JP Morgan 2019 day two roundup – after the party a harsh reality

After Monday’s celebrations the sector gets down to discussing the difficult business of actually selling and making money from drugs.

Drug pricing was always going to be a big theme at the JP Morgan conference, but it was only on Tuesday that the topic gained traction, perhaps as the reality of selling drugs dawned after a day on which the industry celebrated takeovers and clinical trial successes.

Though the day was distinctly quiet takeover talk continued to reverberate, and biotech execs took the opportunity to talk up M&A prospects while big pharma largely stressed discipline, perhaps in fear of assets again becoming unaffordable. Pricing specifically was tackled by Amgen, Bluebird Bio and others.

Amgen brought news that it was cutting the price of two Repatha products – its pre-filled syringe and nine-minute infusion device – to the $5,850 annual cost of its injector pen. The group had cut the price of the pen, the most popular delivery device, last October, matching the cost-effectiveness benchmark calculated by the technology assessment group Icer (Amgen drops Repatha's list price as US elections loom, October 25, 2018).

Its chief executive, Robert Bradway, told investors at JP Morgan that thanks to the price cut 50% of patients covered by commercial insurance could now receive Repatha without prior authorisation paperwork, and 80% of Medicare part D enrollees would have access at the lower price, leading to fewer prescription abandonments.

Mr Bradway separately talked up other atherosclerosis projects, including an inhibitor of asialoglycoprotein receptor 1 (ASGR1), which could lower non-HDL cholesterol. This is probably a follow-on to AMG 529, an ASGR1 antagonist that completed a phase I study some time ago but that Amgen no longer lists in its pipeline. This avenue of research could well have originated at Decode, the controversial Icelandic genetics firm that Amgen bought out of bankruptcy for $415m back in 2012. 

How much?

The cost issue was put on Tuesday’s agenda thanks to an exclusive in the Wall Street Journal, which said Bluebird Bio was considering implementing a method of payments in instalments for its Lentiglobin gene therapy. At JP Morgan the company’s chief executive, Nick Leschly, fleshed out the idea, involving payments spread over five years amounting to around $2m per patient.

This is “not something we dreamt up last week”, Mr Leschly told a breakout session, adding that Bluebird had been thinking about his “for years”, and that it had had multiple interactions with the UK’s drug price watchdog, Nice, and similar organisations.

If all goes well Lentiglobin could reach European markets this year; a US launch is thought unlikely to happen before later in 2020. 

Roche told the meeting to expect evolution and not revolution on pricing in the US, but said it was one of the pioneers of a value-based approach, which was already implemented in oncology in Europe. However, this needs a complex database behind it so can be difficult to implement.

On the issue of cost, Moderna Therapeutics said its mRNA projects should be cheaper to make than biologics, and was keen to discuss its latest pipeline asset, an intratumoural triple therapy targeting Ox40L, IL-23 and IL-36γ, known as mRNA-2752. But the elephant in the room was the slump in the company’s valuation since its public debut late last year.

When asked why investors had not bought into the group its chief executive, Stephane Bancel, struck a belligerent tone, saying: “You need to ask them.” He contended that it had been an achievement even to float in “a pretty choppy market”, accusing some of finding it hard to get their heads around Moderna and its many programmes.

With 21 projects already in clinical development, and several more set to come in the near future, this will only get more difficult.

Deal talk

As was to be expected, news flow was distinctly down versus the manic dump of investor announcements on Monday. No further biotech takeovers were announced but the M&A theme remained high on the agenda at social functions and in the breakout rooms of the Westin St Francis.

During its JP Morgan breakout session Eli Lilly fielded questions about its M&A rationale – logical given the impact its $8bn move on Loxo on Monday had on investors hungry for deals (JP Morgan 2019 – Lilly fans the M&A flames with Loxo Oncology deal, January 8, 2019).

While stressing Lilly’s firepower for future transactions Dave Ricks, chief executive, rubbished the idea of big M&A, suggesting that scale for its own sake probably destroyed more value than it created, particularly in R&D, saying: “As a manager (big acquisitions are) more of a distraction.”

Smaller, Loxo-type deals, involving targeted cancer treatments, will be pursued, however, and Lilly remains interested in cytokines, a presence it acquired through the earlier takeout of Armo. Though Lilly has an anti-PD-L1, LY3300054, this is not a high priority because “we thought we’d be late. We think there’s a lot of promise left in targeted therapies,” said Mr Ricks.

At Roche’s breakout the Swiss group’s chief financial officer, Alan Hippe, also scotched the idea of big M&A, saying this was not something the group had on its mind.

Glaxosmithkline’s chief executive, Emma Walmsley, went to some lengths to justify her group’s recent purchase of Tesaro, all the while stressing that its balance sheet could support further business development, under the premise that sometimes an asset is better in someone else’s hands.

Interestingly, Hal Barron, head of R&D, talked at some length about Tesaro’s anti-PD-1, TSR-042, but noted that this was the icing on the cake rather than the deal’s key rationale. Higher dosing than Keytruda and Opdivo, plus a less frequent schedule could give an advantage especially in adjuvant use, he suggested.

Among Monday’s Loxo-influenced risers was Clovis Oncology, whose chief executive, Pat Mahaffy, had a counterintuitive view of the new fate of Tesaro, his Parp inhibitor rival. He suggested that Glaxosmithkline, although bigger, might not necessarily be better, and that Tesaro had been very aggressive in its marketing.

Asked if Clovis could have the same fate as Tesaro, Mr Mahaffy acknowledged another reality of biotech – that every company was for sale. “Everyone knows where to find me,” he told investors at Tuesday’s JP Morgan breakout session, not mentioning the reality that it was a plummeting valuation that had led to Tesaro’s sale.

Thus oncology again proved to be an important way of generating investor interest, with Sanofi, for instance, highlighting its recently launched anti-PD-1, Libtayo, which it said faced an EU regulatory decision in the first half of 2019. The French company’s protestations notwithstanding, this is a sixth-in-class asset with little to differentiate itself from entrenched competitors.

If Nektar Therapeutics' JP Morgan pitch is to be believed this company has “one of best pipelines in I-O”, according to its chief executive, Howard Robin. Among developments he mentioned further work in lung cancer with the CD122-biased IL-2 agonist NKTR-214 combined with Opdivo, comprising two new phase III trials and the addition of a NSCLC cohort to the disappointing Pivot-02 melanoma study.

The phase III work will start in the second quarter, enrolling over 1,300 subjects across the two trials, one in front-line NSCLC patients and the other in the second/third-line setting specifically in subjects who have progressed after checkpoint blockade – a vital test of the rationale behind IL-2 agonism.

Business development is also a priority for Global Blood Therapeutics, which says it wants to set its sickle cell disease project voxelotor up as a “backbone” that will be supplemented by other assets. One addition is inclacumab, licensed from Roche last year, and the group’s biz dev team is looking broadly for others.

On the day’s hot issue, pricing, Global Blood’s chief executive, Ted Love, accepted that orphan pricing was appropriate for voxelotor, though he said the drug was unlikely to hit the very high end of this.

And among groups on JP Morgan’s private companies track Tmunity Therapeutics whetted appetites with promises of its first release of clinical data: an anti-PSMA CAR-T asset should generate phase I results in time for Asco-GU and then Asco, with a pivotal phase II study following.

A complex NY-ESO-1 targeting, Crispr-edited, triple-knockout engineered TCR project could yield clinical data in time for December’s Ash meeting. With cell therapy companies like Poseida and TCR2 Therapeutics looking to float, the still private Tmunity should generate a lot of attention.

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