the first sign-up period.
FDA/EMA ROUNDUP -- Orexigen Therapeutics Inc. (La Jolla CA) won approval from the Food and Drug Administration for its obesity drug, making Contrave the third weight-loss pill to hit the market in the last two years. The shares fell the most in three months as the agency required notice of potential health complications from the treatment. The FDA said it cleared the pill, designed to reduce appetite and control cravings, for chronic weight management to be used with a lower-calorie diet and exercise. The drug will compete with Belviq from Arena Pharmaceuticals Inc. and Eisai Co. and Vivus Inc.’s Qsymia. Osaka, Japan-based Takeda Pharmaceutical Co., Asia’s largest drugmaker, will market Contrave, also known as NB32, in the U.S. Orexigen closed the week down 16% at $5.16.
Elsewhere, Sanofi SA (Paris) announced that it has won the approval of from the FDA for a label expansion of its meningococcal vaccine Menactra for use as a booster shot. The vaccine’s indication is now in line with the Centers for Disease Control and Prevention’s (CDC) guidelines for meningococcal vaccination and may help the company boost sales for the vaccine. Meningococcal diseases are a broad group of diseases caused by Neisseria meningitidis, a bacterium which is also known as meningococcus. The diseases include severe infections, septicemia (blood poisoning) and meningitis (inflammation of tissues around the brain).
Actavis Plc (Dublin IRL) failed to win the backing of FDA advisers for an experimental pill that combines two existing drugs to lower high blood pressure. The combination pill shouldn’t be approved to treat hypertension because it doesn’t provide a clinically meaningful benefit over the two drugs alone, advisers said. The advisory panel voted 6 to 4 against recommending the treatment. Regulators have questioned whether Actavis’s combination of nebivolol and valsartan would be a better treatment than the highest dose of one of the medicines alone. Using the combination treatment means it would take longer for patients to get their blood pressure under control, the FDA’s Division of Cardio-Renal Drug Products said in a report.
In Europe, regulators approved a long-lasting insulin from Eli Lilly & Co. (Indianapolis IN) and German drugmaker Boehringer Ingelheim GmbH (Ingelheim) that is the subject of patent infringement litigation with French rival Sanofi SA (Paris). Lilly said that the European Commission granted marketing authorization for its product, named Abasria in Europe, to be used in treating diabetes in adults, adolescents and children ages 2 years and above. Last month, the Food and Drug Administration gave a tentative approval to the insulin, named Basaglar in the United States. That is subject to a stay of more than two years due to the Sanofi litigation. The drugmaker has sued in U.S. federal court alleging that the Lilly product infringes on patents protecting its insulin Lantus. Lilly has denied the allegation. The Lilly and Boehringer insulin is a biosimilar product that has the same amino acid sequence as Lantus.
MEDICAL STOCK SPOTLIGHT -- Flexion Therapeutics Inc. (Nasdaq) led advancing issues, soaring $5.93, or 42% over the week, to $19.99. The specialty pharmaceutical company focused on the development and commercialization of injectable pain therapies had its target price lifted by Needham & Company LLC from $26.00 to $31.00 in a research note released on Wednesday. Burlington, MA-based Flexion has a 1-year low of $11.06 and a 1-year high of $20.92. The company last issued its quarterly earnings data on August 7th. The company reported ($0.38) EPS for the quarter, beating the Thomson Reuters consensus estimate of ($0.52) by $0.14. On average, analysts predict that Flexion will post $-2.17 earnings per share for the current fiscal year.
Elsewhere, Misonix Inc. (Nasdaq) surged $2.25, or 34%, to $8.88 on the back of positive fourth-quarter financial results for its fiscal year 2014. The company, which has been making losses in recent years, not only beat analysts’ estimates, but also reported double digit year-over-year growth for both revenues and earnings. New York-based Misonix manufactures, develops, and markets ultrasonic surgical equipment used in various general surgical procedures, as well as in spine surgery, neurosurgery, skull-based surgery, wound debridement, and cosmetic surgery. The company’s devices are designed to be minimally invasive. Misonix operates in 45 countries and is a leader in ultrasound technology.
And Endocyte Inc. (Nasdaq) leaped $1.98, or 30%, to $8.58 after analysts at Cantor Fitzgerald initiated coverage on the stock, giving it a Buy rating with a $21 price target. Meanwhile, Cowen and Company also reiterated its Outperform rating on the stock. The stock has remained close to its 52-week low of $5.91, since the company reported that its ovarian cancer drug, Vintafolide, failed in the phase-III trials in May. West Lafayette, IN-based Endocyte was developing Vintafolide in partnership with Merck & Co. Although the companies have dissolved their work on Vintafolide, they are still conducting trials for treating non-small cell lung cancer (SMCLC). Vintafolide is currently in a Phase IIb TARGET trial for NSCLC.
But RXi Pharmaceuticals Inc. (Nasdaq) skidded $1.01, or 30%, to $2.32 after presenting at the Rodman & Renshaw Annual Global Investment Conference. The highlight of this presentation was the 1-month interim results for the first of three RXI-109 Phase IIa studies that are in progress. With data from 16 patients available, RXI-109 is currently showing statistically significant results for the 8 patients in the delayed cohort group. Fifty nine percent of the blinded observations were positive for RXI-109 over placebo, which would indicate approximately 5 out of the 8 patients had significant improvement with RXI-109 over placebo. The results for the 8 patients in the early treatment group were not statistically different from placebo. Unfortunately, Worcester, MA-based RXi chose to release the results by posting the slides to its website, rather than via a Press Release. An initial quick scan led some investors to conclude that Cohort 1 (the early treatment group) did not have success.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Mevion Medical Systems Inc. (Littleton MA), which markets recently-approved proton radiation therapy systems to treat cancer, registered up to $69 million worth of common stock. The company first received 510(k) clearance from the FDA in July 2012. In December 2013, its first and only proton therapy system was installed at the Siteman Cancer Center in St. Louis, MO. Mevion plans to use IPO proceeds to expand its manufacturing and distribution facilities and to further develop its proton therapy technology. For the nine months ended June 30, 2014, the company booked $7.6 million in revenue. The company, which was founded in 2004, plans to list on the Nasdaq Global Market under the symbol “MEVI.” Jefferies and Leerink Partners are the joint bookrunners on the deal.
September 8, 2014 ...
HEALTHCARE SPENDING TO RISE, FEDERAL EXPERTS PREDICT -- U.S. healthcare spending is expected to grow more slowly in the coming decade as a sluggish economic recovery and higher cost sharing in private insurance plans limit demand for services, according to a government report released last week. The Centers for Medicare and Medicaid Services said it expects average annual healthcare spending to grow by 5.7% from 2013 to 2023, compared to 5.8% in last year’s projections, which covered the years 2012 to 2022. The projected growth rate is well below the 7.2% annual average between 1990 and 2008, CMS said. The projections coincide with Congressional Budget Office estimates released recently that show another $11 billion reduction in projected spending for Medicare for the 2015-24 period. This reduction from projections made in February contributes directly to lower federal deficits. The CMS study projects both public and private healthcare outlays and showed the overall total will make up a smaller portion of the economy than previously thought in coming years. In 2023, it estimated that healthcare spending will equal 19.3% of Gross Domestic Product, compared with last year’s projection of 19.9% for 2022. It made up 17.2% of GDP in 2012. The spending growth rate for 2013 will be 3.6%, nearly at the historic low since CMS started tracking healthcare spending in 1960.
For 2014, the spending growth will accelerate to 5.6% as more people gain healthcare coverage under President Barack Obama’s health insurance reform law, largely through its expansion of Medicaid, and because of an increase in economic growth. But this will still be below last year’s estimate of 6.1% growth for 2014. “The major factor is the relationship between health spending and economic growth,” said Andrea Sisko, an economist in the CMS actuarial division. Loss of jobs and associated healthcare benefits tend to discourage healthcare utilization, she said, adding that employment has been slow to recover. Another deterrent has been the increase in healthcare plans that require beneficiaries to bear a greater proportion of costs for doctor visits, procedures and prescription drugs. Medicare reimbursement rates also have been curtailed by the “sequester” budget cuts and by the Affordable Care Act, and prescription drug costs have eased because patents on a number of major medications have expired in recent years, making cheaper generic versions available. But as the economy improves and more Baby Boomers retire and draw benefits, spending growth is still expected to pick up, averaging 6.0% from 2015-23, CMS said.
THIRD U.S. MISSIONARY WITH EBOLA IS IDENTIFIED -- On Friday, another U.S. medical missionary infected with the Ebola virus entered the Nebraska Medical Center in Omaha for treatment after being flown in from West Africa, a spokeswoman for the medical center said. Dr. Rick Sacra, a 51-year-old Boston physician, is the third U.S. missionary doing health work with the SIM USA (Charlotte NC) Christian group in Liberia infected with the deadly virus. Sacra’s plane landed at the Offutt Air Force Base and he was transported to the medical center in an ambulance escorted by state highway patrol, said Jenny Nowatzke, media relations coordinator with the medical center. Sacra walked onto the airplane in Liberia on Thursday. He will be treated at the Nebraska hospital’s Biocontainment Patient Care Unit. The virus has killed 1,900 people out of 3,500 cases in Liberia, Sierra Leone, Guinea, Nigeria and Senegal since March, in the worst outbreak since Ebola was first uncovered in 1976. The pace of the epidemic has accelerated with close to 400 deaths in last week. Two other SIM USA missionaries infected with Ebola, Nancy Writebol and Kent Brantly, were also flown back to the U.S. for treatment. The Nebraska facility where Sacra is being treated is similar to the one at Emory University in Atlanta where Writebol and Brantly were treated and recovered.
Writebol and Brantly received an experimental treatment, ZMapp, that has been available for only a few patients, but it is not clear whether it aided their recovery. There are no more doses of the experimental drug--made by Mapp Biopharmaceutical Inc. (San Diego CA)--for Sacra, the director of the biocontainment unit in Omaha told reporters on Thursday. Sacra had volunteered to return to Liberia when Writebol and Brantly became infected. It is not known how he contracted the virus because he had not been caring for Ebola patients but was delivering babies, and had been following protocols to prevent the spread of the disease, SIM USA said.
TRACKING WASHINGTON -- Hackers successfully breached HealthCare.gov, but no consumer information was taken from the health insurance website that serves more than 5 million Americans, the Obama administration disclosed Thursday. Instead, the hackers installed malicious software that could have been used to launch an attack on other websites from the federal insurance portal. Health and Human Services spokesman Aaron Albright said the website component that was breached had been used for testing and did not contain consumer information, such as names, birth dates, Social Security numbers and income details. The initial intrusion took place July 8, but it was not detected until August 25 during a manual scan of system logs. HHS said the component that was breached did not have a firewall, or intrusion detection software, installed on it. Technicians manually scanning logs discovered the breach and took action. The Homeland Security Department, which helps safeguard federal systems, said the scope of the attack was limited to one server. There is no evidence an attack was subsequently launched from the tainted machine. Federal computer systems are the targets of hundreds of cyberattacks every day, but this is believed to be the first successful one involving HealthCare.gov. The incident was first reported by The Wall Street Journal.
Elsewhere, the full U.S. Court of Appeals in Washington will rehear a case on Obamacare tax subsidies, granting a government request in a move that may reduce chances of a new Supreme Court showdown over a central part of the law. A rehearing sets up the possibility that the full court will reverse the July ruling of a three-judge panel that blocked subsidies for consumers on federally run health exchanges, a key element to the 2010 healthcare overhaul. Another U.S. appeals court, in Richmond, VA, upheld the provision’s application to federal exchanges. Eliminating the split would reduce the chances of the Supreme Court’s taking the case. Divisions between appeals courts are among the factors the justices consider when deciding whether to hear a case. In a short order last week, the Washington appeals court set aside the July ruling and scheduled new arguments for Dec. 17. “If the government wins, you have certainly reduced the likelihood of Supreme Court review, no question,” said Jonathan Adler, a law professor at Case Western Reserve University in Cleveland, who co-wrote a brief in support of plaintiffs in the case seeking to restrict the subsidies. The D.C. case is Halbig v. Sebelius, 14-5018, U.S. Court of Appeals for the District of Columbia (Washington). The Virginia case is King v. Sebelius, 14-1158, U.S. Court of Appeals for the Fourth Circuit, (Richmond).
FDA/EMA ROUNDUP -- General Electric Co. (Fairfield CT) won approval from the Food and Drug Administration to offer its 3-D breast-imaging technology in the U.S., the company said, adding substantial new competition to the fast-growing market dominated by Hologic Inc. Three-dimensional imaging--also known as tomosynthesis--combines X-rays taken from multiple angles to produce a more detailed picture than regular mammograms. The technology costs more than regular mammography, but finds more cancers with fewer false alarms, studies have found, and is rapidly replacing the traditional mammography in the $10 billion-a-year market for breast screenings.
Elsewhere, Merck & Co. (Whitehouse Station NJ) won FDA approval for the first in a new line of cancer-fighting treatments that use patients’ own immune systems against the disease. The agency cleared Keytruda, known chemically as pembrolizumab, to treat advanced melanoma, the deadliest form of skin cancer. The medicine is the first in an emerging class of drugs that target a protein called PD-1 to boost the immune system and fight cancer cells that manage to evade the body’s natural defenses. Bristol-Myers Squibb Co., Roche Holding AG and Novartis AG are among companies working on similar treatments.
OncoMed Pharmaceuticals Inc. (Redwood City CA) said the FDA lifted a partial hold on patient enrolments for three trials testing its experimental cancer drug, vantictumab. Enrolment of new patients is expected to resume in the next few weeks after the revised trial protocols are approved, the company said. OncoMed had voluntarily halted enrollments on June 13 as a “precautionary measure,” after reports that two of its drugs, vantictumab and ipafricept, were causing mild-to-moderate bone-related side effects. On the same day, the FDA formally placed a partial hold on vantictumab, which is being tested in combination with standard-of-care chemotherapy in three studies in patients with forms of advanced lung, breast and pancreatic cancer.
And in Europe, Abbott Laboratories Inc. (Abbott Park IL) announced that it has received a CE mark (Conformité Européenne) from the European authorities for its FreeStyle Libre Glucose Monitoring System, a new glucose sensing device for diabetes patients. After the EU approval, this sensor will be available in seven countries including France, Germany, Italy, Netherlands, Spain, Sweden, and the United Kingdom. Libre is a revolutionary wearable water-resistant sensor system which saves patients of diabetes from going through routine finger pricks. It is worn at the back of upper arm for 14 days and is capable of sensing blood glucose levels through its sensor. The device also eliminates the need for “finger prick calibration,” which is required by all glucose monitoring systems currently available in the market.
MEDICAL STOCK SPOTLIGHT -- IntelliPharmaCeutics International Inc. (Nasdaq) led a meager group of advancing issues, surging 25% over the week to $3.14. Maxim Group upgraded IntelliPharmaCeutics from Hold to Buy and moved its price target from $3 to $7. The Toronto, Ontario-based company develops drug-delivery technologies. The company says it has developed a controlled-release, drug-delivery platform “to provide life cycle management or new chemical entity delivery system solutions for virtually any small molecule.”
Elsewhere, ACADIA Pharmaceuticals Inc. (Nasdaq) jumped $2.90, or 12%, to $26.96 after the company announced that its Parkinson’s disease psychosis treatment NUPLAZID was granted a “Breakthrough Therapy” designation from the FDA. Drugs meeting the FDA’s breakthrough requirements must treat life threatening diseases and should have preliminary clinical evidence demonstrating a substantial improvement over current treatment options. The FDA reserves the right to expedite the review process for drugs meeting this criteria and San Diego, CA-based ACADIA plans to submit the drug to the FDA for approval later this year.
But Exelixis Inc. (Nasdaq) plunged $2.29, or 55%, to $1.85 after its experimental drug failed to prolong the lives of men with advanced prostate cancer in a late-stage clinical trial. The South San Francisco-based biotechnology company said it will lay off 70% of its workforce--about 160 employees--and halt its other prostate cancer studies. Its remaining 70 employees will focus on two ongoing phase III studies of the drug, cabozantinib, in advanced liver and kidney cancer. Cabozantinib is already approved to treat advanced medullary thyroid cancer. But that disease accounts for just 3% to 4% of all thyroid cancers. Exelixis was betting that cabozantinib would also work in prostate cancer, a much bigger market.
And Recro Pharma Inc. (Nasdaq) slumped $2.92, or 49%, to $3.00 after equities researchers at Aegis reduced their price objective on shares of the Malvern, PA-based company from $40.00 to $38.00 in a report issued on Friday. Recro Pharma had a 52 week low of $5.01 and a 52 week high of $9.88. The company last posted its quarterly earnings results on August 12th. The company reported ($0.36) EPS for the quarter, missing the Thomson Reuters consensus estimate of ($0.25) by $0.11. Recro Pharma is a clinical stage specialty pharmaceutical company developing non-opioid therapeutics for the treatment of pain, initially for acute pain following surgery.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Calithera Biosciences Inc. (San Francisco), an early-stage biotech developing a drug platform for tumor metabolism and immunology, registered up to $80 million worth of common stock. The company, which was founded in 2010, plans to list on the Nasdaq Global Market under the symbol “CALA.” Citi, Leerink Partners, Wells Fargo Securities and JMP Securities are the joint bookrunners on the deal. No pricing terms were disclosed.
August 25, 2014...
BOTH U.S. EBOLA PATIENTS RELEASED FROM ATLANTA HOSPITAL -- The two American aid workers who were the first patients ever to be treated for the Ebola virus at a U.S. hospital were released Thursday. Dr. Kent Bradley, who weeks ago entered an Atlanta hospital in a full-body biohazard suit, said he was “thrilled to be alive” as doctors declared him virus-free and safe for release. Dr. Brantly’s release came two days after a second U.S. missionary, Nancy Writebol, was quietly allowed to leave Emory University Hospital, where both had been treated after contracting the deadly virus in July while working for Christian organizations in Liberia. The announcement of their release and expected full recovery from a disease that has killed 1,350 people in West Africa prompted an emotional scene in Atlanta. “Today is a miraculous day,” said Brantly, a 33-year-old medical missionary from Texas, working for the Christian relief group Samaritan’s Purse. As he left the press conference to rejoin his family, he hugged many of the five doctors, 21 nurses and other hospital workers who had helped care for him and Writebol while at Emory. Writebol did not attend. The 59-year-old from Charlotte, NC, left the hospital on Tuesday and was resting in an undisclosed location with her husband, Christian mission group SIM USA said in a statement.
Dr. Bruce Ribner, medical director of the infectious disease unit at Emory’s hospital, credited aggressive supportive care and the fact that both Brantly and Writebol were healthy and well-nourished with helping them recover. The pair received an experimental therapy called ZMapp, a cocktail of antibodies made by tiny California biotech Mapp Biopharmaceutical Inc. (San Diego). Health experts cautioned against declaring the drug a medical breakthrough based on two patients. “The honest answer is we have no idea,” Ribner said, when asked if the experimental drugs helped the missionaries’ survival. He said early studies in primates suggest the drug has few long-term side effects. The scale of the Ebola outbreak in West Africa, the largest in history with 2,473 people infected and at least 1,350 dead, has prompted a scramble for experimental drugs, most of which have only been tested in monkeys and cell cultures. The week prior, the World Health Organization backed the use of untested drugs and vaccines, but the scarcity of supplies has raised questions about who gets the treatments.
ALLERGAN, SEEKING TO FEND OFF HOSTILE BID, APPROACHES SALIX -- Allergan Inc. (Irvine CA), working to fend off a hostile approach from Valeant Pharmaceuticals Inc. (Laval, Quebec), is reportedly taking a look at the smaller Salix Pharmaceuticals Inc. (Morrisville NC), weighing a multibillion-dollar deal that could render it unattainable--or at least drive up its asking price. Citing unnamed sources, The Wall Street Journal reported that Allergan has approached Salix about a deal, allured by its stable of gastrointestinal drugs and pipeline full of treatments for inflammatory bowel disease and pain. Salix commands a market cap north of $10 billion, and consuming it could be just what Allergan needs to foil Valeant in its attempt to stir a shareholder revolt and get management to accept a $48.7 billion bid. Complicating matters is the fact that Salix is in the midst of an M&A operation of its own, awaiting the close of a $2.6 billion all-stock merger with a subsidiary of Italy-based Cosmo Pharmaceuticals SpA. Under that deal, Salix would reverse-merge with Cosmo’s Irish division, thereby granting the U.S. company a tax-friendly domicile and lowering its effective rate via a trendy process called “inversion.” Whether Salix’s Irish plans have anything to do with Allergan’s reported interest remains unknown, though the Journal’s sources note that the two companies could strike a deal as soon as next month.
The news is a philosophical fit with past statements from Allergan CEO David Pyott, who has repeatedly talked up the potential benefits of a sizable acquisition without disclosing any targets. At January’s J.P. Morgan Healthcare Conference, Pyott told FierceBiotech he had a $10 billion purse earmarked for takeovers and an eye on M&A. But that was before Valeant launched a series of hostile offers, sparking a months-long back and forth that has led Allergan to reevaluate its approach to R&D. On Thursday, a federal judge in California denied a request by Allergan to expedite its civil suit claiming that Valeant and Pershing Square Capital Management (New York) engaged in insider trading ahead of their bid to buy Allergan. Judge David Carter said the U.S. District Court for the Central District of California “would be reluctant to create a precedent that allows corporations to demand at will the immediate attention and input of the federal courts in order to resolve intra-corporate disputes that might be better left to the dynamic free market or to the state court.” Allergan closed the week up 5% at $165.56. Valeant rose 4% to $117.26. Salix jumped 14% to $158.96.
TRACKING WASHINGTON -- In a policy change, the Obama administration is planning to pay doctors to coordinate the care of Medicare beneficiaries, amid growing evidence that patients with chronic illnesses suffer from disjointed, fragmented care. Although doctors have often performed such work between office visits by patients, they have historically not been paid for it. Starting in January, Medicare will pay monthly fees to doctors who manage care for patients with two or more chronic conditions like heart disease, diabetes and depression. “Paying separately for chronic care management services is a significant policy change,” said Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services. Officials said such care coordination could pay for itself by keeping patients healthier and out of hospitals. With the new initiative, Medicare will adopt some of the techniques devised by health maintenance organizations to manage the care of their patients. About 30% of the 54 million Medicare beneficiaries are in HMOs and other private health plans run by companies like Kaiser Permanente (Oakland CA) and Humana Inc. (Louisville KY), but 70% are still in the traditional fee-for-service Medicare program.
Doctors will draft and help carry out a comprehensive plan of care for each patient who signs up for one. Under federal rules, these patients will have access to doctors or other healthcare providers on a doctor’s staff 24 hours a day and seven days a week to deal with “urgent chronic care needs.” The Obama administration rejected pleas from doctors to relax or delay “the 24/7 requirement,” saying it was essential. Two-thirds of Medicare beneficiaries have at least two chronic conditions, and they account for 93% of Medicare spending, said Kimberly A. Lochner, a statistician at the Department of Health and Human Services. As part of the new service, doctors will assess patients’ medical, psychological and social needs; check whether they are taking medications as prescribed; monitor the care provided by other doctors; and make arrangements to ensure a smooth transition when patients move from a hospital to their home or to a nursing home. Doctors can expect to receive about $42 a month for managing the care of a Medicare patient. Care management services can be provided only if patients agree in writing. Patients will pay about 20% of the $42 fee, the same proportion as for many other doctor services.
FDA/EMA ROUNDUP -- Bristol-Myers Squibb Co. (New York) and Pfizer Inc. (New York) said Thursday the Food and Drug Administration expanded approval of their blood thinner Eliquis to treat two types of dangerous blood clots. The agency cleared the drug for patients suffering from or at risk of deep vein thrombosis and pulmonary embolism. The drug was originally approved in 2012 to treat a common form of irregular heartbeat, atrial fibrillation, in patients at risk for strokes or dangerous clots. Eliquis, known chemically as apixaban, is manufactured by Bristol-Myers Squibb and co-marketed with Pfizer. Deep vein thrombosis occurs when blood clots form in one of the large, deep veins, usually in the legs. Pulmonary embolism most commonly occurs when part or all of a thrombosis dislodges and travels to the lung, via the heart, where it can partially or completely block a branch of the pulmonary artery. Xarelto, another blood thinner from rival Johnson & Johnson, was approved to treat the same conditions in 2012.
Elsewhere, the FDA approved a new capsule-based drug to treat Gaucher’s disease. Regulators approved the new drug, Cerdelga, for patients with the Type 1 form of the rare genetic disorder, which causes excess fat to build up in the spleen, liver and bone marrow. Cerdelga is from Genzyme Corp. (Cambridge MA), the specialty drugmaker that introduced the first drug for Gaucher’s disease 20 years ago. The oral treatment could serve as an alternative to Genzyme’s best-selling drug Cerezyme, which is given intravenously. Type 1 is the most common form of Gaucher’s disease and affects an estimated 6,000 people in the U.S. Patients with Gaucher’s disease lack a certain enzyme that helps the body break down fat. Genzyme is a subsidiary of French drugmaker Sanofi SA, which acquired the company in 2011.
The FDA granted tentative approval for Eli Lilly & Co. (Indianapolis IN) and Boehringer Ingelheim GmbH’s (Ingelheim DEU) insulin injection that helps control blood sugar levels in diabetes patients, Lilly said in a statement. The drug, Basaglar, is intended to provide long-lasting blood sugar control in between meals and during the night. It is approved for adults with type 2 diabetes and in combination with mealtime insulin in adults and children with type 1 diabetes. Although the drug meets all regulatory requirements for approval, it is subject to an automatic stay order of up to 30 months because of litigation filed by Sanofi SA (Paris). Sanofi, whose top-selling Lantus helps diabetics control blood sugar levels, has brought a lawsuit accusing Lilly of infringing seven patents related to insulin and devices used to deliver it. FDA cannot give final approval until the end of the 30-month period in mid-2016, unless a court finds in favor of Lilly earlier.
And ViiV Healthcare Co. (Brentford GBR), a joint venture of GlaxoSmithKline Plc (London), Pfizer Inc. (New York) and Shionogi & Co. (Osaka JPN), won FDA approval for an HIV treatment that combines three drugs into one, reducing side effects and providing greater convenience for patients. The FDA cleared Triumeq for patients who have no past history of resistance to any of its component drugs. Triumeq is made up of Glaxo’s Tivicay, developed by ViiV, and the medicines abacavir and lamivudine. Tivicay was approved in August 2013 and may top $1 billion in sales in 2016 for Glaxo, rising to $2.2 billion in 2018, according to analysts’ estimates compiled by Bloomberg. More than 1.1 million Americans are living with HIV, according to the Centers for Disease Control and Prevention. Treatment has involved a cocktail of drugs, making single-tablet combinations more convenient. Tivicay is in a class of drugs called integrase inhibitors that interfere with one of the enzymes required for HIV to multiply.
MEDICAL STOCK SPOTLIGHT -- Heat Biologics Inc. (Nasdaq) led advancing issues, soaring 67% over the week to $6.68. The clinical stage biopharmaceutical company, that is focused on the development of cancer immunotherapies, announced its financial results for the second quarter ended June 30, 2014. It also outlined key highlights of its lead clinical development programs. Chapel Hill, NC-based Heat Biologics reported a second quarter loss of $0.44 per share, compared to the loss of $0.92 per share last year. Heat’s Viagenpumatucel-L (HS-110) will be entering phase II trials against non-small cell lung cancer and its Vesigenurtacel-L (HS-410) is being evaluated in an ongoing Phase 1/2 clinical trial against bladder cancer.
Elsewhere, Amicus Therapeutics Inc. (Nasdaq), a clinical-stage biotech, leaped 32% to $5.87 after announcing positive late-stage results for migalastat as an orally administered treatment for Fabry disease. Fabry disease is a rare, yet often fatal, genetic disorder that causes fat to accumulate in various parts of the body. In a late-stage study, Cranbury, NJ-based Amicus’s migalastat was found to be both a safe and effective treatment for certain types of Fabry disease patients when compared to enzyme replacement therapy. Patients afflicted with Fabry disease presently have two treatment options: Fabrazyme from Sanofi SA and Replagal from Shire Plc. Migalastat’s potential competitive advantage over existing therapies is that it comes in pill form, whereas the others are administered intravenously.
And Pernix Therapeutics Holdings Inc. (Nasdaq) surged 17% to $8.40 after announcing it has closed its acquisition of Treximet (sumatriptan/naproxen sodium) for the acute treatment of migraine attacks with or without aura in adults. Pernix first announced its agreement with GlaxoSmithKline Plc to acquire the U.S rights to Treximet on May 14. Houston, TX-based Pernix’s team of approximately 100 specialty sales professionals will support the sales and marketing of Treximet. With the addition of Treximet, Pernix estimates FY 2014 revenue to be in the range of $110 million to $120 million with adjusted EBITDA of $22 million to $24 million.
But Ampio Pharmaceuticals Inc. (Nasdaq) plunged 30% to a 52-week low of $4.84 on Friday, one day after the biopharmaceutical company announced a major setback to a study on its osteoarthritis drug Ampion. The Greenwood Village, CO-based company said a shipment of Ampion and a placebo was accidentally exposed to freezing temperatures prior to the phase III study, which could have affected Ampion’s efficacy and safety. Ampio said the analysis of the study’s results, which was scheduled to come out this quarter, will be delayed; the company also said it could dismiss the study altogether. Ampio only discovered the Ampion temperature problem after the phase III study was unblinded. This means Ampio has the study results but is choosing not to disclose them.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Foamix Pharmaceuticals Inc. (Weizmann Science Park), an Israeli biotech developing topical foam treatments for moderate-to-severe acne, registered up to $75 million worth of common stock. The company expects to enter phase III trials for its lead candidate, a 4% minocycline foam formulation, in 2015. The company, which was founded in 2003 and booked $3 million in licensing agreements for the 12 months ended June 30, 2014, plans to list on the Nasdaq Global Market under the symbol “FOMX.” Barclays and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.
August 18, 2014 ...
WHO SAYS UNPROVEN EBOLA DRUGS ETHICAL TO USE IN OUTBREAK -- The World Health Organization (Geneva) gave the green light last week for the use of unproven drugs to fight the deadly Ebola outbreak in four West African countries. A panel of specialists agreed it is ethical to offer these treatments to try to curb the Ebola epidemic, which is the largest ever seen. There have been a number of Ebola outbreaks in Eastern and Central Africa over the past 40 years. The WHO was able to stop those outbreaks by identifying and isolating all cases of the disease, tracing those who have come in contact with infected individuals and providing protective covering to healthcare workers. But officials from the U.N. health agency acknowledge what has worked in the past is not working now. They say the outbreak in four West African countries--Guinea, Sierra Leone, Liberia, and Nigeria--continues to spread and appears unstoppable. That’s why the panel of experts who convened last week unanimously agreed it is ethical to offer unproven medicines as potential treatments, according to WHO Assistant Director-General Marie-Paule Kieny. “The magnitude and the spread of the outbreak makes it (such) that we do not have enough people to use and to rely only, if I may say, on what has traditionally worked if we want to stop the outbreak as quickly as possible,” Kieny said.
The death toll from this worst-ever outbreak of Ebola has risen to 1,145, the WHO said on Friday, as 76 new deaths were reported in the two days to August 13 in the four West African nations affected by the epidemic. The U.N. health agency said that a total of 152 confirmed, probable and suspected new cases of the deadly hemorrhagic fever were reported, bringing the total for the outbreak to 2,127. Researchers have found some potential treatments and vaccines that could help bring Ebola under control. But, while a handful of these drugs have shown positive results in monkeys, they have not been clinically tested in humans to see whether they are safe and effective. The health of two American aid workers who got infected with Ebola in Liberia has improved since they were treated with an experimental drug known as ZMapp. This has raised hopes of other successful treatments by using this and other unproven drugs. But finding doses poses an immediate challenge after ZMapp’s developer, Mapp Biopharmaceutical Inc. (San Diego CA), said it’s already exhausted its supply. The WHO says it will push for the speedy start of clinical trials for Ebola drugs that look promising.
MEDICAID ROLLS ARE GROWING EVEN IN STATES THAT REJECTED FEDERAL FUNDS -- Even in states that haven’t changed their Medicaid programs, nearly a million people signed up for Medicaid this year, a side effect of the Affordable Care Act, says the New York Times. The law has expanded insurance coverage to millions of poor Americans through its broadening of the federal-state Medicaid program. In about half the states, that expanded program means that anyone below a certain income threshold is automatically qualified for the program. As might be expected, Medicaid enrollment went way up in those states. But Medicaid enrollment has also increased this year in many states that chose not to accept federal funds. Data from Medicaid last week show that enrollment jumped in most states that did not expand their programs, including Georgia (16%), Montana (10%), Idaho (9%) and Florida (7%). Altogether, enrollment in Medicaid and the Children’s Health Insurance Program in the states that didn’t make any changes has gone up by 975,000. The reason is a phenomenon that health experts like to call the “welcome mat effect” or the “woodwork effect,” depending on whether they see it as good news. What happened is that many people who were always eligible for the program have finally decided to sign up.
There was no policy change that gave people new access to Medicaid insurance, but new online marketplaces and all the public conversation around new insurance options encouraged them to apply and get benefits they were always eligible for, the Times said. There are quite a lot of uninsured people in the country who fall into this category. A 2012 study in the journal Health Affairs estimated that, in some states, fewer than half of all eligible people were enrolled in their state’s programs. These enrollees tagged along with the Affordable Care Act’s coverage expansion. For states, like Washington, that are eager to get eligible people signed up for coverage, this enrollment is a development they cheer. The state has had an explicit goal of covering all children in the state since 2007; this year, they’ve made significant strides. “If you go out into the communities, and you talk about the programs, there is a bump,” said Jim Stevenson, a spokesman for the state’s HealthCare Authority. Washington has added about 400,000 people to its program, most through expansion, with about 40,000 through spreading the word and making it a little easier to sign up. (Source: newyorktimes.com)
TRACKING WASHINGTON -- The Obama administration moved last week to cut off health insurance for up to 310,000 people who signed up through the HealthCare.gov system unless they can provide documents in the next few weeks showing they are U.S. citizens or legal residents. Those individuals have until Sept. 5 to send in additional information that could confirm they are in the U.S. legally, a condition of using the online insurance exchanges to obtain coverage. Officials at the Centers for Medicare and Medicaid Services, which administers the 2010 Affordable Care Act, said they would tell insurers to terminate health policies for people who don’t respond, starting Sept. 30. CMS and its contractors are still trying to dig out from technological flaws with HealthCare.gov. Millions of users had difficulties using the site to shop for insurance when it launched last fall, but deeper problems remain within the system, including the ability to use databases held by various federal agencies to check people’s eligibility for coverage. Federal officials have said the application system wasn’t able to determine citizenship and immigration status for almost one million people of the 5.4 million who had obtained plans through HealthCare.gov by the time the main enrollment period closed in mid-April.
Immigration status has been one of the most politically charged aspects of the law. During congressional debate, supporters added a provision banning people living in the U.S. without authorization from using the exchanges to buy coverage and from receiving tax credits that many lower-income Americans and legal residents can get. Some immigration activists grudgingly accepted the restriction as necessary to maintain support for the legislation, but said it was spiteful to prohibit people from using the site entirely. At the same time, Republicans critical of the law said they didn’t believe the federal government was capable of preventing widespread fraud and have pointed to the data problems as proof of their predictions. CMS officials said 970,000 people had applications with inconsistencies. Around 450,000 cases had since been resolved, and another 210,000 had responded to notices asking for more data. Letters were mailed Tuesday to another 310,000 people who don’t appear to have responded, with warnings that they must send in documents now or lose their insurance.
FDA/EMA ROUNDUP -- The Food and Drug Administration approved a DNA test to screen for colon cancer in people with a lower risk of developing the disease, the first such test of its kind to be cleared by U.S. regulators. The test, called Cologuard, is used to detect genetic mutations in patients’ stool associated with cancerous and precancerous growths in the colon. Doctors must prescribe the test, but patients collect stool samples at home and ship the samples to laboratories for analysis. The FDA said the Cologuard test, made by Exact Sciences Inc. (Madison WI), identified more cancers during clinical trials than a rival blood test. Colon cancer is the fourth most common type of tumor, and was responsible for 51,000 deaths in the U.S. last year, according to the National Cancer Institute. The disease can often be effectively treated if detected early enough, but many people avoid colonoscopy screening out of fear it will be painful and time-consuming.
Elsewhere, Merck & Co. (Whitehouse Station NJ) won FDA approval for a new type of sleeping pill designed to help people with insomnia stay asleep. The tablet, Belsomra, works by temporarily blocking chemicals known as orexins that control the sleep cycle and can keep people awake at night. It’s unclear whether the new drug is safer or more effective than older drugs because it was tested against a placebo, rather than other sleeping medications. The FDA approved the drug in four different doses for various degrees of insomnia. The agency noted that patients who took the highest dose, 20 milligrams, experienced drowsiness and difficulty driving the next morning.
Swiss drugmaker Roche Holding AG (Basel) said on Friday the FDA had approved the use of its Avastin cancer drug in combination with chemotherapy to treat advanced cervical cancer. Avastin has now been approved to treat five distinct tumor types in the United States, Roche said.
In Europe, Gilead Sciences Inc.’s (Foster City CA) hepatitis C drug Sovaldi won the backing of the U.K.’s health-cost regulator, paving the way for the treatment to be reimbursed by British taxpayers at a price of almost $700 a pill. A standard 12-week course of Sovaldi will cost almost 35,000 pounds ($58,380), not including tax or the price of immune-boosting therapies interferon and ribavirin, the immune-boosting therapies that may be taken alongside the drug, the National Institute for Health and Care Excellence said. The therapy has become a lightning rod for debate about drug pricing globally because its cost has prompted some insurers in the U.S. to deny coverage to patients they deem not sick enough. The drug is transforming the treatment of hepatitis C by boosting cure rates to more than 90% and allowing patients to shorten the time they spend taking interferon and ribavirin, which can cause side effects including depression and rash.
MEDICAL STOCK SPOTLIGHT -- Cerulean Pharma Inc. (Nasdaq) led advancing issues, soaring $1.45, or 40% over the week, to $5.04. The company provided an update on corporate activities during the quarter ended June 30, 2014 and the market responded enthusiastically. The Cambridge, MA-based biotech raised net IPO proceeds of $59.9 million, including the exercise of the underwriters’ over-allotment option. Key uses of proceeds include a randomized phase II clinical trial of CRLX101 in relapsed renal cell carcinoma, a single-arm phase II clinical trial of CRLX101 in relapsed ovarian cancer, a single-arm Phase Ib/II clinical trial of CRLX101 in non-metastatic rectal cancer, and a planned phase I clinical trial of its CRLX301. Both candidates are nanoparticle-drug conjugates, or NDCs, that are designed to selectively attack tumor cells, reduce toxicity by sparing the body’s normal cells, and enable therapeutic combinations.”
Elsewhere, T2 Biosystems Inc. (Nasdaq) surged $3.60, or 27%, to $17.00 after announcing the closing of its initial public offering of 5.98 million shares of its common stock at an initial public offering price of $11.00 per share. The shares began trading on the Nasdaq Global Market under the ticker symbol “TTOO” on August 7, 2014. Goldman Sachs & Co. and Morgan Stanley acted as joint book-running managers for the offering. Lexington, MA-based T2 Biosystems will use the funding to commercialize its technology for faster and more accurate diagnosis of infectious diseases in hospitals, a hot area considering all the news about the spread of Ebola.
And Achillion Pharmaceuticals Inc. (Nasdaq) leaped $1.89, or 26%, to $9.25 after the company on Friday announced positive interim results for its hepatitis C treatment. The trial is for the company’s ACH-3102 inhibitor in combination with sofosbuvir, which is marketed and sold as Sovaldi by Gilead Sciences Inc. In its most recent quarterly report, Gilead said sales of Sovaldi, which was approved by the FDA in December 2013, totaled $3.48 billion. In its announcement Friday, New Haven, CT-based Achillion said, “ACH-3102 continues to demonstrate good safety and tolerability through three phase II studies. We believe these studies also confirm a differentiated efficacy profile for an NS5A inhibitor.” As a result of its findings, Achillion said 12 additional patients would begin treatment with six weeks of its ACH-3102 inhibitor with sofosbuvir. Year-to-date, Achillion shares are up more than 190%.
But Dendreon Corp. (Nasdaq) plummeted 31% to $1.40 after the company warned that it will not be able to repay or refinance its notes due 2016. The company also noted in its regulatory filing that it is currently considering alternatives to the repayment of notes due in 2016. As per the company, the alternatives to repay the debt might also leave its current stockholders with little or no financial ownership of Dendreon. The company is a Seattle, WA-based biotech whose lead product, Provenge, is an immunotherapy for prostate cancer. It consists of a mixture of the patient’s own blood cells that have been incubated with the Dendreon PAP-GM-CSF fusion protein.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Forward Pharma A/S (Copenhagen DNK), a late-stage biotech developing treatments for multiple sclerosis and psoriasis, registered up to $200 million worth of common stock. The company, which was founded in 2005, plans to list on the Nasdaq Global Market under the symbol “FWP.” Forward Pharma initially filed confidentially on April 9, 2014. Leerink Partners is the sole bookrunner on the deal. No pricing terms were disclosed.
August 11, 2014 ...
EBOLA DECLARED INTERNATIONAL PUBLIC HEALTH EMERGENCY -- The World Health Organization (Geneva CHE) on Friday declared the Ebola outbreak in West Africa to be an international public health emergency that requires an extraordinary response to stop its spread. It is the largest and longest outbreak ever recorded of Ebola, which has a death rate of about 50% and has so far killed at least 961 people. WHO declared similar emergencies for the swine flu pandemic in 2009 and for polio in May. The WHO chief, Dr. Margaret Chan, said the announcement is “a clear call for international solidarity” although she acknowledged that many countries would probably not have any Ebola cases. “Countries affected to date simply do not have the capacity to manage an outbreak of this size and complexity on their own,” Chan said at a news conference in Geneva. “I urge the international community to provide this support on the most urgent basis possible.” The agency had convened an expert committee last week to assess the severity of the continuing epidemic. The current outbreak of Ebola emerged in Guinea in March and has since spread to Sierra Leone and Liberia, with a suspected cluster in Nigeria. Since it was first identified in 1976, there have been more than 20 outbreaks in central and eastern Africa; this is the first one to affect West Africa.
“Statements won’t save lives,” said Dr. Bart Janssens, director of operations for Doctors Without Borders (Geneva). “For weeks, (we) have been repeating that a massive medical, epidemiological and public health response is desperately needed. Lives are being lost because the response is too slow.” In the United States, the Centers for Disease Control and Prevention already recommends against traveling to West Africa. The agency has also put U.S. hospitals on alert for symptoms to spot potential cases as quickly as possible. Two Americans infected with Ebola recently received a drug never before tested in people and seem to be improving slightly, according to the charity they work for. This week, WHO will hold another meeting to discuss whether it’s ethical to use experimental treatments and drugs in the current outbreak. There’s no evidence in people that the experimental treatments work and it would take months even to have a modest amount. There is no licensed drug or treatment for Ebola.
FDA SAYS EBOLA DRUG BY TEKMIRA MAY BE USED ON INFECTED PATIENTS -- U.S. health authorities have eased safety restrictions on an experimental drug to treat Ebola, a move that could clear the way for its use in patients infected with the deadly virus. Canadian drugmaker Tekmira Pharmaceuticals Corp. (Burnaby BC) said the U.S. Food and Drug Administration modified a hold recently placed on the company’s drug after safety issues emerged in human testing. The company has a $140 million contract with the U.S. government to develop its drug, TKM-Ebola, which targets the genetic material of Ebola. But last month the FDA halted a small study of the injection in adults to request additional safety information. Tekmira said Thursday the agency “verbally confirmed” changes to the hold that may allow the company to make the drug available, although it has yet to be proven as safe and effective. Two Americans diagnosed with Ebola recently received a different experimental drug called ZMapp, made by Mapp Biopharmaceutical Inc. (San Diego CA). It is aimed at boosting the immune system’s efforts to fight off Ebola and is made from antibodies produced by lab animals exposed to parts of the virus. The U.S. aid workers were first treated in Liberia. And while the FDA must grant permission to use experimental treatments in the United States, it does not have authority over the use of such drugs in other countries.
The FDA’s move Thursday comes amid an Ebola outbreak in West Africa that health officials warn could sicken more people than all previous outbreaks of the disease combined. More than 1,700 people have been sickened in the current outbreak, which began in March. Nearly 1,000 have died, according to the World Health Organization (Geneva). Currently, there are no licensed drugs or vaccines for the deadly disease. Several are in various stages of development, but none have been rigorously tested in humans. The FDA in March granted Tekmira “fast track” status for its Ebola drug, a designation designed to speed up approval of high-priority drugs by granting companies extra meetings with FDA scientists. Early studies of TKM-Ebola in monkeys suggested it could block high doses of the Ebola virus. But on July 21, the company announced the FDA had halted a small dosing study of the drug in 28 healthy adults. The company said regulators had questions about a type of drug reaction that can cause nausea, chills, low blood pressure and shortness of breath. FDA spokeswoman Stephanie Yao said she could not confirm the company’s announcement since FDA regulations bar the agency from disclosing information about experimental drugs. Tekmira’s U.S.-traded shares closed the week up $6.44, or 69%, at $20.70.
TRACKING WASHINGTON -- The U.S. government last week said that it will increase the operating payments that acute-care and long-term care hospitals receive from Medicare for inpatient care for the federal fiscal year that begins on Oct. 1. The Centers for Medicare and Medicaid Services (CMS) announced a 1.4% rate update for 3,400 acute care hospitals and a 1.1% rate update for 435 long-term care hospitals for fiscal year 2015. CMS also announced a market basket update of 2.9% but said the rate could vary depending on whether a hospital participates in government efforts to address quality care issues and automates its information systems to accommodate electronic health records. The market basket, a fixed index of goods and services, reflects the influence of inflation and is used to update payments and cost limits within Medicare. Under a final rule released last week, CMS said the market basket update would decrease by one-quarter among hospitals that do not successfully participate in its quality reporting program or use electronic health records in a meaningful way. Overall, CMS projected that payments to acute-care hospitals would decrease by $756 million, while payments to long-term hospitals would rise by $62 million.
Elsewhere, President Barack Obama on Thursday signed into law a $16.3 billion measure to help overhaul the Department of Veterans Affairs, the agency that in recent months faced intense criticism for long wait times for health care and for manipulation of records. “This bill will help us ensure that veterans have access to the care that they’ve earned,” Mr. Obama said at Fort Belvoir, a U.S. Army installation in nearby Virginia. “This will give the VA more of the resources that it needs. It will help the VA hire more doctors and more nurses and staff more clinics.” Congress passed the bill following months of turmoil at the VA, including the resignation of Secretary Eric Shinseki in late May. The agency’s widespread problems included manipulation of official records to hide the fact that veterans had to wait months to receive proper care. The VA has since taken steps to correct the worst deficiencies, the White House said, including reaching out to more than 217,000 veterans to get them off wait lists and into clinics.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved The Medicines Co.’s (Parsippany NJ) single-dose intravenous drug to treat acute bacterial skin infections, the agency’s third approval for the same condition this year. Drugmakers need to constantly devise new therapies to fight bacterial infections as patients build up resistance to older antibiotics. All the three drugs target acute bacterial skin and skin structure infections (ABSSSI), caused by the Gram positive strain of bacteria. These infections involve deep tissue or are associated with an underlying disease such as diabetes. Medicines Co.’s treatment, Orbactiv, is in the same class of drugs as generic vancomycin, the standard-of-care for methicillin-resistant Staphylococcus aureus (MRSA), a serious Gram-positive infection.
Elsewhere, Agila Specialties Ltd. (Bengaluru IND) won approval for its generic version of Ketorolac tromethamine tablets. The medicine is a non-steroidal anti-inflammatory drug (NSAID), indicated for the short-term (up to 5 days in adults) management of moderately severe acute pain that requires analgesia at the opioid level and only as continuation treatment following IV or IM dosing of Ketorolac tromethamine, if necessary. The total combined duration of use of Ketorolac tromethamine tablets and Ketorolac tromethamine should not exceed 5 days.
Aurolife Pharma LLC (Dayton NJ) won approval for its generic version of Phentermine Hydrochloride. Phentermine is a stimulant that is similar to an amphetamine. Phentermine is an appetite suppressant that affects the central nervous system. Phentermine is used together with diet and exercise to treat obesity (overweight) in people with risk factors such as high blood pressure, high cholesterol, or diabetes.
In Europe, one of Roche Holding AG’s (Basel CHE) most promising new drugs—for women with an aggressive form of breast cancer—has been rejected by the panel that advises the U.K. health service on the grounds that it is too expensive. The decision by the National Institute for Health and Care Excellence, known as NICE, reflects growing pressure on drug companies from health authorities in Europe and U.S. insurers over pricing. Ireland’s equivalent pricing body issued a similar decision on the Roche drug, called Kadcyla, last month. Kadcyla is one of Roche’s newly launched treatments and analysts expect it to be among the Swiss drugmaker’s top five products in coming years, with forecast sales eventually hitting more than $3 billion annually. Kadcyla is used in patients with hard-to-treat and often terminal breast cancer that has spread to other parts of the body and is no longer operable. The drug gives patients on average an extra six months of life, NICE noted, but concluded that at its full list price of more than 90,000 pounds ($151,000) per patient annually, it was unaffordable for use on the National Health Service.
MEDICAL STOCK SPOTLIGHT -- Radius Health Inc. (Nasdaq) led advancing issues, soaring $3.43, or 41% over the week, to $11.81. Analysts at Cantor Fitzgerald recently started coverage on shares of Radius with a “buy” rating and a $20.00 price target on the stock. Cantor Fitzgerald’s price target suggests a potential upside of 69% from the company’s current price. Cambridge, MA-based Radius has been the subject of a number of other recent research reports. Analysts at Canaccord Genuity initiated coverage, also setting a “buy” rating and a $21.00 price target on the stock. And analysts at Jefferies Group initiated coverage setting a “buy” rating and a $17.00 price target on the stock. Radius Health is focused on developing therapeutics for patients with osteoporosis, as well as other serious endocrine-mediated diseases. Radius is currently conducting a phase III study of abaloparatide-SC for the treatment of osteoporosis, and expects initial 18-month fracture data to be available in the fourth quarter this year.
Elsewhere, Raptor Pharmaceuticals Corp. (Nasdaq) surged $2.44, or 30%, to $10.56 after beating estimates in the second quarter and raising its guidance for the full-year. The company reported $16.3 million of net product sales for the quarter, which was ahead of analysts’ expectations of $14.6 million. The company’s loss per share was $0.15 compared to estimates of a loss of $0.18. The quarter was driven by sales of the company’s only product, Procysbi, which was launched in June of 2013. The drug saw sequential growth in sales of 34% during the quarter. The strong performance allowed the Novato, CA-based company to raise its full-year sales guidance to a range of $65-$70 million compared to the previously guided range of $55-$65 million. Procysbi is used to treat nephropathic cystinosis--a condition beginning in infancy--causing poor growth and a particular type of kidney damage (renal Fanconi syndrome) in which certain molecules that should be reabsorbed into the bloodstream are instead eliminated in the urine.
And Relypsa Inc. (Nasdaq) jumped $4.54, or 20%, to $27.25. The relatively unknown company ranks high with hedge funds and institutional accounts. The Redwood City, CA-based company is focused on the development and commercialization of non-absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases. Relypsa’s two-part pivotal phase III trial of its lead product candidate, patiromer, for the treatment of hyperkalemia--a life-threatening condition defined as abnormally elevated levels of potassium in the blood--has been completed and the primary and secondary endpoints were met. Wedbush has the stock rated as a “buy” with a $57 target. The teams at Stifel and Deutsche Bank are also big on the name with a “buy” rating, and both have a $45 price target.
But Enzymotec Ltd. (Nasdaq) plunged $5.69, or 38%, to $9.31 after investment analysts at Jefferies Group lowered their target price on shares from $14.50 to $10.00. Jefferies’s price objective suggests a potential upside of just 7% from the company’s current price. Israel-based Enzymotec reported $0.02 earnings per share (EPS) for the second quarter, missing the consensus estimate of $0.10 by $0.08. The company had revenue of $11.5 million for the quarter, compared to the consensus estimate of $14.88 million. The company’s revenue was down 40.3% on a year-over-year basis. Analysts at Wells Fargo & Co. downgraded shares of Enzymotec from an “outperform” rating to a “market perform” rating last week. Analysts at Wedbush cut their price target from $33.00 to $25.00 in May. Enzymotec is engaged in the manufacturing of ingredients for medical foods.
IPO SECTOR -- Included among initial public offerings coming to market last week, the IPO for T2 Biosystems Inc. (Lexington MA) opened for trading at $15.95 after pricing 5. 2 million shares of common stock at a public offering price of $11.00 per share, well below the expected $15-$17 range. The IPO size was increased from 4 million shares. Shares trade on the Nasdaq Global Market under the symbol “TTOO.” Goldman, Sachs & Co. and Morgan Stanley & Co. are acting as joint book-running managers for the offering. T2 Biosystems will use the funding to commercialize its technology for faster and more accurate diagnosis of infectious diseases in hospitals. Shares closed the week up 22% at $13.40.
August 4, 2014 ...
AMGEN PLANS JOB CUTS AND PLANT CLOSINGS -- Amgen Inc. (Thousand Oaks CA), the world’s biggest biotechnology company by sales, reported second-quarter earnings that beat analysts’ estimates and raised its profit estimate for the year. The company also announced it will cut more than 2,400 jobs through 2015 and close plants in two states. Net income rose 23% to $1.55 billion, or $2.01 a share, from $1.26 billion, or $1.65 a share, a year earlier, the company said in a statement. Earnings excluding one-time items were $2.37 a share, topping by 30 cents analysts’ estimates compiled by Bloomberg. Revenue increased 11% to $5.18 billion. “The earnings-per-share beat was massive,” said Mark Schoenebaum, an analyst with ISI Group LLC in New York. He called the job cuts “just as important,” and predicted they would add to profits this year and beyond. The higher-than-expected earnings were driven by sales of Enbrel, the company’s top drug for arthritis, which increased 7% to $1.24 billion, beating analysts’ projections of $1.14 billion. Enbrel sales missed estimates in the first quarter, which at the time sent the company’s shares down the most in a year. The company raised its 2014 EPS forecast to $8.20 per share to $8.40 per share, and revenue to $19.5 billion to $19.7 billion. Previously, Amgen predicted EPS of $7.90 to $8.20 and $19.2 billion to $19.6 billion in revenue.
Amgen announced last week it would cut 2,400 to 2,900 employees, or 12% to 15% of its total workforce, with the firings beginning this year and continuing through 2015. Most of the job reductions will come in the U.S., Amgen said. The company also said it will close facilities in Washington and Colorado, while expanding its presence in South San Francisco, CA, and Cambridge, MA. The changes “will allow us to reallocate resources to invest in our upcoming launches and drive growth,” CEO Robert Bradway said in the statement. “The great companies are constantly figuring out how to do better,” said Bill Smead, CEO and chief investment officer of Smead Capital Management, which owns Amgen shares. “They have a great balance between creating shareholder value and keeping an eye to the future.” Amgen said it would take a pretax charge of $775 million to $950 million for the costs of the restructuring. Shares closed the week up $2.71, or 2%, at $125.55.
U.S. APPELLATE COURTS ISSUE CONFLICTING RULINGS ON HEALTHCARE LAW -- President Barack Obama’s signature legislative initiative and the cost of health insurance for millions of Americans were cast into doubt after two federal appeals courts issued opposite verdicts on whether the government can subsidize policies through federally run insurance exchanges. The rulings were handed down on July 22. About 4.5 million Americans who qualified for subsidies when they signed up will be able to keep their benefits while the court system sorts out the law, White House officials said. The subsidies for policies purchased through state-administered exchanges aren’t under challenge in the cases. Republicans seized on the first ruling, a decision from the U.S. Court of Appeals for the District of Columbia striking down IRS subsidies for coverage, as evidence that Obama overstepped in implementing the law. Virginia judges made the reverse decision just hours later, yet Republicans already had a new line of attack mapped out. “It’s just the tip of the iceberg with a law that’s also destined to either crush patients with obscenely high costs, lead to a taxpayer bailout of health-insurance companies, or both,” said Senator Marco Rubio, a Florida Republican who is considering a 2016 presidential campaign. “With two conflicting appellate court rulings on Obamacare today, I reaffirm my belief that this law ultimately will fall apart.”
If the first decision stands, it could damage Obama’s legacy as a policy maker and render his party’s candidates more vulnerable to Republican attacks in November’s midterm election. The ruling also threatens to gut the law’s basic premise--to provide affordable insurance for Americans who don’t have it. At a minimum, the court rulings inject new uncertainty into a law that has been beset since its 2010 passage by legal and political challenges, skirmishes that have already twice reached the Supreme Court and once provoked a 16-day partial federal government shutdown. House Democratic Leader Nancy Pelosi of California focused on the Virginia decision upholding the subsidies, casting it as a rebuff to Republicans’ “toxic obsession with destroying the Affordable Care Act.” Americans are divided on the law along party lines. Fifty-six percent of Republicans want the law repealed compared with 8% of Democrats. Political independents are still finding their way with 38% supporting repeal, 52% saying the country should wait to see how the law works and 8% saying it should be left as is, according to a Bloomberg National Poll in June.
TRACKING WASHINGTON -- The price tag for healthcare.gov, the Obamacare website, is approaching $1 billion even as key features remain incomplete, congressional auditors said. Year two of Obamacare “won’t be perfect,” a top Obama administration official said Thursday as the government’s website to sell health insurance plans continues to be developed. Andy Slavitt, the principle deputy administrator of the Centers for Medicare and Medicaid Services, would not promise that the site, healthcare.gov, will be “fully ready” in November, when people can start buying insurance plans for 2015. “It’s a bumpy process at times,” Slavitt, a former UnitedHealth Group Inc. (Minnetonka MN) executive, said at a congressional hearing. “We’ve got committed people who by-and-large are doing a good job. There will certainly be bumps.” The budget to get the site ready for the next round of enrollments, starting in November, jumped to $840 million as of March, according to the Government Accountability Office. That’s a $163 million increase since December. Accenture Plc (Dublin IRL), which took over building the site that failed at its introduction this past October, is expected to be paid $175 million as of June, an $84 million increase from the estimate in January when it signed a contract.
The data are part of testimony from the GAO prepared for Thursday’s hearing in the Republican-led House. The GAO places blame for the site’s rising price on poor planning and supervision of contractors who built the federal health exchange. If the management doesn’t improve “significant risks remain that upcoming open enrollment periods could encounter challenges,” William Woods, the GAO’s director of acquisition and sourcing management, testified, according to prepared remarks released by the Energy and Commerce Committee. After frantic repairs to healthcare.gov in October and November last year, about 8 million people signed up for coverage by the end of the first enrollment period in April. Enrollment for 2015 begins Nov. 15.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration granted Orphan Drug Designation to Array BioPharma Inc.’s (Boulder CO) binimetinib for ovarian cancer treatment. The Orphan Drug Act defines a disease as rare if fewer than 200,000 people in the United States have it. Orphan designation qualifies the sponsor of the drug for various development incentives, including tax credits for the costs of clinical research, a seven-year period of exclusive marketing after an orphan drug is approved, and the waiver of Prescription Drug User Fee Act filing fees, as well as access to federal grants. Ovarian cancer is the deadliest of gynecologic cancers, representing the tenth most common cancer among women and the fifth leading cause of cancer-related death among women.
Elsewhere, the FDA approved a new combination pain pill from Purdue Pharma LP (Stamford CT)--the maker of OxyContin--that is designed to discourage abuse by painkiller addicts. Purdue’s new drug, Targiniq ER, is an extended release tablet that combines oxycodone--the active ingredient in OxyContin--with the drug naloxone. FDA regulators approved the drug for daily, round-the-clock pain that does not respond to other medications. If abusers crush the tablets for snorting or injecting naloxone blocks the euphoric effects of oxycodone, making the drug more difficult to abuse.
The FDA said on Thursday it has approved Boehringer Ingelheim GmbH’s (Ingelheim DEU) drug to treat chronic obstructive pulmonary disease (COPD), an umbrella term that includes chronic bronchitis and emphysema. The drug, Striverdi Respimat, known also as olodaterol, is one of a class of drugs known as long-acting beta-adrenergic agonists (LABAs) that relax airways in the lungs to ease wheezing, cough and shortness of breath. COPD, which is usually caused by smoking, is the third leading cause of death in the United States.
And in Europe, Roche AG (Basel CHE) said the European Commission has approved its Gazyvaro treatment for chronic lymphocytic leukemia, the most common form of the disease. Roche said it would begin selling Gazyvaro, which is marketed as Gazyva outside of Europe, in several European countries later this year. The company is also studying the drug’s possible use for treating other blood cancers. Gazyvaro was approved after a late-stage study showed use of the drug in combination with chemotherapy extended the life of patients without a worsening of the disease, Roche said.
MEDICAL STOCK SPOTLIGHT -- In a week featuring a major downdraft in prices, Zeltiq Aesthetics Inc. (Nasdaq) led advancing issues, surging $4.47, or 29% over the week, to $20.13. The upward bounce came after releasing positive second quarter earnings and an upbeat full year outlook, helped by increasing momentum in sales of its CoolSculpting fat cell removal devices. The company reported net income for the second quarter of $2.8 million, or 7 cents per share, up from a net loss of $3.6 million, or (0.10) cents per share in the same quarter the previous year, and beating analysts’ consensus estimate of (0.13) cents by 20 cents. Revenue for the second quarter was up 79.1% from the same quarter of 2013 at $47.1 million, beating the consensus estimate of $34.93 million. The Pleasonton, CA-based medical device development company increased its full year 2014 revenue guidance to $160 million and $165 million, up from the prior $137 million to $140 million, and more than the consensus of $140.1 million.
Elsewhere, Amedisys Inc. (Nasdaq) jumped $3.61, or 23%, to $19.49. The company reported a better-than-expected rise in adjusted quarterly profit after closing some of its hospices and home-healthcare centers to reduce costs. The closures helped Amedisys to reverse three straight quarterly losses, reflecting a turnaround since the appointment of Ronald LaBorde as interim chief executive. While Amedisys did not forecast earnings for the rest of the year, interim CFO Dave Redmond said the company was well poised to exceed analyst expectations. Baton Rouge, LA-based Amedisys said in March, a month after LaBorde became interim CEO, that it planned to close 29 care centers and consolidate a further 25 with other centers in the same markets. Adjusted net income from continuing operations rose to $8 million, or 25 cents per share, for the three months ended June 30 from $5.8 million, or 18 cents, a year earlier. Amedisys generated net service revenue of $305 million in the quarter. Analysts on average expected the company to earn 4 cents per share on revenue of $298.9 million.
But EDAP TMS SA (Nasdaq), the maker of an ultrasound device to treat prostate cancer with lower rates of erectile dysfunction, plunged $3.04, or 62%, to $1.84 after failing to win an FDA advisory panel’s backing. Vaulx-en-Velin, France-based EDAP didn’t provide evidence the device is safe and effective, advisers to the Food and Drug Administration voted. The device, called Ablatherm, is an alternative to traditional surgical and radiation treatments. It uses a robotic arm to insert a high-intensity, focused ultrasound device that kills cancer cells. While the company said Ablatherm produces lower rates of side effects than traditional treatments, an FDA staff report released July 28 questioned whether EDAP’s methods for testing are adequate.
And Galectin Therapeutics Inc. (Nasdaq) plummeted $23.17, or 60%, to $15.25 after the company reported poor results in an early-stage trial of its experimental drug for treatment of a fatty liver disease. Galectin’s experimental drug GR-MD-02 failed in a phase I study of nonalcoholic steatohepatitis (NASH), a severe form of fatty liver disease. Across just about every biomarker for efficacy Galectin thought to measure, GR-MD-02 showed no difference from placebo, according to TheStreet.com. Galectin deemed the updated results from the phase I study to be a success because patients treated with GR-MD-02 reported no serious side effects, but ineffective placebos rarely raise safety concerns. Aegis Capital downgraded the company from “Buy” to “Hold” following the mixed clinical data.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Eyegate Pharmaceuticals Inc. (Waltham MA) registered up to $30.3 million worth of common stock. The company plans to list on the Nasdaq under the symbol “EYEG.” Aegis Capital Corp is the sole underwriter. Eyegate is aclinical-stage specialty pharmaceutical company that is focused on developing and commercializing therapeutics and drug delivery systems for treating diseases of the eye. EGP-437, its first and only product in clinical trials, incorporates a reformulated topically active corticosteroid, dexamethasone phosphate, that is delivered into the ocular tissues though the company’s proprietary drug-delivery system, the EyeGate II Delivery System.
July 21, 2014 ...
ABBVIE FINALLY SEALS $55-BILLION DEAL FOR SHIRE IN HUGE TAX INVERSION -- U.S. drugmaker AbbVie Inc. (North Chicago) bought Dublin-based Shire Plc on Friday in a 32 billion pound ($54.7 billion) deal that will allow it to slash its tax bill by relocating to Britain. The London-listed company, which makes expensive medicines to treat rare diseases, fought off four earlier bids from AbbVie until the U.S. firm raised its price to 52.48 pounds per share--made up of 24.44 pounds in cash and 0.8960 new AbbVie shares. AbbVie is buying Shire to cut both its U.S. tax bill and its reliance on arthritis drug Humira, the world’s top selling medicine which loses U.S. patent protection in 2016. AbbVie, which generates nearly 60% of its revenue from Humira, had until Friday to announce a firm offer for Shire, extend the deadline or walk away under U.K. takeover rules. It now plans to create a company listed in New York, incorporated in Jersey, the Channel Islands, and tax-domiciled in Britain, which will pay an effective tax of about 13% by 2016, sharply lower than its current rate of about 22%, making the deal one of the biggest driven by the tactic known as tax inversion. Pfizer Inc. (New York) tried to pull off the same maneuver earlier this year when it made a bid for Britain’s AstraZeneca Plc, though its $118 billion deal was rejected.
Calls for political action to stop tax inversion deals are growing in the United States. AbbVie’s chairman and CEO Richard Gonzalez said he thought the debate would be more appropriately shifted to tax reform and making companies more competitive in the global economy. U.S. companies cannot move overseas earnings back into the country for acquisitions or investment without losing part of it. “Companies like ours need access to our global cash flows to be able to make investments all around the world, but specifically to be able to make investments in the United States, and today we are at a disadvantage versus many of our foreign competitors,” he said. “It’s not the primary rationale for this,” he said, explaining that the combined group would have leadership positions in immunology, rare diseases, neuroscience, and metabolic and liver diseases. Abbvie closed the week off 5 cents $54.91 in New York. Shire rose 3% to 4,996 pence in London.
JOHNSON & JOHNSON BEATS FORECASTS, HELPED BY HEPATITIS C DRUG -- While Johnson & Johnson’s (New Brunswick NJ) new hepatitis C pill Olysio has had blockbuster revenue in 2014, concerns the sales surge probably won’t last drove shares down last week. Olysio, approved in November, generated second-quarter sales of $831 million, the company said as it reported earnings that beat analysts’ estimates. The drug, though, may face competition from a similar product as early as October. Gilead Sciences Inc.’s (Foster City CA) Solvadi, controversial because of its price, helps cure hepatitis C in people with HIV, according to researchers who say the drug has the potential to limit a top cause of death in those patients. In a study of 223 HIV-infected patients, Solvadi combined with ribavirin cleared the most common U.S. strain of hepatitis C in 76% of newly treated patients over 24 weeks. There were no adverse effects on HIV treatment, according to a report Sunday in the Journal of the American Medical Association. While J&J’s pharmaceutical unit grew 21% in the second quarter, that growth was largely driven by Olysio. “There may not have been as many folks dialing in the pressure on the back half of next year from competition,” said Matt Miksic, an analyst with Piper Jaffray Cos. “That’s certainly something that was driven home.” Positive earnings results were not enough to offset Olysio’s likely future decline.
Shares of J&J closed the week down 3% at $101.80. The share decline may reflect “the lack of a more meaningful guidance increase to reflect this quarter’s out-performance, again, a move that we believe is the company being conservative,” said Danielle Antalffy, an analyst with Leerink Research. Second-quarter net income rose 13% to $4.3 billion, or $1.51 a share, from $3.8 billion, or $1.33 a share, a year earlier. Total revenue was $19.5 billion, up 9% from a year before. After losing patent protection on drugs with $8 billion a year in sales since the early 2000s, J&J has launched 14 new compounds since 2009, making it the fastest growing of the 10 biggest pharmaceutical companies in the U.S., Europe and Japan, CEO Alex Gorsky said. Joaquin Duato, head of J&J’s drug business, credited the company’s long-term investments with the drug unit’s growth. “Is this just a lucky run, or is there something more to it?” Duato said. “After facing significant challenges in the early 2000s, we made a number of changes to our business,” he said, including increasing their focus on drug development. “These changes are directly responsible for the success we are seeing now,” he said.
TRACKING WASHINGTON -- The Obama administration last week urged congressional leaders to take swift action to halt the rush of United States companies moving abroad. In letters sent to four lawmakers, Treasury Secretary Jacob J. Lew said the administration supported a quick fix that would halt the trend of so-called “inversions,” in which U.S. companies buy a smaller competitor and reincorporate overseas to save money on taxes. Mr. Lew called for legislation that would include a package of business reforms, one of which would bring tax levels of companies into the 20% range. “The best way to deal with this is through comprehensive business tax reform and we have a plan out there that would accomplish multiple goals,” he said, citing business tax reforms and providing resources for infrastructure investments. Members of the House and Senate have made proposals to curb the inversion trend in recent months, and the president included a provision in the budget he presented to Congress this year that would have effectively banned the move. But none of these efforts have yet gained traction. Since May, Medtronic Inc. (Minneapolis MN) agreed to acquire Dublin-based Covidien Plc for $43 billion. AbbVie Inc. (North Chicago) on Friday succeeded in buying Irish drugmaker Shire for a $55 billion deal that would be the biggest of the year. Both U.S. companies plan to reincorporate in Europe as part of the deals.
Elsewhere, the U.S. Securities and Exchange Commission disclosed in a legal filing Wednesday that it believes 44 investment funds may be involved in a suspected healthcare insider trading scandal, urging a New York federal court to force the U.S. House of Representatives to turn over documents on an information leak that could have led to the scheme. In arguing against the House’s motion to dismiss the case or send it to a court in Washington, the SEC told a Manhattan federal judge that the geographic scope of its investigation is “much wider” than described by lawyers for the House and involves a total of 44 entities. The agency subpoenaed the House committee and the staff member, Brian Sutter, for its inquiry into whether non-public information was illegally passed about a change in healthcare policy that resulted in a spike in share prices of insurance companies. The case is testing whether U.S. insider-trading laws allow regulators to investigate the committee or its staff. According to the regulators, minutes before the government announced the policy change, an analyst at Height Securities LLC sent clients a flash report outlining the proposal. The government announced an increase, rather than decrease, in payments to health insurers, boosting the shares of companies including Humana Inc. (Louisville KY).
FDA/EMA ROUNDUP -- Glenmark Generics Inc., the U.S.-based subsidiary of Glenmark Generics Ltd. (Mumbai), won final approval by the U.S. Food and Drug Administration for its abbreviated new drug application (ANDA) for fluocinonide cream USP 0.1%, the generic version of Vanos Cream by Medicis Pharmaceuticals Corp. Fluocinonide cream is indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid responsive dermatoses. According to IMS Health and sales data for the 12 month period ending March 2014, fluocinonide cream garnered annual sales of approximately $103 million.
The FDA also granted marketing clearance to generic drugmaker Taro Pharmaceuticals Ltd.’s (Haifa ISR) fluocinonide ointment 0.05%, a topical corticosteroid for the relief of inflammatory and pruritic manifestations of corticosteroid dermatitis. Fluocinonide is the bioequivalent to Medicis’s Lidex.
And the Food and Drug Administration has called an advisory committee meeting on Sept. 17, to discuss the adverse cardiovascular outcomes with the usage of testosterone replacement therapy. The FDA has called for a joint meeting of the bone, reproductive and urologic drugs advisory committee and the drug safety and risk management advisory committee. In June, the FDA said that all testosterone products on the market should include in their labels a general warning about the risk of blood clots in veins. These treatments are used by men who have low levels of testosterone. Products on the market or about to be launched include AbbVie Inc.’s AndroGel, Endo International Plc’s Aveed and Trimel Pharmaceuticals Corp.’s Natesto.
MEDICAL STOCK SPOTLIGHT -- NeoGenomics Laboratories Inc. (Nasdaq) led advancing issues, rallying $1.23, or 29% over the week, to $5.44 on the back of record results for its second quarter. The company beat analysts’ estimates for both revenue and earnings. For the second quarter, NeoGenomics had revenues of $20.7 million, which beat analysts’ expectations of $19.9 million and marked the fourth consecutive quarter in which the company beat expectations. Earnings came in at $0.01 per share which was also ahead of analysts’ expectations. On a year-over-year basis the company reported a revenue increase of 32%. This was achieved as test volumes rose 40% and the average revenue from each test was up 5.3%. Along with that, the Fort Meyers, FL-based company saw a decline of 11.7% in the cost of sales for each test, which resulted in the gross margin increase to 49.5%. NeoGenomics is a specialized cancer diagnostics reference laboratory with four labs in the United States.
Elsewhere, Codexis Inc. (Nasdaq), which develops bio-catalysts for pharmaceutical and chemical production, leaped 26% to $1.83. The company said it has granted GlaxoSmithKline Plc a license to use its CodeEvolver protein technology. The license lets Glaxo use Codexis’s platform technology to develop enzymes for use in pharmaceutical and healthcare products. Redwood City, CA-based Codexis said it is eligible to receive up to $25 million over a period of about two years, $6 million of which will be paid upfront and $19 million that is subject to completion of technology transfer milestones. The company could receive additional milestone payments of $5.75 million to $38.5 million per project, depending on successful application of the technology.
And Vital Therapies Inc. (Nasdaq) shot up $4.19, or 18%, to $27.71. Vital’s shares have surged more than 100% this month as investors become increasingly hopeful that its liver assist technology will post positive results in phase III trials when they’re released next year. San Diego, CA-based Vital is working on a process that would use human cells to simulate liver function in people with acute liver failure, or ALF. Although ALF isn’t common--there are just 2,000 cases annually in the U.S.--there are few treatment options other than liver transplant. Vital hopes that its therapy can help bridge the gap for these patients, but it may face a tough hurdle in phase III. That’s because the company’s phase II trials, while showing an improving trend in survival, didn’t achieve statistical significance. As a result, Vital reworked its phase III patient enrollment.
But The Female Health Co. (Nasdaq) skidded $1.40, or 25%, to $4.19 after announcing that it would suspend quarterly dividend payments in an effort to promote more sustainable earnings and revenue growth. “In order to position the company to pursue a growth strategy, the board of directors has elected to suspend the payment of quarterly dividends at the present time and devote cash flows towards these strategic initiatives that have the potential to accelerate the company’s long-term growth in revenue and earnings,” CEO Karen King said. TheStreet Ratings team rates Chicago-based Female Health Co. as a “Hold” with a ratings score of C. The company manufactures and markets a female condom which can prevent unintended pregnancy and sexually-transmitted diseases. The company’s product is sold over-the-counter and is marketed under the brand name “Reality” in the United States.
IPO SECTOR -- The initial public offering for Sage Therapeutics Inc. (Cambridge MA) opened for trading at $27.00 last week after pricing its initial public offering of 5 million shares of common stock at a public offering price of $18.00 per share, the high end of the expected $17-$18 range. Shares trade on the Nasdaq Global Market under the symbol “SAGE.” J.P. Morgan Securities LLC and Goldman, Sachs & Co. are acting as joint book-running managers for the offering. Sage Therapeutics is a biopharmaceutical company committed to developing and commercializing novel medicines to treat life-threatening, rare central nervous system (CNS) disorders. Sage Therapeutics is currently evaluating SAGE-547 in a Phase I/II clinical trial for the treatment of super-refractory status epilepticus (SRSE). Status epilepticus (SE) is a life-threatening seizure condition that occurs in approximately 150,000 people each year in the U.S., of which 30,000 SE patients die. “Status epilepticus is a life-threatening disease with limited treatment options, and this advancement demonstrates our commitment to delivering SAGE-547 and other therapies to patients with life-threatening, rare CNS disorders,” said Jeff Jonas, MD, Sage’s CEO. Shares closed the week up $12.10, or 67%, at $30.10.
Previous Week's Issue … July 14, 2014
ABBVIE RAISES OFFER FOR SHIRE TO $51.5 BILLION -- Shire Plc (Dublin IRL) has begun negotiating with AbbVie Inc. (North Chicago) for a deal to combine the two drugmakers after the U.S. company raised its takeover offer to about $51.5 billion, people with knowledge of the matter said. AbbVie CEO Richard Gonzalez met in New York last week with officials from Shire for the discussions, which are at an early stage, the people said, asking not to be identified because the matter is private. The talks may not lead to an agreement, the people said. As part of the deal, AbbVie would move its legal address to the U.K., thereby dropping its tax rate to 13% from about 22%. Shire’s rare disease treatments and drugs for attention deficit hyperactivity disorder would also give AbbVie a broader array of products beyond the rheumatoid arthritis injection Humira, which accounts for more than half of sales. AbbVie made a fourth offer for Shire on July 8, valuing the Dublin-based company’s shares at 51.15 pounds each, or about 30.1 billion pounds ($51.5 billion) in total. Shire, which had rejected the previous offers saying they undervalued the prospects of its rare-disease medicines, hasn’t made a formal response. Shire closed the week up 5% at 48.7 pounds in London, valuing the company at 28.7 billion pounds. Its U.S.-listed ADR’s gained 5% to $48.70 in New York. AbbVie tumbled 6% to $54.96.
Since the raised offer, Shire has been hearing from top shareholders pushing the company to come to the table and work out a deal--in letters, telephone calls and meetings with Shire’s Chairwoman Susan Kilsby. The campaign is being encouraged by AbbVie and its advisers, people with knowledge of the matter have said. The companies have a July 18 deadline set by U.K. regulations to work out an agreement. If no deal is approved by then, AbbVie must walk away for as long as six months. Spokespeople for both companies declined to comment. A corporate jet registered to AbbVie traveled to Teterboro Airport in New Jersey from the Chicago area Thursday, according to data provider FlightAware. The data didn’t indicate who was on the aircraft which eventually left the New York-area and flew to Boca Raton, FL. While Shire’s tax domicile is in Ireland, AbbVie has said the combined company would be domiciled in the U.K., where Shire has some executive offices. AbbVie’s top managers will continue to work in North Chicago.
ACKMAN PROPOSES NEW DIRECTORS AHEAD OF ALLERGAN SPECIAL MEETING -- Activist investor Bill Ackman’s Pershing Square Capital Management LP (New York) has put forth its slate of six board nominees for takeover target Allergan Inc. (Irvine CA) in its move to try to unseat a majority of the company’s directors. Pershing Square, Allergan’s largest shareholder, is backing Valeant Pharmaceuticals International Inc. (Laval, Quebec) in its US$54-billion hostile takeover bid for Botox-maker Allergan. Allergan has refused to enter discussions with Valeant, arguing that the company is a serial acquirer that slashes research and development costs of the firms it takes over. Last month, Pershing Square and Allergan reached an agreement under which Pershing Square can enter a process to hold a special meeting of Allergan shareholders. The slate proposed by Pershing Square includes former venture capital firm CEO Betsy Atkins, venture capital adviser Cathleen Black, healthcare investment fund executive Fredric Eshelman, private equity firm executive Steven Hulman, corporate director David Wilson and the former executive chairman of an industrial and specialty chemicals distributor, John Zillmer. Pershing Square also said that it is filing revised preliminary solicitation materials with the U.S. Securities and Exchange Commission.
“Each member of our slate of nominees is an independent, skilled leader with relevant domain, industry and/or executive management experience,” Mr. Ackman said. “By supporting this slate, Allergan shareholders can ensure that the interests of shareholders will be well represented on the board of Allergan.” Allergan was quick to fire back in a news release, charging that “today’s announcement is a further attempt by co-bidders Pershing Square and Valeant to acquire Allergan at a grossly inadequate price that substantially undervalues the company and creates significant risks and uncertainties for Allergan stockholders. Today’s announcement also fails to address the serious concerns raised by Allergan and important members of the investment community about Valeant’s anemic organic growth driven by unsustainable price increases, among other fundamental business model issues.” Allergan’s current board includes individuals “with significantly more industry experience than Pershing Square’s nominees” and the company has a plan to drive long-term organic growth, the company said. Allergan closed the week off $2.90, or 2%, at $166.43. Valeant slipped $4.59, or 4%, to $120.47.
TRACKING WASHINGTON -- Speaker of the House John A. Boehner’s (R-OH) lawsuit against President Obama will focus on changes to the healthcare law that Mr. Boehner says should have been left to Congress, according to a statement issued Thursday by the speaker’s office. By narrowly focusing the legal action on the Affordable Care Act, Mr. Boehner will sidestep the more politically problematic issue involving Mr. Obama’s executive action offering work permits for some illegal immigrants who were brought to the United States as children. Last month, Mr. Boehner announced his intention to seek legislation allowing the House to sue the president over his use of executive actions, a reflection of charges by congressional Republicans that the president has overreached his authority. On Thursday, Mr. Boehner said the lawsuit would specifically challenge the president’s decision to delay imposing penalties on employers who do not offer health insurance to employees in compliance with the Affordable Care Act. “The current president believes he has the power to make his own laws--at times even boasting about it,” Mr. Boehner said. “He has said that if Congress won’t make the laws he wants, he’ll go ahead and make them himself, and in the case of the employer mandate in his healthcare law, that’s exactly what he did.”
Mr. Boehner is acting in part to quell Tea Party members of his Republican caucus, some of whom want to impeach Obama, and to show he can be tough on the president without risking the political damage that an impeachment effort might cause. To proceed with its suit, the House must vote on the resolution, which won’t need Senate approval and would immediately take effect upon passage. The House Rules Committee is set to hold a hearing on the draft resolution July 16, and a House floor vote may be held during the last week of July. Legal scholars have expressed doubt about whether Republicans can win in court. Obama has dismissed the effort as a “stunt” and made a scoffing reference to the threatened suit Thursday during a speech in Austin, TX.
FDA/EMA ROUNDUP -- Purdue Pharma LP’s (Stamford CT) tamper-resistant competitor to Zogenix Inc.’s (San Diego CA) powerful pain pill has received priority review from U.S. regulators, the company said. The Food and Drug Administration will expedite the application process for Purdue’s hydrocodone tablet, the closely held drugmaker said in a statement. The review is expected to take six months instead of the standard 10 months, Purdue said. The chronic pain medication is hard for abusers to crush and snort or inject, making it a threat to Zongenix’s Zohydro ER, which doesn’t have abuse-deterrent features. Zohydro, approved by the FDA in October, is the only pure hydrocodone painkiller on the market. The FDA has said that Zohydro could be pulled from the market if Zogenix or another manufacturer gets an abuse-deterrent formula approved. Zogenix closed the week down 24% at $1.75.
Elsewhere, Protein Sciences Corp. (Meriden CT) announced that the FDA has approved the company’s strain change amendment for its seasonal influenza vaccine, Flublok. Every year influenza vaccine manufacturers must receive approval from the Agency for changes they make to the upcoming season’s manufacturing process and product formulation, as the influenza vaccine is adapted annually. Early approval for Flublok will enable delivery on time to healthcare providers in the fall. This is especially important for those that rely on Flublok’s unique properties for protection from the flu; namely, that the vaccine is egg-free, highly pure and triple the strength compared to conventional influenza vaccines.
India’s Sun Pharmaceutical Industries Ltd. (Mumbai) is recalling 41,127 bottles of antidepressant venlafaxine hydrochloride in the United States after the drug failed to dissolve properly, the U.S. Food and Drug Administration said. The voluntary recall was begun by Sun Pharma’s unit Caraco Pharmaceutical Laboratories Ltd. in June, and was classified by the FDA as Class II, meaning that use of or exposure to the drug may cause temporary or medically reversible adverse health consequences. “Stability results found the product did not meet the drug release dissolution specifications,” the FDA said in a post on its website on Friday. Dissolution tests are commonly conducted to help predict how a drug performs inside the body. A company spokesman in Mumbai declined comment.
And a member of a panel advising the government on the safety of a medical device that can spread cancer in women stepped down after the FDA reviewed consulting fees he accepted from a device manufacturer, the agency said Thursday. San Francisco gynecologist Andrew Brill removed himself from the 16-member panel before two days of hearings on the device were set to begin Thursday, an FDA spokeswoman said. A spokesman for Dr. Brill referred questions to the FDA. In 2013, he received nearly $100,000 in consulting fees from Johnson & Johnson (New Brunswick NJ) subsidiary Ethicon, according to J&J’s website. Ethicon is by far the largest manufacturer of a tool known as a laparoscopic power morcellator. The advisory panel is expected to recommend to the FDA whether regulations governing morcellators, used in an estimated 50,000 hysterectomies a year, should be altered.
MEDICAL STOCK SPOTLIGHT -- La Jolla Pharmaceutical Co. (Nasdaq) led advancing issues, surging $1.68, or 19% for the week, to $10.65. Stock analysts at Noble Financial boosted their target price on shares of La Jolla Pharmaceutical from $34.00 to $38.00. The firm currently has a “buy” rating on the stock. Noble Financial’s price objective would suggest a potential upside of 324.58% from the stock’s previous close. San Diego, CA-based LJPC has been the subject of a number of other recent research reports. Analysts at Zacks downgraded shares to a “neutral” rating in a research note May 7th. They now have a $9.70 price target on the stock. The company is focused on the development of therapeutic agents that inhibit the activity of galectins as a means of treating human diseases such as chronic organ failure and cancer.
Elsewhere, BioDelivery Sciences International Inc. (Nasdaq) leaped $2.03, or 17%, to $14.02 after the drug developer said its potential severe pain treatment fared better than a placebo in another late-stage study. The Raleigh, NC-based company said the trial also triggered another $10 million milestone payment from Endo International Plc, which has a licensing agreement with BioDelivery. The drugmaker said its treatment, BEMA buprenorphine, led to significantly improved chronic pain relief when compared to a placebo in patients who had tried other opiates. The drug is being developed to manage pain that is bad enough to require daily, around-the-clock, long-term opioid treatment. BioDelivery said it will meet with Food and Drug Administration officials this month and then prepare and submit its drug application as soon as possible.
And TherapeuticsMD Inc. (Nasdaq), a drug manufacturer focused on developing over-the-counter, prescription generic, and branded clinical-stage therapies for women, jumped 14% to $4.77 after FBR Capital initiated coverage on the company with an “outperform” rating and a price target of $34 per share. Keeping in mind the company’s closing price of $4.77, FBR is implying as much as a 723% upside. According to FBR’s theory, the company’s hormone replacement pipeline, specifically investigational hot flash treatment TX-001, could revolutionize the way women receive hormone replacement therapy. Some analysts believe TX-001HR has peak sales potential in the U.S. of more than $2 billion. But it appears FBR has shrugged off any notion that there could be competing drugs, launch issues, or even FDA concerns. Although the Boca Raton, FL-based company may succeed, a $34 price target seems high.
But Intellipharmaceutics International Inc. (Nasdaq) plunged $1.32, or 32%, to $2.83 after Maxim Group downgraded the stock to “hold” from “buy” and decreased its price target to $3 from $7. The firm cited the company’s lower-than-expected revenue and greater-than-expected expenses. Maxim also has concerns that Intellipharmaceutics’ Abuse Deterrent Technology is no longer different from that of Teva Pharmaceutical Industries Ltd. Maxim Group’s price objective points to a potential downside of 11.24% from the stock’s previous close. Toronto-based Intellipharmaceutics has a 52 week low of $1.56 and a 52 week high of $6.46. Intellipharmaceutics specializes in the controlled and targeted once-a-day delivery of oral, solid dose pharmaceutical products.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, ReWalk Robotics Ltd. (Marlborough MA) registered up to $57.5 million shares of common after recently receiving Food and Drug Administration approval for a motorized device that will aid movement for some people with lower body paralysis. ReWalk plans to use proceeds for purposes including sales and marketing costs aimed at expansion, and research and development expenses. The company, formerly known as Argo Medical Technologies Ltd., could use some proceeds for acquisitions. Barclays Capital and Jefferies are joint book-running managers. ReWalk plans to trade on the Nasdaq Global Market under the symbol “RWLK.” ReWalk’s largest shareholders are SCP Vitalife Partners and Yaskawa Electric Corp. In June, the FDA cleared for marketing the company’s ReWalk product, the first motorized device that will aid movement for certain people who are paraplegic because of spinal-cord injuries. The device will help some of these people with lower body paralysis to walk, sit, stand or rise up from a chair.
July 7, 2014 ...
SUPREME COURT UPHOLDS FIRMS' RELIGIOUS OBJECTIONS TO CONTRACEPTION -- Small companies across the U.S. will be forced to make hard decisions about whether to offer employees coverage for contraception following last week’s Supreme Court decision. The court ruled in a 5-4 decision that two closely held companies, Hobby Lobby Stores Inc. (Oklahoma City OK) and Conestoga Wood Specialties Corp. (East Earl PA), don’t have to comply with a requirement of the Patient Protection and Affordable Care Act that their health plans cover birth control without cost to their workers. Democrats and proponents for abortion rights and women’s health criticized the decision, which is likely to factor into this year’s congressional campaigns. While the ruling appeared to damage the health law by raising the possibility that other medical services, even life-saving procedures such as blood transfusions, could be rejected on religious grounds, such a step is unlikely, benefits experts and lawyers said. Scaling back health coverage in such a way would hamstring an employer in labor markets, they said. “This is a very narrow decision and the prospects of using it to justify cutting other health benefits are highly unlikely,” said Steve Wojcik, vice president of policy at the National Business Group on Health, a Washington trade association for large employers. “This ruling was mainly, if not exclusively, about religious freedom, not health care.”
About 116.6 million Americans were employed in the private sector in May, according to data compiled by Bloomberg. It’s unknown how many are at closely held companies covered by the Supreme Court decision. The category includes anything from people who are self-employed to huge corporations such as Cargill Inc. (Minneapolis MN), which has about 143,000 workers and recorded $137 billion in revenue in 2014. Forty-nine for-profit companies have sued the Obama administration over the birth-control requirement, according to the Becket Fund for Religious Liberty (Washington DC), which represented Hobby Lobby and other firms. Forty won injunctions, sparing them from complying with the requirement while the issue wound its way through the courts, according to the fund. “Clearly some companies are going to go down this road with contraception,” Paul Fronstin, director of health research and education at the Employee Benefit Research Institute in Washington, said. “They’re doing it because of their beliefs and maybe helping to attract like-minded people.”
SCIENCE JOURNAL NATURE RETRACTS STEM-CELL RESEARCH STUDIES -- Two scientific papers that initially electrified biologists by describing an easy way to make stem cells were retracted last week by the journal that published them after they were found to be riddled with “critical errors.” The papers, published in Nature in January, were a source of pride in Japan, where much of the research had been performed in the government-backed Riken Center for Developmental Biology (Kobe). The lead scientist, Haruko Obokata, became an instant celebrity. But pride soon turned to embarrassment as one error after another came to light, and an internal investigation by Riken concluded that Ms. Obokata had misrepresented or altered images. So far, independent scientists have not reproduced the work described in the papers, raising substantial doubts about whether the simple way to produce stem cells really exists. “We apologize for the mistakes,” the authors of the two papers wrote in a retraction. “These multiple errors impair the credibility of the study as a whole, and we are unable to say without doubt whether the STAP-SC phenomenon is real,” they wrote. “Ongoing studies are investigating this phenomenon afresh, but given the extensive nature of the errors currently found, we consider it appropriate to retract both papers.” STAP-SC stands for stem cells resulting from stimulus-triggered acquisition of pluripotency.
The researchers reported in January that regular cells taken from the body could be turned into stem cells by simply exposing them to stress, as by dipping them in an acid bath. That seemed to provide an easy way to create multipurpose stem cells that could then be turned into different types of tissues, which might one day be used to treat diseases or repair injuries. The retraction notices listed five errors that were not previously disclosed in the Riken investigation. Most of them were that images in the papers did not show what they were said to have shown. One error was that cells used in a crucial experiment did not match the mice from which the cells were supposed to have been taken. While many of the authors of the work at Riken had previously agreed to a retraction, one holdout had been Dr. Charles A. Vacanti of Harvard University and the Brigham and Women’s Hospital, who had been Ms. Obokata’s supervisor when she was a graduate student in his laboratory and was the senior author of one of the papers. In a statement Wednesday, Dr. Vacanti said he was “deeply saddened by all that has transpired, and after thoughtful consideration of the errors presented in the Riken report and other concerns that have been raised, I have agreed to retract the papers.”
TRACKING WASHINGTON -- The Obama administration proposed raising Medicare payments to hospitals for care they provide on an outpatient basis, part of a trend toward discouraging unnecessary admissions. Payments for outpatient services would be increased 2.1% under a proposal last week from the U.S. Centers for Medicare and Medicaid Services. Medicare paid about $37 billion in 2013 for outpatient treatment at hospitals and $139 billion for admissions. Hospitals are grappling with insurance expansions under the Patient Protection and Affordable Care Act known as Obamacare. Health insurers have negotiated prices aggressively for plans they sell in new government-run exchanges serving about 8 million people, while Medicaid, the state-run program for the poor with traditionally low payment rates, has grown to cover about 6 million more people. “Most people agree that if a procedure can be performed on an outpatient basis, it should be,” Les Funtleyder, a consultant who is the author of “Healthcare Investing,” said. “For acute-care hospitals who haven’t figured out they need to bolster their outpatient activities, it’s going to be a problem.”
The Medicare agency already proposed trimming payments for admissions at hospitals next year by about $241 million. Those cuts are in part due to the Affordable Care Act, which ordered reductions in Medicare costs to help pay for its expansion of insurance coverage, in a deal with the hospital industry. Combined with increases in Medicare enrollment next year and other changes, the rate boost for outpatient services will mean Medicare pays about $5 billion more for the services than it did this year, the agency said in a regulatory filing. The proposed rule is open for a 60-day comment period before it can become final.
FDA/EMA ROUNDUP -- Allergan Inc. (Irvine CA), the drugmaker resisting a takeover by Valeant Pharmaceuticals International Inc. (Laval Quebec), won U.S. approval for a treatment of vision loss in diabetics and rejection for its migraine inhaler. The Food and Drug Administration approved Allergan’s Ozurdex, a drug for diabetic macular edema, which can cause vision loss and eventual blindness in people with diabetes, according to a regulatory filing. The agency rejected Semprana, formerly known as Levadex, an inhalable treatment for migraines, because of problems with the drug’s delivery device. An eventual approval for Levadex could “vindicate” Allergan’s research capabilities and its argument to investors that it’s better off alone than as part of Valeant, according to Shibani Malhotra, an analyst at Sterne Agee & Leach Inc. Allergan plans to meet with the FDA about Semprana and estimates the agency could have an answer on the drug by July 2015, according to the filing.
Elsewhere, the FDA has approved a drug from Spectrum Pharmaceuticals Inc. (Henderson NV) to treat patients with a rare, aggressive form of cancer that affects the lymph nodes. The agency cleared the drug, Beleodaq, to treat peripheral T-cell lymphoma that has returned after earlier treatments or has not responded to any treatments. An estimated 70,800 Americans will be diagnosed with the cancer this year and 18,990 will die from it, according to the National Cancer Institute. The drug works by stopping an enzyme that makes T-cells cancerous. T-cells are a type of white blood cell that helps the immune system fight off infections and foreign cells. The FDA approved Beleodaq under its accelerated approval program, which grants early approval to drugs based on promising test results. In this case the FDA said a small study of Beleodaq showed that more than 25% of patients given the drug had their cancer tumors disappear or shrink.
Human tests of Tekmira Pharmaceuticals Corp.’s (Vancouver, British Columbia) treatment against Ebola, one of the world’s most lethal diseases, have been put on hold by the FDA due to safety concerns. The agency has requested additional information to ensure the treatment is safe at higher doses, the company said. The drug is in the first of three stages of clinical trials usually required by regulators before approval. Tekmira will “continue our dialogue with the FDA, provided for under our fast-track status, in order to advance the development of this important therapeutic agent,” Tekmira’s CEO Mark Murray said. The company didn’t say how long the hold was expected to last. Shares of the drugmaker closed the week off $1.99, or 15%, at $11.63.
And AstraZeneca Plc (London), the drugmaker that rejected a $117 billion takeover offer from Pfizer Inc., failed to win the backing of FDA advisers for an ovarian cancer treatment the company has resurrected for certain patients. Agency advisers voted 11-2 that AstraZeneca should complete a study meant to confirm olaparib’s benefit before the FDA considers approving the drug. While the U.K.-based company scrapped plans for the drug in 2011, it revived olaparib after deciding to reanalyze data on patients with a hereditary mutation of the BRCA genes.
MEDICAL STOCK SPOTLIGHT -- Amicus Therapeutics Inc. (Nasdaq) led advancing issues, soaring 33% over the week to $4.02 after providing a detailed statistical analysis plan including updates on the company’s second phase III study of its experimental drug, migalastat. The new study, titled Study 012, will further test migalastat as a monotherapy for patients suffering from Fabry disease. Earlier this year in April, the company had announced results of its first phase III study of migalastat, which showed positive results. The news had sent the stock up over 20% during trading. After having completed the 18-month primary treatment period, for which the company will present top-line data in its third quarter, 96% of the patients opted to continue with its 12-month treatment extension. Additionally, JPMorgan Chase & Co. upgraded its rating on the Cranbury, NJ-based company to “Overweight,” with a target price of $7.
Elsewhere, Dicerna Pharmaceuticals Inc. (Nasdaq) surged $2.63, or 14%, to $21.47 after announcing the presentation of preclinical data demonstrating the promise of DCR-PH1, the Watertown, MA-based company’s therapeutic candidate for the treatment of primary hyperoxaluria type 1 (PH1). The disease stems from a rare inherited liver disorder that often results in progressive and severe kidney damage. The preclinical studies showed that DCR-PH1 provides potent and long-term inhibition of HAO1, a gene implicated in the pathogenesis of PH1. In a genetically modified mouse model of PH1, researchers reported a 97% reduction of the HAO1 transcript in the liver after a single dose of DCR-PH1 and a significant reduction in urinary oxalate levels, a key marker of the disease. In mice treated with DCR-PH1, urinary oxalate levels returned to near baseline levels, similar to normal mice.
And Transcept Pharmaceuticals Inc. (Nasdaq) leaped 14% to $2.23 after announcing its merger with Paratek Pharmaceuticals Inc. The merger will result in a Nasdaq-listed biopharmaceutical company whose lead asset is a novel phase III-ready, oral and intravenous antibiotic drug candidate designed to address the treatment needs of patients with serious community-acquired bacterial infections. Upon the closing of the merger, Paratek stockholders will acquire in the aggregate approximately 89.6% of the outstanding capital stock of Point Richmond, CA-based Transcept in exchange for their shares in Paratek, and Paratek will become a wholly owned subsidiary of Transcept.
But Regado Biosciences Inc. (Nasdaq) plunged $4.11, or 59%, to $2.81 after it was announced that the Data Safety and Monitoring Board (DSMB) had initiated an unplanned review of its findings regarding an actively-controllable antithrombotic drug system, Revolixys Kit, which has been the subject of a phase III clinical study. The company announced that the DSMB had initiated an unplanned review of data from testing the system and will return its findings sometime over the next eight weeks. Patient enrollment into the program has been paused while the review, which is focusing on “serious adverse events related to allergic reaction,” runs its course. The Board will also conduct a full analysis of the risk-benefit ratio of the more than 3,000 enrollees in the program; results of the analysis will be kept private from those leading the study. Basking Ridge, NJ-based Regado is focused on antithrombotic drug systems designed for acute and sub-acute cardiovascular treatments.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, T2 Biosystems Inc. (Lexington MA), which is developing diagnostics tests that screen for sepsis and hemostasis, registered up to $69 million worth of common stock. The company, which was founded in 2006, plans to list on the Nasdaq Global Market under the symbol “TTOO.” T2 Biosystems initially filed confidentially on April 24, 2014. Goldman Sachs and Morgan Stanley are the joint bookrunners on the deal. No pricing terms were disclosed. The company claims that its technology platform will lead to an earlier detection of sepsis, which is the most expensive hospital-treated condition in the U.S. with a 30% mortality rate. Combined with the detection of impaired hemostasis, T2 pegs its annual U.S. addressable market at $3 billion. Primary backers include Goldman Sachs, Polaris Partners and Flagship Ventures.
June 30, 2014 ...
U.S. HEALTHCARE PROFIT OUTLOOK SURGES ON OBAMACARE DRUG PRICES -- U.S. healthcare companies are winning higher profit forecasts, defying a wider trend on Wall Street, as pricey new biotech drugs hit the market and insurance enrollment rises under the Affordable Care Act. Analysts’ profit expectations for the group have risen sharply since the start of the year, while estimates for most of the other nine Standard & Poor’s 500 macro sectors have fallen, according to Thomson Reuters data. The jump in forecasts has come in the past two months, thanks largely to rising estimates for biotechnology companies such as Gilead Sciences Inc. (Foster City CA), and for insurers, including Aetna Inc. (Hartford CT). It provides some early evidence that President Barack Obama’s signature healthcare overhaul could be a long-term source of profit growth for managed care providers. “Now you’re actually seeing real numbers grow and that population start to take off,” said Betsy Pecor, portfolio manager at Eagle Asset Management (St. Petersburg FL). Companies “are actually seeing that growth.” About 8 million people have signed up for the plans, which are provided by commercial subscribers and come with income-based government subsidies, above the 2 million who had enrolled by January. Aetna and other insurers have said they lost money on the plans this year, but insurers are heading into new markets for 2015 to add customers.
Many healthcare companies are better able to manage Obamacare now than they were last year, Pecor said. Profit estimates for healthcare companies for 2014 have jumped from up 8.3% at the start of January to up 12.2% now, one of just a few sectors with a 2014 earnings outlook that exceeds profit-growth forecasts at the start of the year, Thomson Reuters data showed. Earnings growth estimates for the whole S&P 500 this year have gone down slightly in that period, from 10.8% in January to 9.1% now. The upward revision is also the most of any sector except utilities, where estimates reflect a blow-out first quarter courtesy of home heating needs during the cold winter in North America. By contrast, the revisions to the health sector earnings reflect rising expectations for the second quarter and beyond. The healthcare sector jumped 39% in 2013, more than any other sector except consumer discretionaries. Healthcare is up 10.2% so far for 2014, outpacing the 6% rise for the wider S&P 500.
3-D MAMMOGRAM SCANS MAY DETECT MORE BREAST CANCER -- Hologic Inc.’s (Bedford MA) three-dimensional mammograms, when paired with traditional screening, caught more deadly breast cancers than standard scans alone and resulted in fewer women being called back for more testing, a study found. When combined, the two screening methods caught 41% more cancers than traditional mammography alone, according to research funded by Hologic and published last week in the Journal of the American Medical Association. With the combination approach, 15% fewer women had to get more tests because of unclear results, researchers said. The study is the largest to evaluate the effectiveness of 3-D mammography, a technology approved by U.S. regulators in 2011 that is not as widely available as conventional screening, the authors said. The method lets doctors see through the layers of the breast like the pages of a book to find cancers that may not be detected in traditional 2-D tests, they said. “We have a technology that is improving upon the main limitations of standard mammograms,” said lead study author Sarah Friedewald, section chief of breast imaging at Advocate Lutheran General Hospital (Park Ridge IL). “We now have a more accurate examination.”
The U.S. Preventive Services Task Force, an independent medical advisory group to the government, in 2009 recommended against routine mammograms for women ages 40 to 49 who aren’t at an increased risk for breast cancer, while suggesting a mammogram once every two years for those 50 to 74. The guidelines recommended against annual screenings for women in their 40s because they are more likely to get false-positive results that can lead to unnecessary biopsies. The American Cancer Society suggests annual mammograms starting at 40. More than 232,000 women and 2,360 men will be diagnosed with breast cancer this year, according to the National Cancer Institute. About 40,000 will die. The 3-D technology, known as tomosynthesis, is designed to detect tumors that overlapping tissue can mask in conventional mammogram images. Currently, Hologic has the only approved 3-D mammogram device in the U.S. More than 1,100 of these devices are in use nationwide, said Peter Valenti, division president of Breast and Skeletal Health Solutions at Hologic. About six million women in the U.S. will be screened this year with a Hologic device, he said.
TRACKING WASHINGTON -- Two senior Republican lawmakers voiced support last week for the generic drug industry’s fight against a proposed U.S. rule requiring companies to change labels on products if they receive new safety information. Representative Bob Goodlatte, chairman of the House Judiciary Committee, and Senator Lamar Alexander, ranking member on the Senate’s Committee on Health, Education, Labor & Pensions, wrote to the White House’s Office of Management and Budget requesting justification for the cost-benefit analysis on the proposed rule by the Food and Drug Administration. If finalized, the FDA’s proposal would overturn long-standing regulations that prohibit generic drugmakers from updating safety data on labels without the changes first being made by the medicine’s original manufacturer. The FDA has said the change is designed to create parity between branded and generic drugmakers and make it easier for generic firms to pass on safety information. Generics say the proposed rule would open them to product liability lawsuits and raise the cost of products. Goodlatte and Alexander said in their letter that the FDA did not consider litigation-associated costs in its cost-benefit analysis. It cited figures from a report commissioned by the Generic Pharmaceutical Association (Washington DC) suggesting the costs of the proposal rise to $4 billion a year when litigation is included.
In other news, the Obama administration plans to automatically renew for next year the health plans and premium subsidies that consumers obtained through the Affordable Care Act’s federal insurance exchange. The move, which will apply to most of the five million people who selected insurance through HealthCare.gov for 2014, will make it easier for consumers to stay in their plans and retain tax credits lowering the cost of coverage. It also will relieve pressure on the federal exchange, which was crippled during parts of its first enrollment period. But the decision could cause complications as the federal government tries to update consumers’ eligibility for tax credits. The Department of Health and Human Services said Thursday it would allow about 95% of people who signed up for coverage to be automatically re-enrolled in their current plan if they didn’t return to the site to switch plans. People who don’t come back to the site and report changes in income also would have their tax credits renewed based on information the federal government has on file about them.
FDA/EMA ROUNDUP -- The first robotic device that acts as legs to help paraplegics walk was cleared for sale by U.S. regulators. The device, called ReWalk, is a motorized “exoskeleton” approved for those whose lower body is paralyzed from a spinal cord injury, the Food and Drug Administration said in a statement. The product, from closely held Argo Medical Technologies Inc. (Marlborough MA), consists of a fitted, metal brace; motors at the hips, knees and ankles; and a backpack that contains the computer and power supply. About 200,000 people in the U.S. are living with a spinal injury, according to the Centers for Disease Control and Prevention. ReWalk weighs 46 pounds, only 5 pounds of which users feel from the backpack, according to Argo. The personal system costs $69,500, the company said.
Elsewhere, MannKind Corp. (Valencia CA) won FDA approval to sell its inhaled insulin, culminating an almost decade-long effort, with a warning that the product shouldn’t be used by those with asthma or a serious lung disease. The FDA said it cleared MannKind’s Afrezza as a fast-acting insulin to be used at meal times for those with Type 1 and Type 2 diabetes. The drug labeling will warn that spasms in the airways of the lung have been seen in patients with asthma and chronic obstructive pulmonary disease and will advise against smokers using the medicine, the agency said in a statement. MannKind has spent almost eight years seeking approval of the diabetes therapy since starting late-stage clinical trials.
Ranbaxy Laboratories Ltd. (Gurgaon IND) won FDA approval to make a generic version of Diovan, a blood pressure drug from Novartis AG, almost two years after the $3.5 billion medicine lost patent protection from low-cost competition. The agency approved Ranbaxy’s Ohm Laboratories in New Jersey to make the generic. Ranbaxy has held exclusive rights to copy Diovan for the first six months of the medicine’s generic period though it couldn’t manufacture the drug after plants in India failed inspections.
And AstraZeneca Plc (London), the drugmaker that rejected a $117 billion takeover offer from Pfizer Inc., failed to win the backing of FDA advisers for an ovarian cancer treatment the company has resurrected for certain patients. Agency advisers voted 11-2 that AstraZeneca should complete a study meant to confirm olaparib’s benefit before the FDA considers approving the drug. While the U.K.-based company scrapped plans for the drug in 2011, it revived olaparib after deciding to reanalyze data on patients with a hereditary mutation of the BRCA genes.
MEDICAL STOCK SPOTLIGHT -- Medical Action Industries Inc. (Nasdaq) led advancing issues, soaring $6.78, or 97% over the week, to $13.80. Owens & Minor Inc. announced Wednesday it has agreed to acquire the company for about $208 million. Brentwood, NY-based Medical Action Industries makes custom procedure trays and minor procedure kits. Owens & Minor is a healthcare logistics company that provides services across the spectrum of medical products from disposable medical supplies to devices and implants. The Fortune 500 company’s annual revenues exceed $9 billion. Medical Action reported $287.8 million in net sales from continuing operations for the fiscal year that ended March 31, of which approximately 45% represented sales to Owens & Minor.
Elsewhere, drug developer Aerie Pharmaceuticals Inc. (Nasdaq) surged $6.86, or 35%, to $26.58 after saying its single-drop eye treatment was shown to be superior to each of its two components in a mid-stage trial. The drug, Roclatan, combines Aerie’s other experimental glaucoma drug Rhopressa with the approved latanoprost. Patients treated with the drug experienced a significant reduction in fluid pressure inside the eye, compared with those treated with either latanoprost or Rhopressa. Bedminster, NJ-based Aerie Pharma said it would immediately start preparing for Roclatan’s late-stage trial.
And Agile Therapeutics Inc. (Nasdaq) leaped $1.60, or 21%, to $9.25 after the women’s health specialty pharmaceutical company announced the U.S. Patent and Trademark Office issued a new patent for its Skinfusion transdermal delivery device, the contraceptive patch Twirla. “The granting of this patent further strengthens the patent protection of our proprietary Skinfusion transdermal technology used in our contraceptive patch, Twirla, currently in Phase 3 clinical development,” said Princeton, NJ-based Agile president and CEO Al Altomari. “The issuance of this patent demonstrates our commitment to protecting our intellectual property in our proprietary transdermal technology and is expected to provide protection into 2028.”
But Alnylam Pharmaceuticals Inc. (Nasdaq) sank $7.78, or 11%, to $62.23. CEO John Maraganore sold 113,668 shares of the company’s stock on the open market, something that never sits well with other investors. That trade represented over half his holdings and shares were sold at an average price of $65.45, for a total value of about $7.44 million. Following the sale, the CEO now directly owns 106,320 shares of the company’s stock, valued at approximately $6,958,644. The sale was disclosed in a document filed with the Securities & Exchange Commission. Cambridge, MA-based Alnylam has a one year low of $30.65 and a one year high of $112.57. Alnylam is a biopharmaceutical company developing therapeutics based on ribonucleic acid interface (RNAi).
IPO SECTOR -- Included among recent SEC filings for initial public offerings,