President Trump is expected to sign an executive order this week that would require for the first time disclosure of prices across the healthcare industry, in a move that officials hope will lower healthcare costs, The Wall Street Journal reported, citing people familiar with the discussion.
The presidential directive, blessed with the power of law, would ask federal agencies to force price disclosures across the industry, including the negotiated rates between hospitals and insurers. For pharmas, that could mean publishing information on drug prices and those so-far-secretive discounts drugmakers offer to pharmacy benefit managers to win formulary coverage.
The industry was obviously disappointed, arguing the list price offers little help to patients as it’s not reflective of what they pay out of pocket.
“We are concerned that the administration’s rule requiring list prices in direct-to-consumer (DTC) television advertising could be confusing for patients and may discourage them from seeking needed medical care,” Steven Ubl, industry trade group PhRMA’s president and CEO, said in a statement at the time.
Here are the leading beneficiaries and casualties of the uncertainty that has persisted and generally undercut stock prices in recent months due to Trump’s zombie-like effort to repeal Obamacare and proposed legislative moves to reduce drug prices.
1) Outlook Therapeutics Inc. (Nasdaq:OTLK) led advancing issues, soaring 33% over the week to $2.79 in the wake of the biotechnology company’s positive update on a drug trial and bullish analyst report. On Thursday, Oppenheimer analyst Leland Gershell started coverage of Outlook with an outperform rating and $12 stock price, and the Cranbury, NJ-based company said two Phase 3 studies remain on track with its plan to submit its monoclonal antibody therapeutic product for regulatory approval in 2020. The primary catalyst for the big upward move was the advancement of lead candidate ONS-5010, a potential treatment for people with wet age-related macular degeneration (wet AMD).
Steve’s Take: One of the main benefits of ONS-5010 is it can lower the risks the current US market leader, Avastin and others are associated with. Avastin accounts for close to 50% of the wet AMD prescriptions in the US market. A win by ONS-5010 would be huge for Outlook. If it performs as hoped and wins FDA approval, it will likely take significant market share in the wet AMD space.
2) Elsewhere, Tonix Pharmaceuticals Holding Corp. (Nasdax:TNXP) rocketed 24% to $2.03. The clinical-stage biopharmaceutical company focused on developing small molecules and biologics to treat psychiatric, pain and addiction conditions as well as to improve biodefense, announced that it has in-licensed a Phase 2 asset, TNX-1300, for the treatment of cocaine intoxication. TNX-1300 is designated as a breakthrough therapy by the US Food and Drug Administration. TNX-1300, formerly RBP-8000, is a recombinant enzyme that efficiently degrades and metabolizes cocaine in cocaine abusers, as demonstrated in a Phase 2 randomized, double-blind, placebo-controlled clinical study.
Steve’s Take: Currently there is no specific pharmacotherapy indicated for cocaine intoxication, a big plus to Tonix if it comes all the way through to an FDA greenlight. TNX-1300 was developed by Columbia University, University of Kentucky and University of Michigan, and in-licensed by NYC-based Tonix from Columbia University. Financial terms were not disclosed.
3) And Arrowhead Pharmaceuticals Inc. (Nasdaq:ARWR) surged 24% to $24.04 after it was disclosed it would be added to the S&P 600 list. Arrowhead’s decision to reboot its RNA interference platform in 2016 initially sent its shares reeling, but the Pasadena, CA-based company’s stock has been surging higher since the start of 2018 on optimism that its new approach will pan out.
The company has launched a handful of Phase 1/2 trials, including a study of ARO-AAT, a subcutaneous RNAi therapy for alpha-1 antitrypsin deficiency; ARO-HBV, a third-generation RNAi therapy for chronic hepatitis B; AMG 890, formerly ARO-LPA, for cardiovascular disease; and ARO-ANG3, an RNAi therapy for metabolic diseases. The increase in its market cap to $2B made it eligible for inclusion in the S&P 600.
Steve’s Take: Inclusion in the index helps companies because S&P 600 mutual funds and exchange-traded funds (ETFs) must own every stock in the index. It’s common for newly added names to rally on the news. There’s room for further upward movement on this name.
4) But BioCryst Pharmaceuticals Inc. (Nasdaq:BCRX) plunged 55% to $3.32 Inc. after announcing that its Phase 3 study of BCX7353 in HAE patients met the primary endpoint. The reason for the collapse despite the successful topline is simple? The results are extremely unsatisfying as BCX7353 has shown significantly worse efficacy than its approved competitor, Takeda’s Takzhyro. Durham, NC-based BioCryst tried to tout some of the results from the study, such as 50% of patients achieving a greater than 70% decline in HAE attacks vs. 15% of placebo-treated patients, but that’s not nearly enough. BioCryst went into this readout significantly undercapitalized with 12 months of cash. Some analysts remain interested in the company’s factor D inhibitor, but the question here is can BioCryst make it past the Phase 1 trial given its cash balance?
Steve’s Take: Takeda’s Takhzyro demonstrated excellent efficacy in its Phase 3 trial–attack reductions were in the 73% to 87% range. The results BCX7353 demonstrated are not anywhere near those levels. Don’t sell, but don’t buy, either.
5) And Tocagen Inc. (Nasdaq:TOCA) skidded 48% to $4.59. The San Diego-based clinical-stage biopharmaceutical company crumbled after delivering a clinical-trial update that was less than remarkable. Tocagen’s lead candidate, Toca 511, is a retrovirus that surgeons inject directly into the cavity left when they remove a brain tumor. The complicated therapy is in a pivotal study with patients who have recurrent brain cancer, and independent data monitors recently performed an interim analysis. The 403-patient trial was allowed to continue without modification, which wasn’t exactly what investors wanted to hear.
Steve’s Take: Investors should be breathing a sigh of relief because the data monitors didn’t raise the pointlessness flag. Instead, they’re disappointed that any benefit observed wasn’t strong enough to end the trial early and allow the placebo group to start active treatment. While the single-arm trial data look convincing, placebo groups have a nasty tendency to perform much better than expected. Sit tight and wait for the next splash of trial data.