It was the dullest of times, it was the buzziest of times. A dualism, born of expectations not quite meeting reality, served as a common thread running through the 40th annual JPMorgan Healthcare Conference.
Let us explain. It’s the age of cash-rich biopharmas (think Pfizer, Moderna, BioNTech and Novartis, to name a few). Yet rather than a multi-billion-dollar biopharma megamerger to kick things off, small tie-ups and licensing deals ruled the day. It’s the season when all eyes typically turn to San Francisco for the year’s biggest biopharma investor gathering but, with a late-year Omicron surge, the meeting was forced onto Zoom.
It was the epoch of …. Well, you get the idea.
Perhaps the unveiling of some blockbuster buyout, or the prospect of playing sardines in the Westin St. Francis while in the throes of a pandemic, were too much to expect. Still, one sensed a bit of a letdown among investors.
“It’s hard to imagine JPM becoming as relevant as it was in a pre-COVID world,” one research director at a biotech-focused hedge fund said. “It may be for the best. Instead of a front-loaded M&A year, we get deals throughout the year.”
At any rate, here’s what actually did draw attention during one of the quieter JPM weeks.
Biogen steals the show (but not in a good way)
If the absence of big-time M&A activity created an attention vacuum, Biogen looked like it was doing its best to fill that void.
The beleaguered biotech, tattooed with the stigma of failure after the rocky launch of Alzheimer’s drug Aduhelm, looked to an all-important Medicare reimbursement decision to revive anemic sales. Other than an eyebrow-raising admission that its initial pricing was “wrong,” Biogen’s JPM presentation on Monday gave few clues as to what it expected.
Last Tuesday’s proposed result — coverage with evidence — meant the drug (or any monoclonal antibody in the same class as Aduhelm) would only be paid for when used as part of a clinical trial. The draft ruling elicited a range of analyst reaction. Jefferies’ Michael Yee termed it a “relative setback,” while Wolfe Research’s Tim Anderson noted, “Practically speaking, not covered (for now, that is).”
Indeed, the decision could change come April 12, when the final version is due. And in the case of CAR-T cancer therapies, there is some precedent. In that case, the Centers for Medicare and Medicaid Services initially proposed a similar requirement for coverage, only to back off.
Not everyone took such a rosy view. “I don’t see that happening here,” said Evercore ISI analyst Umer Raffat, noting that the clinical benefit of CAR-Ts was already more clearly established than the benefit of Aduhelm.
Then again, if other companies developing drugs for the disease — namely Eli Lilly, Roche and Eisai, the latter which is studying two other treatments with Biogen — report late-stage study data that demonstrates that their Alzheimer’s treatments are effective, CMS might have to change course.
In the event that the ruling, which severely limits access, doesn’t change, Biogen’s board is considering acquisitions, STAT reported. It added that Biogen CEO Michel Vounatsos’ future as CEO may also be up for debate. On a call with analysts Thursday, Vounatsos alluded to the board weighing “strategic options.”
Pfizer bets on Beam
The CEOs of Pfizer and Moderna noted during Monday sessions that they’re moving forward to update their COVID-19 vaccines to cover Omicron and potentially other strains. Both are applying their mRNA expertise to develop additional vaccines, including a universal flu/RSV/COVID jab. Pfizer and BioNTech are readying one for shingles, which would compete with GlaxoSmithKine’s Shingrix, while Moderna has begun developing one for Epstein-Barr virus.
But what proved more newsworthy than vaccines (for a change) were research collaborations the firms had struck with smaller biotechs on cutting-edge, early-stage science. Cancer and gene editing figured heavily.
The deal that generated the most buzz was probably the pairing of Pfizer and Beam Therapeutics. It involved a $300 million upfront payment to the gene-editing company for a four-year partnership on its base editing programs, which claim to be more precise than the standard CRISPR/Cas9 approach.
Moderna hashed out a “biobucks” pact of its own, extending a $45 million upfront to team with Carisma Therapeutics to develop Car-M therapies (in vivo engineered chimeric antigen receptor monocytes) in cancer. That was followed by BioNTech’s $750 million milestone payment deal with Crescendo Biologics around work on T-cell enhancing therapeutics.
A gene-therapy barometer?
More established (though still quite new as a technology) are gene therapies. While there are two on the U.S. market, it has been more than two years since the last one, SMA treatment Zolgensma, received the green light from regulators.
Bluebird Bio stands on the cusp of bringing the third gene therapy to market (and the fourth and fifth, if the company’s plans pan out). Two of those have been submitted to the FDA: beti-cel for transfusion-dependent beta-thalassemia (TDT) and eli-cel for cerebral adrenoleukodystrophy (CALD). The FDA is set to decide on the drugs in May and June, respectively. An adcom for the first drug is set for March 9.
Last Wednesday, Bluebird CEO and president, Andrew Obenshain, offered an update on its launch preparations.
Companies trying to bring gene therapies to market have battled manufacturing issues and other snafus. Bluebird has endured its share of adversity, including two clinical holds on its sickle cell gene therapy and a cool reception from European payers to its TDT drug, approved in the EU under the name Zyntelgo.
“We’re engaging with payers on the value of our therapies and putting in place wrap-around patient services,” said Obenshain, who moved into his current role in November, just prior to the company’s split into two separate companies. Obenshain, formerly Bluebird’s European head, took over for Nick Leschly, who now runs the oncology spin-off 2seventy bio.
Negotiations with EU governments broke down after Bluebird failed to convince them to pay a steep up-front price ($1.8 million) for its treatment in exchange for the promise of reducing downstream health system costs.
In the U.S., company chief commercial officer Thomas Klima noted, payers “recognize the value of a one-time therapy. We’re confident in our ability to price it and secure reimbursement.”
Nevertheless, with reimbursement and pricing a major question for these therapies, Bluebird’s experience could prove to be a barometer for successors looking to launch future one-and-done treatments.
Diagnostics firms and the pandemic effect
The COVID-19 era has been a boon for testing firms. For instance, Quest Diagnostics hit a record $10.8 billion in revenue last year amid extraordinarily high volume, CEO Steve Rusckowski reported.
A positive antigen test is typically confirmed via a lab-based PCR test, allowing a patient to rule in or rule out the virus. As such, labs such as Quest have played a big role in managing the pandemic.
“As we’ve navigated COVID, it’s delivered good shareholder value,” Rusckowski said.
That jibes with what CEOs of other big names in the COVID business, such as CVS Health and Abbott, said last Tuesday at JPM.
While independent labs such as Quest brace for a decline this year in their COVID-19 screening, other kinds of diagnostics firms appear to be hitting their stride. Outpatient imaging company Akumin, for example, said it is seeing increased demand from handling the deficit in skipped screenings. Oncology screenings have returned to pre-pandemic levels, Akumin president and co-CEO, Rhonda Longmore-Grund noted.
Digital health debuts
Digital health firms enjoyed a larger presence at the conference than in years past, especially firms which went public via special purpose acquisition companies (SPACs) this past year. Fifteen of the digital health firms that exited in 2021 did so via SPAC, versus two the year prior, per Rock Health.
One of these was Talkspace, which made its JPM debut Thursday. Instead of seeking to win over investors, however, new CEO Doug Braunstein focused on calming them after a bumpy 2021. During the year, the firm saw a drop in its consumer revenue, a confusing 8-K filing and the exodus of its two founders and chief operating officer.
JPM presented a good opportunity for digital health companies to tout themselves as worthy investments. But with many relatively new to the public markets, Talkspace’s experience shows their learning curve is still evident.
Back on the biopharma side, the majors’ plans for mitigating the effects of patent loss was another big theme. Bristol Myers Squibb CEO Giovanni Caforio, for one, laid out a road map for absorbing Revlimid’s upcoming loss of exclusivity later this year, including seven planned drug launches from the drugmaker’s mid-to-late-stage pipeline. He’s also looking for megablockbusters Opdivo and Eliquis to ramp up revenue by an additional $8 to $10 billion until 2025, when they, too, are expected to lose exclusivity.
It was Bristol’s huge Celgene takeover that grabbed the spotlight ahead of 2019’s JPM conference. Considering the drugmaker’s revenue replacement strategies, a similarly transformational deal doesn’t seem to be in the cards, at least not in the near term.
That doesn’t mean industry watchers, who would have loved a blockbuster M&A deal to chew on during JPM week, weren’t hanging on Caforio’s words in that regard. When asked whether BMS would consider that kind of deal again, the CEO may have left the door open:
“Business development remains a key pillar.”