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J.P. Morgan Conference Daily Update Links:

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J.P. Morgan Notebook Day 1: No Big Deals, But Plenty Of Pipeline, Commercial Highlights

Daily round-up from the J.P. Morgan Healthcare Conference in San Francisco: There was no big M&A, but biopharma CEOs discussed deals they're pursuing. Also, Novartis's Zolgensma reimbursement insights, Sarepta's third DMD filing, Bristol's post-merger progress and more highlights.





Should We Expect No Big Deals This Year?
The overarching theme so far at the J.P. Morgan Healthcare Conference this year is a big question: “Where are the deals?”

There were several partnerships announced as the meeting kicked off on 13 January, such as Biogen’s agreement to license a neuroscience drug candidate from Pfizer Inc., but there were no big acquisitions revealed on day one of the conference.

That’s in stark contrast to last year’s J.P. Morgan meeting when Eli Lilly & Co. announced the $8bn acquisition of Loxo Oncology Inc., which came within days of Bristol-Myers Squibb Co.’s announcement that it would pay $74bn for Celgene Corp. (Also see "Lift-Off For Lilly In Cancer Genetics With Loxo Buy" - Scrip, 7 Jan, 2019.)

Bristol-Myers CEO Giovanni Caforio said on 13 January at this year’s J.P. Morgan conference that the company remains committed to business development to expand its pipeline, even after digesting its Celgene acquisition. Those deals are likely to be smaller transactions and partnerships, however.

“We really believe in the importance of business development,” Caforio said during the Q&A session following his presentation at the meeting, noting that the history of both Bristol and Celgene has been to complement internal innovation with external assets.

He said Bristol’s business development focus primarily will be “small science deals” going forward, including opportunities reviewed during J.P. Morgan that may strengthen the company’s early pipeline.

“When we believe there is great science that complements ours, we do have capacity to do those deals,” Caforio said.

Merck & Co. Inc. opted for a fireside chat with CEO Ken Frazier and executive vice president/president of Merck Research Laboratories Roger Perlmutter instead of a 25-minute presentation by the CEO. When asked about business development, Frazier reminded the audience that the company doesn’t see a lot of value in big M&A deals, but intended to continue with bolt-on acquisitions and smaller transactions.

“We think that business development will remain for us a very important element going forward,” the CEO said. “What’s the next great opportunity in science and how can we get a hold of it in a way that creates the most value for shareholders? As we think about bolt-on acquisitions, we are looking for those in a financially disciplined way.”

He noted that Merck did more than 80 deals in 2019 and spent about $8bn, including the pending $2.7bn acquisition of ArQule Inc. that was announced in December. (Also see "Merck & Co. Joins Competitive BTK Research Space With $2.7bn ArQule Buy" - Scrip, 9 Dec, 2019.)

Biogen CEO Michel Vounatsos left the door open for the company to enter into transactions of all sizes, noting that as of the end of 2019 it had about $16bn in financial capacity for deals, including $6bn on hand that could be leveraged with $10bn in debt.

Through 2024, the company expects to have $51bn in financial capacity for deals based on its current portfolio, but not including any sales from the Alzheimer’s therapy aducanumab, which Biogen plans to submit for US Food and Drug Administration approval imminently, based largely on a Phase III program in which only one of two studies met the primary endpoint. (Also see "Biogen’s Big Day Arrives, But Aducanumab Results Don’t Answer Key Question" - Scrip, 5 Dec, 2019.)

“The Biogen team is continuously screening opportunities from small to large size,” Vounatsos said during the Q&A session following the company’s presentation.

Gilead Sciences Inc. CEO Dan O’Day – in his first presentation at the company’s helm from the J.P. Morgan podium – emphasized many times Gilead’s investments in both internal and external innovation. O’Day said the company will pursue M&A “from a position of strength and with a sense of urgency,” considering everything from early-stage collaborations to commercial-stage assets to expand Gilead’s research and development pipeline as well as boost revenue growth.

That said, both O’Day and chief financial officer Andrew Dickinson noted the unique nature of the company’s partnership with Galapagos NV, which the companies expanded last year to give Gilead access to more of Galapagos’s inflammation and fibrosis development programs. (Also see "$5bn Galapagos Deal Won’t Be Last For Gilead, Says O’Day" - Scrip, 15 Jul, 2019.) 

“It is a really thoughtful partnership,” Dickinson said. “We can’t do a lot of those, but we would like to do at least one more.” He noted that Gilead is most interested in small- to medium-sized bolt-on transactions, and it has a fiduciary obligation to look at larger transactions, but said the company doesn’t see big M&A deals adding enough value over time.

Zolgensma Reimbursement: VBR Is In, Annuity Payment Is Out
Only one patient with spinal muscular atrophy (SMA) treated with Zolgensma in the US has not been reimbursed since the expensive gene therapy launched in mid-2019. Novartis AG's AveXis Inc. president David Lennon talked about the launch of Zolgensma and market access during an interview at the J.P. Morgan Healthcare conference on 13 January.

Even though Zolgensma has been widely reimbursed so far, some patients have had to go through several rounds of back-and-forth with payers to secure reimbursement. Those are generally not newly diagnosed patients, for which the turnaround time from initiation to treatment, particularly for newborns, has been typically less than two weeks, according to Lennon.

"There's another population, which skews to the older population that has been treating with Spinraza currently and often there is push-back on different elements," Lennon said. Some of the requirements payers have in place include formal assurance that patients are going to stop taking Biogen's Spinraza (nusinersen) or more information from physicians around the justification for initiating treatment.

Zolgensma launched in June with a $2.1m price tag as the first potential one-time gene therapy for SMA. (Also see "It's Official: Novartis SMA Gene Therapy Zolgensma Is World's Most Expensive Drug" - Scrip, 24 May, 2019.) Novartis offered payers a value-based reimbursement option and a five-year annuity payment model for those that might rather pay in installments as opposed to fronting the full cost.

Not a single payer has taken Novartis up on the extended payment plan, however. In Europe, where Zolgensma is not yet approved and where governments are looking at contracts for a group of patients at one time, the idea seems to have more traction, Lennon said.

"This isn't the use case for it," Lennon said of the annuity payments in the US. "I think you need something bigger or a more urgent bolus of patients." If Zolgensma eventually secures FDA approval for Type 2 SMA as Novartis hopes, that could represent a more relevant test case, he said. "Right now, we are talking about a few hundred patients, five to 10 patients per a big plan. It's just not a big enough number."

US payers, however, have been receptive to the value-based reimbursement plan, in which Novartis agrees to pay a rebate if the drug doesn't perform as expected. The outcome the rebate is tied to is death or permanent ventilation. Novartis has not yet had to pay a rebate linked to a disappointing outcome, Lennon pointed out.

Novartis did not disclose the latest revenue for Zolgensma, which will be provided later in January when fourth quarter financials are released. Zolgensma generated $160m in the third quarter, a strong launch. (Also see "2019 Drug Launches: New Specialty And Rare Disease Blockbusters Take Shape" - Scrip, 31 Dec, 2019.)

For Sarepta, Another Exon-Skipping Drug
Sarepta has initiated a rolling submission for a third exon-skipping drug, casimersen, with the US FDA, CEO Doug Ingram said during the company's 13 January presentation. The candidate, like Sarepta's other two exon-skipping drugs, would be targeted to a small subset of patients with Duchenne muscular dystrophy, this time for children who are exon 45 amenable.

"It is our goal to obtain that approval in 2020," Ingram said. If successful, he noted, "We will be among that very rare club of biotechs that have three or more internally developed and FDA approved therapies." Sarepta's exon-skipping drugs, including the first one Exondys (eteplirsen) and the second Vyondys (golodirsen), have not been without controversy, however, due to limited efficacy data. The three drugs together address about 30% of the DMD patient population. 

The FDA approval of Vyondys in December was a bit of a surprise, as it represented a big reversal on the part of the agency, which had issued a complete response letter due to renal safety and then reversed its decision. 

Presenting to the J.P. Morgan audience, Ingram thanked the FDA for working with the company to resolve their questions – and also restated that the company hadn’t overstepped the mark or pressured the regulator to change its mind.

Sarepta already is gaining some commercial momentum. The company announced that Exondys generated more than $100m in the fourth quarter and around $381m in 2018.

Investors, however, are more interested in Sarepta's gene therapy SRP-9001. The therapy has produced positive nine-month functional data from the first four-patient cohort, significantly impacting biomarkers for the disease, including a 96% expression of micro-dystrophin measured by signal intensity, as well as encouraging improvements of the physical function of the first four boys in the trial.

Results from SRP-9001’s first placebo-controlled trial will be ready in early 2021, with what Ingram, Sarepta and the Duchenne community hope will be a major step forward in halting the life-limiting disease.

“This is what the revolution looks like,” Ingram said. The gene therapy initiative was also recently boosted by a new ex-US commercial deal with Roche.

Sarepta also announced at the J.P. Morgan meeting another coup – Gilead’s ex-CEO John Martin joined its board. Ingram told Scrip that he had reached out to Martin to help advise the company, saying his experience in launching curative treatments in hepatitis C would be invaluable to Sarepta.

“He has been involved in so many transformative moments in medicine … but he has never joined any other company board before,” Ingram said. “But if you are going to bet on any company, why wouldn't it be Sarepta?”

Bristol-Myers Happy With Post-Merger Progress
Bristol-Myers CEO Caforio’s 2019 presentation at the J.P. Morgan Healthcare Conference in San Francisco occurred just days after the company announced that it would pay $74bn for Celgene and his 2020 presentation on 13 January came about two months after the companies closed their transaction. (Also see "Bristol Values Celgene's Hematology, Immunology Portfolio At $74bn, But Does It Price In Risk?" - Scrip, 3 Jan, 2019.)

And now that Celgene has been integrated into Bristol-Myers, Caforio told the audience, “I feel better about our opportunity at Bristol-Myers Squibb today than I felt one year ago when we announced the deal. The company truly is well positioned today and in the future.”

Caforio outlined progress in Bristol’s pipeline during the past year – including for the Celgene assets – and noted the eight launches that the company anticipates over the next 24 months. Among those are new indications for key products, including first-line lung cancer indications for the blockbuster combination of PD-1 inhibitor Opdivo (nivolumab) and CTLA4-inhibitor Yervoy (ipilimumab) based on the CheckMate-227 and CheckMate-9LA studies. (Also see "An Early Surprise Win For BMS’s Opdivo/Yervoy In Lung Cancer" - Scrip, 22 Oct, 2019.) 

Celgene made progress on several late-stage assets prior to its merger into Bristol, such as a new drug application (NDA) resubmission to the US FDA for S1P receptor modulator ozanimod in multiple sclerosis. 

Biologic license application (BLA)-supporting data for the CD19-targeting chimeric antigen receptor T-cell (CAR-T) therapy lisocabtagene maraleucel (JCAR017, liso-cel) in lymphoma were presented at the American Society for Hematology meeting in December – and Caforio emphasized Bristol’s commitment to the cell therapy space in oncology at the J.P. Morgan meeting, noting that more products and new indications are coming in this space. (Also see "Bristol’s CAR-T Strategy Comes Into Focus With Two Near-Term Filings" - Scrip, 10 Dec, 2019.)

The company has filed its BLA for liso-cel and anticipates a BLA filing in the first half of 2020 for idecabtagene vicleucel (ide-cel, bb2121) against B-cell maturation antigen (BCMA) in multiple myeloma – a filing that must be expected sooner rather than later since executive vice president and president, hematology Nadim Ahmed said during the Q&A session following Caforio’s presentation that Bristol will have two CAR-T therapies on the market by the end of this year.

The CAR-T programs have been high-profile assets under both Celgene and Bristol, but one asset that’s flown somewhat under the radar is Reblozyl (luspatercept), which is partnered with Acceleron Pharma Inc. and was approved last year for transfusion-dependent beta-thalassemia. (Also see "Keeping Track: Biosimilars, Novel Approvals, And Ebola" - Pink Sheet, 10 Nov, 2019.) 

An NDA is pending now at FDA for a much larger indication – the treatment of adults with very low to intermediate risk myelodysplastic syndromes (MDS)-associated anemia who have ring sideroblasts and require red blood cell transfusions.

Ahmed said anemia is one of the biggest problems associated with MDS, because patients become transfusion-dependent. He noted that Bristol will capitalize on its experience in MDS – through Celgene’s long-term participation in that market with its drug Vidaza (azacitadine) – and its relationships with treating physicians in this area to maximize Reblozyl’s potential beyond the “smaller niche indication” of transfusion-dependent beta-thalassemia.

Teva's Prospects For An Opioid Litigation Settlement
Teva Pharmaceutical Industries Ltd. CEO Kare Schultz said during the company's breakout session that he is cautiously optimistic the company could finalize a broad opioid litigation settlement ahead of a big state case in New York that is headed to trial in mid-March. "There is kind of a deadline coming up because it would be advantageous for everybody to get the actual settlement done before the next state trial," Schultz said.

The uncertain cost of the company's potential liability in ongoing opioid litigation has been a big overhang for Teva, even as the company has made some progress on its efforts to make a turnaround. (Also see "Teva Turnaround Hung Up By The Uncertain Cost Of Settling Opioid Cases " - Scrip, 7 Nov, 2019.)

Last year, Teva proposed a national settlement framework that would allow the company to settle much of the ongoing litigation with some states' attorneys general. That proposal includes a $250m upfront payment and an offer to donate $23bn in supply of the opioid addiction treatment Suboxone (buprenorphine naloxone) tablets over 10 years. (Also see "Teva Seeks Global Resolution Of Opioid Litigation As Bellwether Trial Is Halted" - Pink Sheet, 21 Oct, 2019.)

"I think there's a lot of political momentum behind this because it's actually doing something really to try and improve the situation," Schultz added.

Teva did not update investors on the 2019 financials or outlook for 2020. The financial update is planned for 12 February. The company has said it hopes 2019 will be a trough year before it returns to growth in 2020, but there are a lot of elements of its business strategy that need to be in place to get there. One snag has been the slow launch of the CGRP drug Ajovy (fremanezumab) for migraine, which has struggled against Eli Lilly & Co.'s Emgality (galcanezumab) and Amgen Inc.'s Aimovig (erenumab), both of which are available in an auto-injector.

Teva is developing an auto-injector version of Ajovy that it thinks will help level the playing field, but it is pending at FDA. Pricing competition in the space has been stiffer than Teva had originally expected, Schultz said. The pricing set by Amgen when it launched Aimovig was lower than Teva had expected, and then rebates have been higher with three players in the market. "That means that the value per patient is probably maybe half of what we thought it would be net three/four years ago, but on the other hand, the volume is significantly higher."

Vertex's Leiden Passes The Baton To Kewalramani
In a fitting presentation for Vertex Pharmaceuticals Inc.'s big transition year, outgoing CEO Jeffrey Leiden and incoming CEO and current chief medical officer Reshma Kewalramani addressed J.P. Morgan attendees together. It was a symbolic changing of the guard as Leiden wraps up his seven-year tenure as Vertex CEO and Kewalramani begins her leadership reign. The leadership change comes at a broader period of transition for Vertex, which aims to move beyond its core therapeutic area of cystic fibrosis.

"I cannot underestimate, and I don't think anybody does, the challenge of going from one medicine to many, one disease area, to many," Kewalramani. But she said Vertex is well positioned to take on the challenge, having now built out the pipeline partly through internal R&D and partly through business development into areas like sickle cell disease, beta thalassemia, Duchenne muscular dystrophy and type 1 diabetes.

"These are all diseases of high unmet need. We understand the causal human biology. We have biomarkers that translate from bench to bedside. These are all programs with efficient development pathways, and they're all served by specialty markets," she said. "That's probably the most important thing to know about our pipeline."

She highlighted two programs in particular on two early-stage development programs. One is the type 1 diabetes program acquired with the $950m acquisition of Semma Therapeutics in September, focused on developing insulin-producing beta cells grown from stem cells. (Also see "Vertex Buys Semma, Gaining Cell Therapy-Based Type 1 Diabetes Treatments " - Scrip, 3 Sep, 2019.) She said Vertex set an ambitious goal of bringing that product to the clinic in late 2020 or early 2021.

The other is a treatment for alpha-1 antitrypsin deficiency (AATD), a lung disease caused by a misfolded protein which Vertex initiated a Phase II trial for in December.  The company's near-term priority, however, is executing on the launch of the new triple combination cystic fibrosis drug Trikafta. (Also see "Keeping Track: Vertex’ Trikafta Speeds To US Approval; New Indications For AZ’s Farxiga, J&J’s Stelara, GSK’s Zejula" - Pink Sheet, 24 Oct, 2019.)

The US Election 2020 And What It Means For Pharma
In the Donald Trump era, many commentators throw up their hands and say it’s impossible to predict what will happen next week, let alone in the November 2020 US presidential election. 

However, one biopharma veteran was happy to provide his prediction of the outcome, and how it might play out for the sector.

BIO chairman Jim Greenwood was one of a diverse panel discussing the US political climate at the Biotech Showcase, taking place in parallel to the J.P. Morgan conference in San Francisco.

Biopharma finds itself under attack from both sides of the political spectrum: Trump is threatening to introduce international reference pricing, and Democratic presidential candidates such as Bernie Sanders and Elizabeth Warren want to introduce federal government controls on drug prices and target pharma profits.

“If our assumptions are correct, the House is going to remain Democrat and the Senate is likely to remain Republican,” said Greenwood.

“Then regardless of who wins the presidential election, it will probably still be the Republican majority in the Senate that protects our industry from the most horrible of the proposals out there.”

Invoking Charles Dickens, he added that the sector was outdoing itself in innovation, but couldn’t turn to either political party for support.

“We are living in the best of times and the worst of times,” Greenwood said, “the science is galloping and we've never been able to provide as much hope to patients as now, with gene therapy, cell therapy, CRISPR and all of that. At the same time, this is the worst political dilemma the industry has ever faced. It's really dire.”

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J.P. Morgan Notebook Day 2: Bourla Feels Pfizer's Underappreciated, GSK Prepares For Myeloma First And More

Daily round-up from the J.P. Morgan Healthcare Conference in San Francisco: GSK's first-in-class oncology opportunity, Pfizer's Bourla on underappreciated pipeline, AstraZeneca's Enhertu pricing, Amgen's genomics push, Lilly filters through deals and Medicxi's de Rubertis teases big pharma CEOs about M&A. 



HIGHLIGHTS FROM DAY 2 AT J.P. MORGAN. Source: Shutterstock


Albert Bourla On What The Street Has Wrong About Pfizer
Pfizer Inc. CEO Albert Bourla is one year into the job and tried to impress upon J.P. Morgan Healthcare Conference attendees at a fireside chat in the Grand Ballroom at San Francisco's Westin St. Francis how much the company's innovative R&D business has changed. Pfizer is set to update investors on 2019 financials and 2020 forecasts on 28 January, but Bourla said there is a lot of upside in the company's longer-range pipeline that Wall Street analyst forecasts aren't taking into account.

For example, in vaccines he said that while there are some forecasts for Pfizer's 20-valent pneumococcal vaccine, analysts aren't accounting for a Clostridium difficile vaccine in Phase III that will read out later in 2020, a meningococcal vaccine in Phase II, and a maternal vaccine for respiratory syncytial virus (RSV) in Phase II.

"In rare diseases, I know the Street projects the growth of tafamidis and now they increased Vyndaqel projections, but I haven't seen anyone having numbers for our gene therapy," Bourla said. Pfizer surprised investors with the success of its early launch of the Vyndamax/Vyndaqel (tafamidis) franchise last year for wild-type or hereditary transthyretin-mediated amyloidosis (ATTR-CM). (Also see "Pfizer Vyndaqel Launch Surprises With An Early Burst Out Of The Gate" - Scrip, 29 Oct, 2019.)

Bourla said also that Pfizer is poised to be a leader in gene therapy, but rarely gets the credit for that on Wall Street. The company has three gene therapies in clinical development, two more it gained through business development with Vivet Therapeutics and Therachon AG and another seven in preclinical development, he said. Pfizer paid $340m in May for Therachon, gaining a Phase I gene therapy for short-limbed dwarfism. (Also see "Pfizer Grows In Rare Disease With $810m Dwarfism Company Buy" - Scrip, 9 May, 2019.) Also in 2019, the company gained an option to buy Vivet, which was advancing a treatment for Wilson disease toward the clinic at the time. (Also see "Pfizer Buys Option For Vivet In Latest Gene Therapy Tie-Up" - Scrip, 20 Mar, 2019.)

"We are building in Sanford here in the US, the largest gene therapy manufacturing capacity in the world, and there's nothing, I think, in the projection of the Street about that," Bourla said. Pfizer announced last year a $500m investment in the construction of a gene therapy manufacturing facility in Sanford, NC.

In Pfizer's immuno-inflammation franchise, he said the company has five different JAK inhibitors in development across 10 different indications. "Only one of them I have seen some minor projections in the Street analysts," he said. "I can go on and on. What I want to say is that there is a significant gap."

Some of the responsibility falls to Pfizer, he said, which hasn't shone a big enough spotlight on the innovation going on. He announced the company will have its first R&D day in many years on 31 March. He also told investors that they can expect Pfizer to spend more on R&D going forward as a percent of sales because the company plans to continue the same level of R&D investment even after it spins out the Upjohn business into a merger with Mylan NV. (Also see "Upjohn/Mylan: Will "Potential Moderate Growth" Lure Investors?" - Scrip, 29 Jul, 2019.)

The result is that Pfizer will go from being one of the lowest R&D spenders as a percentage of sales to one of the highest. Pfizer spent 14.8% of revenues on R&D in 2018.

First-In-Class Launch Will Test GSK’s Cancer Credentials
GlaxoSmithKline PLC is gearing up for the anticipated approval and launch of belantamab mafodotin, a first-in-class treatment for multiple myeloma that represents an important next stage in GSK’s reinvention, since it is one of six anticipated new drug or line extension approvals in 2020.

Presenting at the J.P. Morgan conference, CEO Emma Walmsley recapped GSK’s progress in transforming its product portfolio and internal culture during the last few years, stressing that “we have much more to do.”

Belantamab is especially important as it will be a test of the company’s re-entry into oncology, which it effectively exited in 2014 under previous CEO Sir Andrew Witty.  (Also see "GSK Gears Up For Three Cancer Launches In 2020" - Scrip, 5 Nov, 2019.))

GSK hasn’t launched a new cancer treatment since the melanoma combination of Mekinist (trametinib) and Tafinlar (dabrafenib) seven years ago, and that means it is now busy with a recruitment drive to rebuild its commercial expertise in the field.

Belantamab is an antibody-drug conjugate and the first drug to be submitted to the US Food and Drug Administration that targets B-cell maturation antigen (BCMA) in patients with relapsing and refractory multiple myeloma.

The drug may reach the market before any of its competitors, but two chimeric antigen receptor T-cell (CAR-T) therapies – bluebird bio Inc. and Bristol-Myers Squibb Co.’s bb2121 and JNJ-4528 from Johnson & Johnson and Legend Biotech Corp. – are not far behind. Bristol anticipates filing its CAR-T candidate for FDA approval during the first half of 2020. (Also see "Bristol’s CAR-T Strategy Comes Into Focus With Two Near-Term Filings" - Scrip, 10 Dec, 2019.)

GSK’s head of R&D Hal Barron has singled out belantamab for rapid development, and told investors at J.P. Morgan that its registrational DREAMM2 study produced “quite impressive” data. This remark skirts round that the fact that the overall response rate (ORR) in the trial stood at just 31% – down a long way from the 60% ORR seen in an earlier study and far below the 100% response rate reserved to date with JNJ-4528. There also are safety concerns regarding the eye condition keratopathy.

At the same time, GSK can point to belantamab’s advantages over CAR-T therapies, including convenience, cost and toxicities.

GSK’s commercial head Luke Miels also outlined the company’s efforts to build a new oncology organisation by hiring experienced sales reps.

“What we've tried to do is, from a strategic level right down to an operational level in the key markets, hire people who really know this area,” Miels said. “Of course, there's a few mergers and things which are also disruptive, which put people into the marketplace who may not have naturally been out there looking, and we've taken advantage of that. So, I feel very comfortable with the teams that we've built.”

GSK’s oncology portfolio includes ovarian cancer treatment Zejula (niraparib), purchased in the $5.1bn acquisition of Tesaro Inc. that closed last year, plus multiple internal and partnered candidates that are central to the company’s growth for the next five to 10 years. 

AstraZeneca On Launching Enhertu
The launch of AstraZeneca PLC's Enhertu (trastuzumab deruxtecan) for metastatic HER2-positive breast cancer is expected to be a blockbuster, and exec VP-Oncology Business Unit David Fredrickson talked to Scrip at the J.P. Morgan Healthcare conference about the launch.

The drug, partnered with Daiichi Sankyo Co. Ltd., received accelerated approval from the US Food and Drug Administration on 20 December based on Phase II data, including a notable progression-free survival benefit in patients who have run through other treatment options. The market is expected to be a competitive one, however, with Seattle Genetics Inc. poised to launch tucatinib, a medicine that works differently but has also shown strong efficacy, in 2020. (Also see "Data For Two HER2-Positive Breast Cancer Drugs Impress, Including On Overall Survival" - Scrip, 11 Dec, 2019.)

Getting to the market first could be an advantage gaining traction, Fredrickson said, though he expects both Enhertu and tucatinib will become part of the treatment paradigm for advanced breast cancer patients. "New options are good for patients always," he said. But, he noted, "the way I see things playing out is we are launched and we are available today." Positive early experience with the medicine is what will carry the most weight going forward from a competitive standpoint, he said, as that is what will drive more uptake longer term. 

AstraZeneca and Daiichi are also poised to take advantage of patients who are waiting for a new option. "We do see and expect there are going to be some bolus of patients that are out there that are being treated with chemotherapy today," Fredrickson said, though he said he doesn't expect any patients who are responding to treatment with existing therapy would switch.   

Enhertu does appear to carry a premium price tag. Leerink analyst Andrew Berens said in a 23 December note that the price per patient is approximately $13,300 per month, which would be $159,600 annually. Analysts at Datamonitor Healthcare calculated the wholesale acquisition cost at approximately $172,295 per year for an 80kg patient, given that dosing is weight based.

AstraZeneca wouldn't confirm the WAC for Enhertu, however, a contrary  move given the push more recently by big pharma to be more transparent on pricing. Fredrickson said the price is in line with the value it offers and on parity with other innovative drugs in breast cancer.

Lilly Pans For Gold, Filtering Out The Sand From External R&D Gems
Scrip spoke with Eli Lilly & Co. senior vice president and chief scientific officer Daniel Skovronsky about various programs in the company’s research and development pipeline, which Lilly continues to fill with both internally discovered assets and externally sourced programs. The company was the only big pharma to announce a significant M&A deal around the start of the J.P. Morgan Healthcare Conference when it said on 10 January it would buy Dermira Inc. for $1.1bn.

“It’s a deal that’s perfectly lined up with our strategy of bolt-on acquisitions where the science is good, the probability of success is high, addressing a major unmet medical need in one of our therapeutic areas,” Skovronsky said. “By the time you get through all of those filters, there’s not too many deals that look like that, so we were really excited about this opportunity and pleased to announce the deal.”

Lilly also came to J.P. Morgan in January 2019 with another big deal – the $8bn acquisition of Loxo Oncology Inc., leading to the recent formation of a new oncology R&D unit helmed by Lilly executives who came to the company through the Loxo deal. (Also see "Lilly Taps Loxo Execs To Bring Back That Biotech Feeling" - Scrip, 5 Dec, 2019.)

“Probably I spend more than half of my time here at J.P. Morgan doing business development – meeting with companies and scouring for great opportunities,” Skovronsky said. “They’re hard to find; we have to look at a lot of things to find a Loxo or a Dermira. I wish that we had more. I would happily do deals like these more often, but our standards are high.”

He said Lilly is looking for good science, which includes drug mechanisms of action that are understandable and will translate into a high probability of success in areas of significant unmet need within the company’s therapeutic areas – oncology, immunology, diabetes and neuroscience.

“And then the final big screen is on value,” Skovronsky continued. “We have to be able to acquire things at a price that while fair for the company being acquired still creates value for our shareholders. Usually that’s about Lilly seeing something that others don’t see or being willing to create some upside on the asset through our unique capabilities. Dermira checked all those boxes this year as Loxo did last year.”

Asking prices for such assets, he noted, “are also high in all areas, but probably particularly in oncology, and at the same time competition is high. We are competing against our peers, and sometimes companies larger than us, to get the best assets and the best companies.”

Amgen Looks To Capitalize On Investments In Genomics
Amgen Inc. CEO Bob Bradway said in his 14 January presentation at the J.P. Morgan Healthcare Conference that the company’s three most important words this year are execution, execution and execution. Commercial execution is key as the company continues to feel the impact of biosimilar and generic competitors for some of its biggest blockbusters, but newer products still are struggling to make up for the revenue gap. (Also see "Amgen’s Q3 Sales Beat Consensus, But Two Key New Drugs Fell Short" - Scrip, 29 Oct, 2019.)

Execution also is important for the company’s research and development pipeline, where Amgen hopes its investments in deCode genetics EHF and other genomics capabilities will pay off through more efficient R&D processes and faster successes. (Also see "'Beautiful baton pass' as Amgen picks up deCODE to validate drug targets " - Scrip, 11 Dec, 2012.)

“We consider that we are the industry-leading company when it comes to integrating human genetics into our discovery research, and we significantly expanded those efforts through collaborations completed in 2019,” Bradway said. “In addition, we're very focused on using next-generation proteomics technologies to enable us to combine information with our genetics portfolio to characterize the pathways in biology that we think are relevant for disease.”

Scrip spoke on the sidelines of J.P. Morgan with Amgen executive vice president of research and development David Reese about the three strategic imperatives that the company’s R&D effort is focused on across Amgen’s three therapeutic areas – cardiovascular disease, immunology and oncology – including the use of genomics to bring medicines to the market faster.

First, the company is working on improving its success rate, where genomics and proteomics efforts are being used to not only identify new drug targets, but also identify appropriate patients for clinical trials. Second is reducing the development cycle time of getting a drug from discovery to the market, which takes about 10-14 years now, and Amgen has shaved about three years off of that process. Third is taking into consideration earlier in development barriers that keep patients from getting access to new drugs.

“We need to be sure the drugs we’re developing and the evidence packages will allow drugs to get to the people that need them,” Reese said. “We’re infusing that thinking in R&D, internally and in partnering. That doesn’t mean the commercial group is determining what research is done. We want hand-in-glove thinking. We want to make sure patients get our drugs and that we generate a return that allows us to continue to invest in R&D.” 

Karyopharm CEO Says Xpovio Launch Is ‘Better Than Expected’
Karyopharm Therapeutics Inc. gave an early look at sales to date for its multiple myeloma drug Xpovio (selinexor) on 13 January, a day before CEO Michael Kauffman presented at the J.P. Morgan Healthcare Conference, and the executive told Scrip the launch “has been going a bit better than expected.” 

The US Food and Drug Administration approved Xpovio, a selective inhibitor of nuclear export, on 3 July for relapsed or refractory multiple myeloma patients who have gone through at least four prior lines of therapy. Karyopharm said sales totaled $17m-$18m in the fourth quarter versus analyst consensus of $15m; sales for 2019, starting with Xpovio’s launch on 9 July, totaled $30-$31m for the fiscal year.

“To date, the payer community has been pretty receptive; they understand how sick these patients are,” vice president Ian Karp said. “We haven’t seen denials for this drug – it just hasn’t been a hurdle.”

More than 550 doctors have prescribed Xpovio and more than 1,400 prescriptions have been filled as of 31 December.

Next up for Karyopharm may be a second indication in relapsed or refractory diffuse large B-cell lymphoma (DLBCL) after at least two prior multi-agent therapies and who are ineligible for stem cell transplantation, including chimeric antigen receptor T-cell (CAR-T) therapy; the company submitted an application to the US FDA in December for this indication and will file later this year for European approval, following submission in early 2020 for multiple myeloma.

Also, results from the Phase III BOSTON study testing Xpovio in combination with Velcade (bortezomib) in second-line multiple myeloma are expected in early 2020, and if positive it will be filed with the FDA in 2020. Karp noted that this indication will expand the patient population eligible for treatment from 6,000 to 32,000 patients in the US.

Karyopharm expects results from the Phase III SEAL study in patients with advanced, unresectable, dedifferentiated liposarcoma – Xpovio’s first solid tumor indication – in mid-2020 with an FDA filing expected this year. Completion of enrollment in the Phase III SIENDO study of Xpovio as maintenance therapy in endometrial cancer patients expected this year.

The Last Laugh On Biopharma M&A
Truth be told, biopharma is a pretty serious business and light-hearted moments have been in short supply at the J.P. Morgan conference this year.

Meeting this unmet need on the second day of the conference was Francesco De Rubertis, co-founder and partner at Medicxi. The venture capital firm has many of the great and good from biopharma advising its investment plans, and enticed some of these big names to its event at a hotel away from the conference, high up on San Francisco’s Nob Hill.

De Rubertis was leading a discussion about “New Shapes of the Pharma Industry in the Next Decade” with three industry heavyweights: Giovanni Caforio, CEO of Bristol-Myers, newly enlarged by the $74bn acquisition of Celgene Corp.; Jennifer Taubert, EVP, worldwide chairman, pharmaceuticals at Johnson & Johnson, and Vas Narasimhan, CEO of Novartis AG, one of the sector’s most prolific M&A practitioners.

The conversation about business and M&A strategy was proceeding as normal until De Rubertis deadpanned: “So can you please tell us the names of the companies you are going to acquire?”

This raised a big laugh from the audience, who like everyone else attending J.P. Morgan were wondering when the next big M&A deal was going to land, since the conference kicked off without any large deals being unveiled.

Narasimhan eventually asked the biotech venture capitalist: “I have a question for you, Francesco. So, do you feel like a lot of biotech valuation expectations have gotten really out of hand?”

Francesco allowed the laughter to subside before answering simply: “No, I don’t think so!”

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J.P. Morgan Notebook Day 3: Skyrizi Momentum Builds, What's Next For Amarin, Viatris Debuts And More

Daily round-up from the J.P. Morgan Healthcare Conference in San Francisco: AbbVie's Skyrizi takes psoriasis lead, Amarin goes it alone, Viatris debuts, BeiGene on US drug pricing and Roche think neuroscience is the new oncology.




AbbVie CEO Notes Skyrizi’s Growth, Sees More After Cosentyx Beat
AbbVie Inc. CEO Richard Gonzalez walked into the J.P. Morgan Healthcare Conference with fresh data showing that one of the company’s newest products beat the market leader among new biologics in a head-to-head Phase III clinical trial in psoriasis. 

Gonzalez asserted that AbbVie’s interleukin-23 (IL-23) inhibitor Skyrizi (risankizumab) is outperforming Novartis AG’s IL-17 inhibitor Cosentyx (secukinumab) commercially as well, noting during a 15 January fireside chat that Skyrizi holds the largest position in the psoriasis market, garnering about a 25% share of second- and third-line prescriptions.

“We clearly were looking for an opportunity to come out with an asset that would redefine this market from the standpoint of efficacy and safety, and certainly, this particular medicine has been able to do that. It's been well accepted in the marketplace,” Gonzalez said.

He pointed to factors such as Skyrizi’s quarterly dosing and long duration of efficacy as factors driving prescriptions for the product. The only other marketed IL-23 inhibitor in the US – Johnson & Johnson’s Tremfya (guselkumab) – is dosed every eight weeks.

“What's been even more impressive to us and a bit surprising, to be honest, is not a lot of [Skyrizi’s market share] has come from Humira,” Gonzalez said. “Humira declined about three or four market share points from where it started prior to the Skyrizi launch, so our combined share now in psoriasis is … 47% or so.”

Humira (adalimumab) already has biosimilar competitors in the EU and will face biosimilars in the US in 2023. While it remains a top-selling product globally, revenue is expected to diminish significantly when copies of the TNF inhibitor reach the US market, which is why rapidly accelerating market share for Skyrizi is particularly important for AbbVie.

“We expect it to continue to remain strong and continue to build,” Gonzalez said. “The most recent data that we've seen come out with the head-to-head against Cosentyx we think will be extremely helpful.”

AbbVie expects both Skyrizi and the oral JAK inhibitor Rinvoq (upadacitinib) in rheumatoid arthritis – both approved in 2019 – to be key contributors to the company’s revenue going forward. Clinical trials are ongoing to add several indications to the products’ labels and Gonzalez said together they could replace the revenue generated by Humira. 

“Humira took us about 13 years to build [it into a] $20bn product, and one of the reasons why we were able to build it to be that size was it was the only TNF that had broad applicability across a large number of disease states,” he said. “When you step back and you look at Rinvoq and you look at Skyrizi, those two assets will have all of the major indications that Humira have when fully built out, plus one that Humira doesn't have, which is atopic dermatitis. So, if pricing were to stay the same … you should be able to build these assets to be $20bn combined or greater.”

With No Buyer, What's Next For Amarin?
Investors at Amarin Corp. PLC's presentation came with questions about the options for the company if no buyer materializes. After positive cardiovascular outcomes data supported an expanded indication from the US Food and Drug Administration for the fish oil pill Vascepa (icosapent ethyl), investors were hoping a big pharma would swoop in to buy the commercial opportunity. That hasn't happened yet and the company has been moving forward independently with commercialization plans.

If Amarin isn't acquired, other options could include signing an ex-US commercialization partner for Vascepa or partnering with other companies to commercialize their products.

CEO John Thero said it is premature to think about partnering European rights at this stage. As for in-licensing other products to sell, he said it could be a possibility further out. The focus for now is on executing on the successful launch of the new indication for cardiovascular risk reduction as an add-on to statin therapy in high-risk patients. The FDA approval came in December, though the drug had already been approved as a triglyceride lowering therapy since 2012. (Also see "With Vascepa’s New CV Claim, Amarin Targets Patients On Other Triglyceride-Lowering Agents" - Scrip, 16 Dec, 2019.)

"Focus allowed us to execute on a major study and we need focus to ensure we are successful with the launch," Thero said. He said the company is approached regularly by others with products Amarin could commercialize.

"There may be many opportunities for products that could be $500m-$600m," he said, but it is premature. "We've got to get the launch done right."

The company is doubling its sales force to 800 representatives and rolling out a consumer advertising campaign. Branded advertising is expected to begin mid-year after going through approval, but an unbranded disease awareness campaign is set to begin in the US next week, he said.

The company already reported preliminary 2019 financial results on 7 January, saying net sales in 2019 would be at or slightly above guidance of $410m-$425m and forecasting 2020 revenues of $650m-700m, coming mostly from sales of Vascepa in the US.

Viatris Debuts At J.P. Morgan
Viatris, the new company born out of the anticipated combination of Mylan and Upjohn, the established products business of Pfizer Inc., debuted on the main stage at J.P. Morgan. The merger has not yet closed but is on track to be completed in mid-2020. Viatris chairman Robert Coury, CEO Michael Goettler and president Rajiv Malik made the business case to investors, which involves moderate growth, strong cash flow and a dividend. 

Coury said management is confident in the 2020 pro forma sales forecasts released when the merger was announced last year. At the time, in July, the companies forecast 2020 pro forma revenues of $19bn to $20bn and 2020 EBITDA of $7.5bn to $8bn as well as synergies of $1bn to be realized by 2023.

"I believe that 2021 will really be the year in which you will see it all come together, because it is in that year that we will establish a financial baseline to grow from," Coury said.

One opportunity the combined company is hoping to tap for longer-term growth is being the partner of choice for the global commercialization of mid-sized products. "Not the billion-dollar blockbusters that everyone else is competing over, but the many innovators, many of them at J.P. Morgan here that don't have access to such a global health care gateway," Goettler said.

The combined company is poised to have a global footprint in 165 countries, including scale in China, Latin America and the Middle East.

BeiGene CEO: China Can Help Solve US Pricing
China is now delivering on its long-anticipated promise of becoming the world's second biggest pharma market behind the US, and a major driver for industry. A very clear sign of this transformation is the development of an innovation-based pharma ecosystem in China, and BeiGene Ltd. emerged as a leader last year, launching two products and signing a $2.7bn equity and partnering deal with Amgen Inc.. (Also see "Amgen Joins China Oncology Market Race With $2.7bn BeiGene Stake" - Scrip, 1 Nov, 2019.)

BeiGene's CEO John Oyler set up the company with Chinese co-founder, chairman and scientific advisor Xiaodong Wang in 2010, and is starting to see the long-term vision pay off. The company has ambitions for further expansion into global markets, and more co-marketing deals with big pharma companies from outside China. 

Oyler is also thinking about the challenges around the US drug pricing environment, however, and put forward his own thoughts during a presentation at J.P. Morgan on how the sector needs to recalibrate. The increasing pressure on US drug prices could also be an opportunity for the company's high volume-low price model.

After the presentation, Oyler told Scrip the arrival of 1.5bn Chinese patients, who are beginning to pay for innovative medicines, will boost industry revenues – which could allow it to lower its drug development costs, which could then in turn allow companies to offer lower prices in the US. “That's something that should have a very positive impact on a cost per patient basis,” he said.

“We’ve got to get drugs to everyone. If you have something that's going to save someone's life you can’t not give it to them. We can't have a system where patients miss out, but we’re in jeopardy of doing that. It's amazing what this industry has done over the last 10 years.” 

Roche: Neuroscience Could Be The New Oncology
Roche’s head of pharma Bill Anderson used the firm’s 14 January presentation at the J.P. Morgan conference to push the idea that neuroscience has the potential to the next big area of innovation in the 2020s, as cancer drugs have been for the past decade.

Anderson cited Ocrevus (ocrelizumab) as a test case; Roche’s multiple sclerosis drug has been one of the best commercial launches in recent years. (Also see "10 Triumphant Drug Launches Of The Decade" - Scrip, 6 Jan, 2020.)

“Ocrevus has now been on the market for almost three years, and we're really pleased with its progress, and its ability to benefit patients with primary progressive and relapsing disease – and there's a lot more coming behind it,” Anderson said.

Two promising candidates in Roche’s late-stage pipeline are satralizumab in neuromyelitis optica spectrum disorder and risdiplam for spinal muscular atrophy, both likely to gain approval in the US this year. Roche also expects pivotal trial results for its candidate in Huntington's disease in collaboration with Ionis Pharmaceuticals Inc. later this year, and has earlier stage candidates for Parkinson's, autism and Alzheimer's disease.

“So that's quite a rich pipeline in neuroscience. We think that neuroscience has the potential to be in the '20s what oncology has been in the last decade, and we have a very strong scientific and development effort there.”

Coming from a big pharma company that has thrived on oncology, that’s a big claim – though whether neuroscience can deliver the kind of revenue growth that oncology has delivered over the last decade or more, as well as the scientific breakthroughs, is tougher to call.

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J.P. Morgan Notebook Day 4: Novartis CEO Weighs In On AI, Sangamo’s Next Steps And More

Additional highlights from the J.P. Morgan Healthcare Conference, including Takeda’s partnering outlook, Sage’s guidance on Zulresso sales, Frequency’s next steps for its hearing loss drug and Revance’s preparations to take on the aesthetics market. 




Sangamo Hopes To Demonstrate Reliability In Hemophilia A In Coming Months
Sangamo Therapeutics Inc. may be months away from demonstrating that its gene therapy for hemophilia A – SB-525, partnered with Pfizer Inc. – offers best-in-class sustainability of its therapeutic effect, which is crucial because competitor BioMarin Pharmaceutical Inc. is positioned to get to market first with a gene therapy for the disease.

The potential of showing “reliability” represents Sangamo’s best chance to overcome BioMarin’s expected first-to-market advantage, CEO Sandy Macrae said at the J.P. Morgan Healthcare Conference on 16 January. The exec has previously explained that an optimal gene therapy for hemophilia A – replacing regular treatment with Factor VIII – must be “safe, reliable and predictable.” (Also see "Hemophilia A Gene Therapy Race Intensifies With Updated Sangamo/Pfizer Data" - Scrip, 2 Apr, 2019.)

In San Francisco, Macrae said Sangamo has shown that SB-525 is safe and predictable in updated results from its Alta trial, but demonstrating reliability will only come from longer-term data expected in the next three to six months. BioMarin’s Phase III program for valoctocogene roxaparvovec (valrox) showed some patients’ Factor VIII levels eventually dipped below 50%, the bar for a diagnosis of hemophilia. (Also see "Hemophilia A Gene Therapy: BioMarin In Lead, Sangamo ‘Prays’ For Superior Results" - Scrip, 22 Nov, 2019.) An FDA action date for valrox is expected in August, and the product also is under review by the European Medicines Agency.

“We're waiting to see that we're reliable because that's the debate that everyone's having,” Macrae said on 16 January. “Everyone's seen the results of our friends at BioMarin and wonders about the reliability of that medicine.”

If a gene therapy for hemophilia A does not permanently correct the patient’s Factor VIII level, retreatment presents a challenge because first-generation candidates produce an immune response in the patient that results in neutralizing antibodies to a subsequent dose. BioMarin is working on a next-generation adeno-associated virus (AAV) vector version of valrox that could enable re-treatment.

Macrae added that the Alta study has shown a peak effect within six to 10 weeks and that patients in the highest-dose cohort have had no bleeding episodes. Sangamo has transferred the SB-525 program to Pfizer under their 2017 partnership, with the pharma enrolling a Phase III lead-in trial. 201720222 Pfizer plans to launch a pivotal study of SB-525 later this year. SB-525 and Roche/Spark Therapeutics Inc.’s Phase III SPK-8011 are thought to be a year or more behind BioMarin in reaching market.

Sangamo now can realize $300m between the completion of the investigational new drug (IND) application transfer to Pfizer and the first commercial patient for SB-525, Macrae said, after which it can earn sales royalties ranging from the low teens up to 20%. “One can imagine this having a substantial effect on the finances of Sangamo and it really will pay for our research in years to come.”

Macrae said Sangamo’s vision is to move beyond gene therapy. “Eventually, we will become more and more a cell therapy company. And then, ultimately, we will do gene and genome editing. And this range of modalities that we have at our fingertips allows us a range of medicines,” the CEO noted.

Novartis Leaves Financial Forecasting to AI
While artificial intelligence (AI) and machine learning still suffers an image problem in the biopharma sector because of excessive hype, it is nevertheless becoming a part of day-to-day business in the industry. It was a recurrent theme at J.P. Morgan this year, with leaders citing its use from drug discovery to clinical trials recruitment to salesforce productivity.

Novartis AG CEO Vas Narasimhan has made his company an early adopter of AI and data science technology, and says he believes rapid uptake can give it an edge over competitors.

Speaking at a spin-off summit of CEOs and R&D leaders hosted by health care venture capital firm Medicxi on 14 January, Narasimhan said Novartis has tried to adopt the technology broadly across the company, and at scale and speed.

“Digital data science technologies can fundamentally give you an edge in decision making in your operations,” said Narasimhan.

He said that so far the biggest impact has been leveraging the technologies in Novartis’ core operations, with chief digital officer Bertrand Bodson appointed in 2017 to lead 12 digital lighthouse projects to embed the technology across the business.

“To give you a concrete example, in 2020 our entire financial forecasts were generated by data science and AI,” Narasimhan said. “We have AI generated predictions of every single product in every market, as well as optimization algorithms on how to optimize our investment and spending.”

He added that commercial and other teams naturally engage in conversations about future product expectations, but that taking the forecasting responsibility allows them to focus on other aspects of the business.

However, it is clear that AI is no panacea.

Speaking on a second panel at the event, alongside other big pharma R&D leaders, Bristol-Myers Squibb Co.’s new president of research and early development Rupert Vessey agreed that AI was now “pervasive” in many R&D functions.

He couldn’t resist making a tongue-in-cheek but nonetheless serious warning note on Novartis’ forecasting application, however. He repeated the well known “garbage in, garbage out” observation that analytics technology can’t perform well if the original data fed into it is flawed.

“Actually I’m really worried about the prediction of market valuation that Vas brought up. Because every single market valuation I have ever seen was wrong…and if they’re putting the same data into the AI, it is just going to be wrong all over again!”

Takeda's Appetite For Partnering Is Big
Takeda Pharmaceutical Co. Ltd. R&D President Andrew Plump said the company will be actively partnering in 2020. "We won't do major acquisitions. We don't have the capital or the interest or the need, but the model that we put in place, the R&D partnership model will continue as long as I'm here," he said in an interview at J.P. Morgan.

Takeda closed the $62bn acquisition of Shire a year ago and has largely completed the integration. (Also see "Takeda's Weber: ‘Everything Relies On Our Ability To Deliver Innovative Medicines’" - Scrip, 7 Jan, 2019.) The company highlighted the combined pipeline at an R&D Day in November, with a therapeutic focus in four areas: oncology, rare disease, gastroenterology and neuroscience. (Also see "Takeda: 12 NMEs Poised To Launch In Five Years, And Deliver $10 Bn In Peak Sales" - Scrip, 19 Nov, 2019.)

At J.P. Morgan, Plump said the company has earmarked the same level of spending for business development in 2020 as it did in 2019. While a lot of the company's recent activity has focused on oncology, he said the therapeutic area with the biggest gap right now is rare disease.

In January, Takeda signed a small deal with Silence Therapeutics PLC to use the company's gene-silencing platform to generate siRNA molecules against an undisclosed target. (Also see "Silence Signs Takeda Deal And Sets Sights On US" - Scrip, 7 Jan, 2020.) Another interesting deal last year linked the company with MD Anderson Cancer Center to develop cord blood-derived CAR-directed NK cell therapies. In December, Takeda signed a bigger deal with Turnstone Biologics Inc. in which it agreed to pay $120m in upfront cash, equity and near-term milestones to collaborate on the development of multiple products using its vaccinia virus platform in cancer.

"We will clearly still look in oncology, but we actually have a nice portfolio of opportunities there," Plump said. "My guess is that we will be a little bit more active in the rare space, maybe neuroscience as well."

Sage Expects To See Zulresso Growth In Second-Half 2020
Sage Therapeutics Inc. prepared investors for a slow ramp-up in sales for its postpartum depression (PPD) drug Zulresso (brexanolone) after the product’s launch in mid-2019, and that will continue through the first half of 2020, Sage chief business officer Mike Cloonan told Scrip in an interview at the J.P. Morgan Healthcare Conference. (Also see "Sage's Zulresso Launch Is Off, But Not Running " - Scrip, 6 Aug, 2019.)

The company continues to work with hospitals to help them get certified under the Risk Evaluation and Mitigation Strategy (REMS) for Zulresso, which requires continuous monitoring of patients admitted for the drug’s 60-hour infusion due to the risk of sedation and sudden loss of consciousness. Once certified and a treatment protocol is established, hospitals must negotiate reimbursement for the cost of the drug and the associated care.

“We’re making a lot of progress with the 140 sites that are REMS-certified; 11 were treating at the end of Q3, so there’s that gap between 140 and 11, because they have to work through those steps,” Cloonan said.

Sage is working with hospitals and health care providers to create a sense of urgency and to share best practices from sites that have completed the certification and reimbursement processes to make more treatment sites available.

“What we’ve said is modest [sales] growth over the first half of the year while we build this foundation and then we expect a significant increase in revenue in the second half of the year while we have more sites set up and as we have the access for moms,” Cloonan said.

Payers have recognized the efficacy and the need for Zulresso as well with favorable reimbursement policies for 75% of covered lives in the US, including commercial health plans and Medicaid.

“The payers recognize the unmet need; they’re willing to cover Zulresso and we’ll continue to work through that 25% that hasn’t been established yet,” Cloonan said.

Everything that Sage has learned from the Zulresso launch will benefit its second drug, SAGE-217, which is seen as a much larger opportunity as it’s an oral drug in development for both PPD and major depressive disorder (MDD). The drug has generated positive Phase III results in PPD and mixed results in MDD, but the company will meet with the US Food and Drug Administration in the first quarter to discuss a path forward for SAGE-217 in MDD. (Also see "Sage Still Sees Approval Path After Depression Drug Fails In Phase III Trial" - Scrip, 5 Dec, 2019.)

“The market that ‘217 is going to launch into in postpartum depression is going to be different than the one that Zulresso launched into because of Zulresso. It’s going to pave the way in many ways for ‘217,” Cloonan said.

Frequency Aims For Clear Signal In Hearing Loss Trial
Frequency Therapeutics raised $84m in its initial public offering in October 2019 based on its lead candidate for hearing loss, and the company is hoping that a Phase IIa trial reading out at the end of 2020 will help establish the potential of its technology.

The firm is working on small molecule candidates that can reactivate progenitor cells – providing a potentially far simpler and lower-cost way of regenerating cells within the body compared to cell or gene therapy platforms.

Its lead candidate, FX-322, will initially target a US market of around 30 million patients with sensorineural hearing loss (SNHL), the most common form of hearing loss, but could move on to a much larger global market.

SNHL is the most common form of hearing loss and results from damage to the hair cells in the inner ear or problems with the nerve pathways that convert sound waves from the inner ear to the brain. FX-322 is designed to treat the underlying cause of SNHL by regenerating these hair cells through activation of progenitor cells already present in the cochlea.

CEO David Lucchino told the J.P. Morgan audience that progenitor cells are “underutilized assets that Mother Nature put in your body but [until now] there has been no way to turn them back on.”

FX-322 has shown benefit in a Phase I/II study already, with more data on the way later this year.

Frequency has a deal with Astellas on ex-US rights to the drug, involving an $80m upfront payment, further milestone payments and double-digit royalties.

The company is planning an IND for its next candidate in the second half of 2021, a drug aimed at bringing about remyelination of nerve cells in multiple sclerosis.

Revance Readies For Daxi Launch With Dermal Filler Deal
Revance Therapeutics Inc. has responded to concerns that it might have a tough time selling its neuromodulator daxi (daxibotulinumtoxinA or RT002) to dermatologists and plastic surgeons without being able to offer a bundle of medical aesthetics products with discount pricing for the individual offerings – a strategy that has helped Allergan PLC boost sales for its blockbuster aesthetic Botox (onabotulinumtoxinA) – by bringing in a dermal filler line.

Revance announced on 10 January that it entered into an agreement with Teoxane SA to sell its Resilient Hyaluronic Acid (RHA) line of dermal fillers in the US and Scrip spoke with Revance CEO Mark Foley during the J.P. Morgan Healthcare Conference – where he presented on 16 January – about the strategic importance of the deal for daxi.

The company submitted its biologic license application (BLA) to the US Food and Drug Administration for daxi in the treatment of moderate-to-severe frown lines in November and it anticipates approval in the fourth quarter of this year – and it is hoping for a label in late 2020 that allows for treatment as infrequently as every six months, versus Botox’s quarterly injections. (Also see "Another Botox Competitor: Revance Prepares Longer-Lasting RT002 For BLA Submission" - Scrip, 22 Feb, 2019.)

“Other more recent product launches suggest that overall in medical aesthetics physicians are open to trying new things,” Foley said. “Having said that, when we looked at what other products to add to the bag, a filler was the most logical.”

Teoxane’s dermal filler line is approved in Europe and the US; Revance is hiring its sales team in anticipation of a second quarter launch in the US. In Europe, Teoxane has sold more than 10m syringes. The agreement is a 10-year exclusive US distribution deal with the ability for Revance to extend the agreement for two more years.

“When daxi comes out, we will be established with user relationships,” Foley said. “We feel very fortunate on the timing. It significantly strengthens our position in the marketplace.”

As for the company’s other partnership – a deal with Mylan NV for the development and commercialization of a Botox biosimilar – the big generics maker needed more time to decide whether to opt in to that opportunity because of its pending merger with Pfizer’s Upjohn business into a new company called Viatris GMBH. (Also see "Mylan Gets Until April 2020 To Decide On Biosimilar Botox Collaboration With Revance" - Generics Bulletin, 4 Sep, 2019.)

“They came to us and said that because of the Upjohn relationship [they] need more time. They gave us another $5m to extend the relationship,” Foley said. He noted that if Mylan has to walk away from the Botox biosimilar agreement, Revance is confident that another deal can be negotiated with one of the other companies that previously was interested in such a partnership. (Also see "Mylan Set To Develop Biosimilar Botox In Deal With Revance" - Scrip, 28 Feb, 2018.)

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A Muted J.P. Morgan, But The Focus Is Execution – And That's Good News

A lack of deal news at the J.P. Morgan Healthcare Conference didn't excite investors, but industry is confidently executing on focused strategies as it welcomes a new decade. The persistent overhang is US drug pricing and political uncertainty.





The atmosphere at the J.P. Morgan Healthcare Conference was muted this year, without any big deal news, or any substantial news at all. At first the quiet opening on 13 January was unsettling, but over the course of the meeting the undercurrent shifted to a sense that the pharmaceutical industry is on solid footing as it moves into a new decade, executing on focused business strategies.

The dust has settled on 2019, when several sizable mergers were announced or closed – Bristol-Myers Squibb Co. and Celgene Corp., AbbVie Inc. and Allergan PLC, Takeda Pharmaceutical Co. Ltd. and Shire PLC, Mylan NV and Pfizer Inc.'s Upjohn, and Roche and Spark Therapeutics Inc., for example. Investors were hoping J.P. Morgan would start the year off with a similar buzz as last year, when Eli Lilly & Co. announced the $8bn acquisition of Loxo Oncology Inc.. (Also see "J.P. Morgan 2019: Industry Throws A Bonanza, With An Elephant In The Room " - Scrip, 9 Jan, 2019.) But the value of assets is high and many big biopharma companies are well positioned for moderate near-term organic growth, so the urgency for deals is tempered.

That doesn't mean deals won't happen in 2020. Many of the industry's top biopharma leaders said they expect to keep a similar pace of business development activity in 2020. For a few like Gilead Sciences Inc., with money to spend, the onus is on them to get a deal done.

Poised For Execution
Novartis is in the process of launching multiple new drugs. Pfizer, this year, will have cycled through its last big patent loss for a six-year time horizon and is pivoting to be a smaller innovative pharma company. GlaxoSmithKline PLC is beginning to see the first fruits of its R&D revamp approaching the market under the leadership of Emma Walmsley and Hal Barron.

AstraZeneca PLC has big new growth drivers to focus on in oncology, including Enhertu (trastuzumab deruxtecan) and Calquence (acalabrutinib) and just filed roxadustat for anemia in chronic kidney disease. Merck & Co. Inc. is confident in the continued growth of its mega-blockbuster Keytruda (pembrolizumab), which is annualizing $1bn per month in revenues.

Merck CEO Kenneth Frazier characterized Keytruda as being in the early middle innings of the game during a fireside chat at J.P. Morgan. "It may be the beginning of the fourth inning, but remember every inning is different and a lot more runs get scored in some innings than others, and we think there are a lot of runs let to be scored."

In an interview, Novartis' new pharmaceuticals president Marie France Tschudin summed up the sentiment across many big pharma companies this year. "It is a fantastic time to be at Novartis and really in pharma," she said. "We have a really clear strategy around where it is that we want to go, which is fueled obviously by our pipeline."

Takeda president of R&D Andrew Plump reflected that it been the first calm J.P. Morgan for the company since he joined the Japanese pharma in 2015. "This was the first time we haven't had a big event to announce and it was just so nice, to be now a company that's starting to create a stable foundation," he said. "We are building on what we put together over the past few years and it's really great."

Across the industry, Plump said, there has been a similar feeling going into 2020. "There's huge progress across companies in terms of focus, in terms of reducing waste, in terms of trying to drive spend in a responsible way, in terms of adopting new technologies."

A lot of industry's focus is stemming from advancement in science in areas like immuno-oncology, gene editing and gene therapy that present an opportunity to make an impact on serious diseases. But unlike some years at J.P. Morgan, where the thrill of a scientific breakthrough is still new and palpable, this year the industry is digesting the first commercial experience with new advances, for example in genetically defined cancer with drugs like Roche's Rozlytrek (entrectinib), in RNAi with
Alnylam Pharmaceuticals Inc.'s Onpattro (patisiran) and Givlaari (givosiran) and in gene therapy with Novartis's Zolgensma. 

Deals Will Follow
Industry leaders said they are still eager to supplement their pipelines through business development. Genentech's chief medical officer and head of global product development Levi Garraway said in an interview that he expects Roche to continue executing on business development at a similar pace.

He joined the company from Eli Lilly last year. "One of the things I've admired about Roche and Genentech from the outside is the consistent activity," he said. "The great thing about innovation is that no matter where you are, there is always far more innovation outside your doors than inside your doors."

Takeda's Plump said the company has earmarked a similar amount of money toward business development as it did in 2019, both of which is higher than the 2018 spending commitment.

Pfizer CEO Albert Bourla, from center stage of the Grand Ballroom at the Westin St. Francis, reaffirmed his business development strategy. "We want to acquire or in-license programs Phase II-ready, Phase III-ready, these programs that can become medicines in 2024, 2025, 2026, 2027," he said.

Other biopharma CEOs like Gilead's Daniel O'Day, Bristol's Giovanni Caforio and Biogen Inc.'s Michel Vounatsos also reaffirmed their commitment to business development. (Also see "J.P. Morgan Notebook Day 1: No Big Deals, But Plenty Of Pipeline, Commercial Highlights" - Scrip, 14 Jan, 2020.)

PwC's US pharmaceutical and life sciences deals leader Glenn Hunzinger said there are lots of deals brewing. "There is a ton of activity underneath the hood," he told Scrip. He predicted a similar amount of business development activity in 2020 as 2019, with $5bn to $15bn deals being the sweet spot.

"This conference has been a lot more calm than last year. Most people we speak to feel good about where they are, they have good assets, their pipeline is good," he added.

The Big Uncertainty – US Drug Pricing
Drug pricing reform in the US and mounting political pressure remains the big uncertainty, particularly in an important election year. Industry would like to see drug price reforms that reduce the cost burden on patients and out-of-pocket costs but are lobbying against policy changes that would change the way Medicare negotiates drug prices or would rely on international drug prices as benchmarks.

Across the industry, leaders acknowledge that if patients can't afford their medicines no one is succeeding.

Regeneron Pharmaceuticals Inc. CEO Leonard Schleifer, asked about the political environment in a breakout session, said "We hope that market-based solutions would be the way that the problem could be solved. It is clear, this is the United States of America. People should be able to have access to drugs. They shouldn't go bankrupt. They shouldn't have to choose between food and their insulin or not be able to take a drug that can prevent blindness. That's just unacceptable."

Despite the frustration, industry is still pushing rebate reform talking points even though the prospect for policy change on that front seems as dead as inhaled insulin – at least in the near term. The US Congressional Budget Office forecast HHS's rebate reform proposal would increase federal spending on Medicare Part D by $170bn from 2020-2029, which ended enthusiasm for being the political party responsible for implementing the kind of change that could increase costs. (Also see "Pharma's Big Defeat: US Rebate Proposal Hits The End Of The Road" - Scrip, 11 Jul, 2019.)

Nonetheless, industry leaders including the chief lobbyist, the Pharmaceutical Manufacturers and Researchers of America (PhRMA) CEO Steve Ubl, Bristol's Caforio, who is PhRMA chairman, and Roche pharmaceuticals CEO Bill Anderson, used a drug pricing panel at the conference to continue advocating for rebate reform.

"We think rebate reform is a no-brainer," Anderson said during the panel. Caforio added, "The real issue is that the rebates are not used to lower the exposure of patients to the cost of care. The rebates are used primarily to reduce the monthly cost of healthy individuals.”

While pricing transparency would be welcome by many, widescale rebate reform doesn't appear to be on the near-term horizon. What is approaching, however, is the 2020 US election, which could bring a new US president and changes in the Republican-controlled Senate, which is currently viewed by industry as a welcome barrier against a House bill, HR3, that would allow the federal government to negotiate drug prices in Medicare. (Also see "US Government Drug Pricing ‘Negotiation:’ Where We Go From Here" - Scrip, 13 Dec, 2019.)

"We are a little bit agnostic who sits in the White House," AstraZeneca Biopharmaceuticals exec VP Ruud Dobber said in an interview. "Our main objective is to make sure patients can afford their medicines and there is access, whether it is President Trump or Democratic candidates."

One policy Dobber and other industry leaders said they support is a Senate proposal that would cap out of pocket costs for seniors, which has some bipartisan support. (Also see "Senate Drug Pricing Bill Lowers Manufacturer Discounts In Part D Catastrophic Phase" - Pink Sheet, 6 Dec, 2019.)

"We clearly believe out-of-pocket costs are too high so a cap on the out-of-pocket costs is critical moving forward and at that point, it is irrespective of whether you are Republican or a Democrat," Dobber said.

No big policies are expected to get significant attention in an election year, but the drug pricing debate will continue and the outcome of the election could set a very different tone for J.P. Morgan in 2021.

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Other Scrip articles related to the J.P. Morgan Conference:

J.P. Morgan 2020: What To Watch For At The Industry's Biggest Meeting

Deal Watch: Pfizer, Biogen Partnership One Of Many As JPM Gets Underway

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