Top Stories for Week of March 9, 2020

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COVID-19 Addenda: Trump signs $8.3 billion emergency spending package; Italy coronavirus deaths near 200; $2 billion needed to develop new vaccine; U of Washington has closed classrooms.

  • President Donald Trump on Friday (March 6, 2020) signed an $8.3 billion measure to help tackle the coronavirus outbreak that has killed over 15 people in the US and infected more than 300 (as of Saturday morning). The legislation provides federal public health agencies with money for vaccines, tests and potential treatments and helps state and local governments prepare and respond to the threat. The rapid spread of the virus has rocked financial markets, interrupted travel and threatens to affect everyday life in the US, says the Associated Press. Trump had planned to sign the bill during a visit to the Centers for Disease Control and Prevention in Atlanta. But he told reporters Friday that concerns were raised about “one person who was potentially infected” who worked at the CDC. Trump said the person has since tested negative for the new virus, and the CDC was added to his schedule on Friday. The Senate passed the $8.3 billion measure Thursday to help tackle the outbreak in hopes of reassuring a fearful public and accelerating the government’s response to the virus. Its rapid spread is threatening to upend everyday life in the US and across the globe.

The spending plan would more than triple the $2.5 billion amount outlined by the White House nearly two weeks ago. The Trump proposal was immediately discarded by members of Congress from both parties.

  • The death toll from an outbreak of coronavirus in Italy has risen by 49 to 197, the Civil Protection Agency said on Friday, the largest daily increase in fatalities since the contagion was uncovered two weeks ago. Italy is currently reporting more deaths from the virus than any other country in the world and the government last week ordered the closure of schools, universities, cinemas and theaters around the country to try to stem the infections. The cumulative number of cases in the country, which has been the hardest hit in Europe by the epidemic, totaled 4,636 compared with 3,858 on Thursday. The Vatican, an independent state that sits in the heart of Rome, also registered its first case on Friday.
  • A global coalition set up to fight epidemic diseases issued a call on Friday for $2 billion to support the development of a vaccine against the new coronavirus that is causing COVID-19 infections around the world. Describing the outbreak as an “unprecedented threat in terms of its global impact,” the Coalition for Epidemic Preparedness Innovations (CEPI) said that while containment measures would help slow the spread, a vaccine was key to longer-term control.
  • And the University of Washington, which has 50,000 students on three campuses across the Seattle region, said on Friday that it would cancel in-person classes and have students take classes and final exams remotely while the Seattle area grapples with a growing coronavirus outbreak. It’s a move that other colleges around the country are preparing to follow if the virus becomes more widespread.

Gilead intensifies immuno/oncology presence with deal to buy Forty Seven for $4.9 billion.

Gilead Sciences Inc. (Foster City CA) announced that it entered into a definitive agreement to acquire Forty Seven Inc. (Menlo Park CA) for $95.50 per share in cash, or approximately $4.9 billion, further boosting the company’s presence in immuno-oncology. The transaction has been unanimously approved by both Gilead and Forty Seven’s boards and is expected to close during the second quarter.

“This agreement builds on Gilead’s presence in immuno-oncology and adds significant potential to our clinical pipeline,” remarked Gilead chief executive Daniel O’Day.

Through the deal, Gilead will gain Forty Seven’s investigational lead product candidate magrolimab, formerly Hu5F9-G4. The monoclonal antibody, which targets CD47, is in clinical development for the treatment of several cancers, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL), as well as non-Hodgkin lymphoma (NHL) and solid tumors. Gilead said the deal will also help it towards its goal of “bringing 10 transformative therapies to patients in the next 10 years.”

The previous week, sources suggested that Gilead had made a takeover approach to Forty Seven, although they also noted at the time that the immuno-oncology company had received interest from other potential suitors as well. The price that Gilead agreed to pay for Forty Seven represents a premium of 64% to the stock’s closing price on February 28, 2020.

Gilead entered the oncology space in 2017 via the $11.9-billion purchase of Kite Pharma, through which it gained the CAR-T therapy Yescarta (axicabtagene ciloleucel).

“Magrolimab complements our existing work in hematology, adding a non-cell therapy program that complements Kite’s pipeline of cell therapies for hematological cancers,” O’Day said, adding “with a profile that lends itself to combination therapies, magrolimab could potentially have transformative benefits for a range of tumor types.”

In December, Forty Seven said data from 46 evaluable patients enrolled in an ongoing Phase 1b study of magrolimab plus azacitidine showed an overall response rate (ORR) of 92% for patients with higher-risk MDS, with half achieving a complete response, and an ORR of 64% for those with untreated AML, with 41% having a complete response. Gilead execs suggested magrolimab could eventually be used alongside Yescarta, with chief medical officer Merdad Parsey saying:

“there are studies ongoing and data being generated in DLBCL, and that’s one of those areas where I think you could imagine that there could be…possibilities.”

Credit Suisse analyst Evan Seigerman said, “The deal is in line with the strategy…O’Day had laid out earlier in the year, but I think he and his management need to do something more impactful.”

Gilead closed the week up 16% at $80.23.

Supreme Court will decide fate of Obamacare.

The Supreme Court last Monday (March 2, 2020) agreed to hear a third major case on the Affordable Care Act, President Barack Obama’s healthcare law, granting petitions from Democratic state officials and the House of Representatives in a case with the potential to wipe out the entire law. The court did not say when it would hear the case, The New York Times reports. But under its ordinary practices, arguments would be held in the fall and a decision would land in the spring or summer of 2021.

The arguments could occur just as the presidential campaign reaches full throttle, timing that Democrats hope will be bad for Mr. Trump and fellow Republicans on the ballot. Democrats, who consider health care a winning issue and worry about possible changes in the composition of the Supreme Court, had urged the justices to act quickly even though lower courts had not issued definitive rulings.

They wanted to keep the fate of the Affordable Care Act, sometimes called Obamacare, in the public eye during the presidential campaign and to ensure that the appeal was decided while justices who had rejected earlier challenges remain on the court. In the meantime, the law remains almost entirely intact.

The case was brought by Republican state officials, who argued that when Congress eliminated the law’s requirement in 2017 that most Americans obtain health insurance, the law became unconstitutional. The Trump administration sided with the state officials, arguing that the rest of the healthcare law could not survive without the requirement, sometimes called the individual mandate.

A Federal District Court judge in Texas agreed, ruling that the entire law was invalid, but he postponed the effects of his ruling until the case could be appealed. In December, the US Court of Appeals for the Fifth Circuit, in New Orleans, agreed that the mandate was unconstitutional but declined to rule on the fate of the remainder of the health law, asking the lower court to reconsider the question in more detail.

The Democratic states and the House, which intervened in the case to defend the health law, asked the Supreme Court to put its consideration of whether to hear the appeal on an unusually fast track. The court turned down that request in January. Having lost that fight, the states and the House asked the court to hear their appeal in the ordinary course. They said Supreme Court review was warranted because part of a federal law had been held to be unconstitutional, which is often reason enough for the justices to agree to hear a case. They added that the lower courts’ rulings had created doubt about the balance of the law.

Medical Stock Spotlight

Since news of the coronavirus outbreak emerged, in contrast to the sell-off in the broader market, companies associated with the COVID-19 space have seen valuations significantly increase.

  • Let’s start with Inovio Pharmaceuticals Inc. (Nasdaq:INO), which skyrocketed 229% over the week to $14.09, following the announcement of development timelines for its COVID-19 vaccine (INO-4800) using its DNA vaccine platform. Plymouth Meeting, PA-based Inovio’s COVID-19 vaccine, INO-4800, was developed in just three hours once the COVID-19 sequence was deposited in data banks for public access. Inovio is a regular recipient of grants for the development of infectious disease vaccines. CEPI (the Coalition for Epidemic Preparedness Innovations), awarded Inovio a $9 million grant in February to advance development of a COVID-19 vaccine. Preclinical studies for the vaccine are ongoing. By the fall, the trial results will be published, and by year-end, one million doses of INO-4800 COVID-19 DNA vaccines should be ready for additional trials or emergency use.
  • Elsewhere, OPKO Health Inc. (Nasdaq:OPK) soared 55% to $2.32. The move came after the company’s BioReference Laboratories subsidiary made a coronavirus-related announcement that suggested a possible spike in sales in the near future. Miami, FL-based OPKO said late Thursday that it would offer a test for the coronavirus, with its subsidiary expecting to receive specimens of the virus for its own use in the coming week. Because BioReference has an extensive network of service centers that patients can visit along with logistical support, the company believes it will be able to offer access to COVID-19 testing across the US quickly. OPKO had already seen its stock rise on hopes that the test would become available soon. Last week, shares jumped 11% once the Centers for Disease Control and Prevention (CDC) set the stage for the company to file for approval of its proposed coronavirus test.
  • And nano cap Tocagen Inc. (Nasdaq:TOCA) jumped 103% to $2.88, adding to its announced merger-stoked rally that began on February 19. Last fall, a late-stage brain-cancer flop prompted Tocagen to cut 65% of its workforce to stay afloat. Out of options, the one-time cancer specialist will become Forte Biosciences Inc.’s route to the public markets. The duo announced last Wednesday that they would merge in an all-stock deal. Forte CEO Paul Wagner, PhD, will lead the combined company, which will work on Forte’s clinical-stage skin disease pipeline, including a late-phase program in atopic dermatitis, or eczema. Forte’s lead candidate is FB-401, a topical drug for an inflammatory skin condition that supposedly showed a treatment effect in a Phase 1/2 study, the results of which will be submitted mid-year for publication.
  • But Surgery Partners Inc. (Nasdaq:SGRY) plunged 34% to $10.76 after coming out with quarterly earnings of $0.10 per share, missing the Zacks consensus estimate of $0.12 per share. This compares to a loss of $0.74 per share a year ago. Figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -16.67%. A quarter ago, it was expected that this surgical facilities operator would post a loss of $0.28 per share when it actually produced a loss of $0.28, delivering no surprise. Over the last four quarters, the Brentwood, TN-based company has not been able to surpass consensus EPS estimates. Surgery Partners posted revenues of $517.20 million for the quarter ended December 2019, surpassing the Zacks consensus estimate by 2.60%. This compares to year-ago revenues of $491.17 million. The company has topped consensus revenue estimates three times over the last four quarters.
  • And Recro Pharma, Inc. (Nasdaq:REPH) plummeted 31% to $9.83. Fourth-quarter earnings and revenue missed estimates, and next year’s revenue outlook also came in lower than the Street estimates. For the year 2019, Recro reported net income from continuing operations of $4.6 million, or $0.20 per share compared with a net loss of $13.1 million, or $0.64 per share in the same period last year. Loss per share for the year was $0.79 compared with loss per share of $3.90 last year. On average, analysts polled by Thomson Reuters expected the company to report a loss of $0.56 per share. Revenues increased to $99.2 million from $77.3 million last year. The consensus estimate was at $101.23 million. For 2020, the company expects revenue to be in the range of $97-$100 million. Analysts see revenue of $118.68 million.

Allergan, Editas dose first patient with CRISPR-based therapy for blindness.

Scientists say they have used the gene editing tool CRISPR inside someone’s body for the first time, a new frontier for efforts to operate on DNA, the chemical code of life, to treat diseases. A patient recently had the procedure performed at the Casey Eye Institute at Oregon Health & Science University in Portland for an inherited form of blindness, the companies that make the treatment announced. They would not give details on the patient or when the surgery occurred. It may take up to a month to see if it worked to restore vision. If the first few attempts seem safe, doctors plan to test it on 18 children and adults.

“We literally have the potential to take people who are essentially blind and make them see,” said Charles Albright, chief scientific officer at Editas Medicine Inc. (Cambridge MA) which is developing the treatment with Allergan PLC (Dublin IRL). “We think it could open up a whole new set of medicines to go in and change your DNA.”

Dr. Jason Comander, an eye surgeon at Massachusetts Eye and Ear in Boston, another hospital that plans to enroll patients in the study, said it marks “a new era in medicine” using a technology that “makes editing DNA much easier and much more effective.”

Doctors first tried in-the-body gene editing in 2017 for a different inherited disease using a tool called zinc fingers. Many scientists believe CRISPR is a much easier tool for locating and cutting DNA at a specific spot, so interest in the new research is very high. The people in this study have Leber congenital amaurosis, caused by a gene mutation that keeps the body from making a protein needed to convert light into signals to the brain, which enables sight. They’re often born with little vision and can lose even that within a few years.

Scientists can’t treat it with standard gene therapy–supplying a replacement gene–because the one needed is too big to fit inside the disabled viruses that are used to ferry it into cells. So they’re aiming to edit, or delete the mutation by making two cuts on either side of it. The hope is that the ends of DNA will reconnect and allow the gene to work as it should.

The procedure is performed in an hour-long surgery under general anesthesia. Through a tube the width of a hair, doctors drip three drops of fluid containing the gene editing machinery just beneath the retina, the lining at the back of the eye that contains the light-sensing cells.

“Once the cell is edited, it’s permanent and that cell will persist hopefully for the life of the patient,” because these cells don’t divide, said one study leader not involved in this first case, Dr. Eric Pierce at Massachusetts Eye and Ear.

Doctors think they need to fix one-tenth to one-third of the cells to restore vision. In animal tests, scientists were able to correct half of the cells with the treatment, Albright said.

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