Biopharma Companies Seek Solidarity Amid Challenges and Opportunities at 2019 J.P. Morgan Healthcare Conference
Once-in-a-lifetime encounter. In January 2019, the J.P. Morgan Healthcare Conference was held as scheduled in San Francisco. At this event, dubbed the “Super Bowl of biomedicine,” massive biopharmaceutical technology deals can be sealed amidst clinking glasses and a few handshakes and conversations.
On the third day of the conference, participating companies jointly discussed the current challenges facing the biopharmaceutical industry and shared their key strategic moves to address these challenges:
1. The biopharmaceutical industry remains cautious about the impact of the U.S. government shutdown;
2. AstraZeneca’s net prices fell in 2019, and the company will raise prices for certain products;
3. Biotech innovator Denali Therapeutics increases its investment in gene therapy and collaborates with Sirion Holdings to develop candidate drugs for neurodegenerative diseases;
4. Allergan will release Phase III data for the NMDA modulator rapastinel in the first half of 2019;
5. Aptinyx and Sangamo Therapeutics Seek Partnerships with Large Pharmaceutical Companies.
Here are the key points curated for you by VCBeat (WeChat Official Account: vcbeat):
On January 9, local time, at the biotechnology showcase held concurrently with the JPM conference, an industry executive stated during a panel discussion that the sector remains cautious about the impact of the U.S. government shutdown, while also expressing concern over potential risks associated with a prolonged shutdown.
U.S. President Trump and members of Congress clashed over funding for the U.S.-Mexico border wall, leading to a partial shutdown of the U.S. government that began on December 22, 2018. The U.S. FDA continues to review applications using carried-over funds, a situation expected to end in February this year.
At a biotech panel on “The Intersection of Policy and Sentiment,” executives stated that new NDA submissions were not being accepted, and they were uncertain about how long this situation would persist.
During the biotechnology showcase, Joe Panetta, President and CEO of Biocom, the Southern California life sciences industry association, stated that members of his organization reported being unable to submit applications as planned. He remarked with resignation, “Some people want to apply, but they are unable to do so.”
It remains unclear how long the deadlock will last. Panetta pointed out, “This uncertainty is of no help to the industry we are in.”
Rachel King, CEO of Glycomimetics, stated that she had just learned from a banker that two initial public offering (IPO) transactions, originally scheduled to launch after the JPM conference, have been suspended. She emphasized that timing is everything for capital formation, and delaying an IPO is a “disaster.”
Jonathan Leff, a partner at Deerfield Management, stated that the recent government shutdown serves as a reminder that “the entire biotechnology and drug development industry is heavily reliant on the government.” He noted, “It is a symbiotic relationship.”
He stated that the prolonged government shutdown has had a “massive” impact on the biotechnology industry—potentially greater than on any other sector—due to the “extremely high degree of interdependence.” Many areas have been affected, including FDA reviews, research funding, and patent applications.
“If this situation persists for an extended period, I believe we will see a wide range of consequences, even ones beyond what we can currently imagine.”
Rick Suarez, Senior Vice President of AstraZeneca, stated in an interview with JPM that the average net price of AstraZeneca’s 2019 product portfolio would be lower than that of 2018, although the company would raise prices for certain products.
On the issue of price hikes, the pharmaceutical industry is facing pressure from the public and lawmakers. On January 9 (local time), U.S. Secretary of Health and Human Services Alex Azar posted a message on Twitter condemning pharmaceutical companies for continuing to raise list prices for their products. In January this year, many pharmaceutical manufacturers did increase their list prices as usual, but so far, some of these price increases have been more moderate.
The industry prefers to focus on net prices—i.e., prices after rebates—which are often significantly lower than list prices. However, pricing remains important for patients enrolled in high-deductible health plans who must pay out of pocket upfront.
Rick Suarez said, “When we began to focus on the list prices of drugs, we did not truly address some of the core challenges patients may face regarding out-of-pocket costs at the pharmacy counter.”
He stated that AstraZeneca is striving to enhance pricing transparency and exploring new drug pricing models, primarily by reaching value-based reimbursement agreements with payers. AstraZeneca has been actively pursuing this approach across its portfolio.
The executive stated that one benefit of the Trump administration’s focus on drug prices was that it sparked industry discussions on drug pricing, payment, and reimbursement models.
In December 2017, Denali Therapeutics, a biotech innovator founded just over two years prior, successfully listed on the NASDAQ, setting the highest record for a biotechnology IPO in 2017 with a total valuation of $1.7 billion. Just one month later, in January 2018, Denali and Takeda Pharmaceutical Company (Takeda) announced a strategic collaboration to jointly develop therapies for neurodegenerative diseases.
At the JPM Conference, Alex Schuth, Chief Operating Officer and Co-Founder of Denali, was interviewed. This neuroscience expert believes that gene therapy for neurodegenerative diseases is one of the most exciting yet challenging areas in drug development, with the potential to address major challenges in treating these conditions.
He stated, “In recent years, gene therapy has made tremendous progress. One of the challenges we continue to face is delivering gene therapies to the brain, which happens to be one of our core competencies.”
On January 9 local time, the company announced a collaboration with Sirion Holdings, a developer of viral vector gene delivery technologies, to jointly develop adeno-associated virus (AAV) vectors that enable therapeutic agents to cross the blood-brain barrier. The ultimate goal of this partnership is to develop a pipeline of candidate products for the treatment of neurodegenerative diseases.
Denali boasts a compelling pedigree. Founded by three former executives from Genentech and launched in 2015 with backing from venture capital firms Flagship Ventures and ARCH Venture Partners, the company has inevitably drawn close industry scrutiny of its progress.
Phase III data for Allergan’s NMDA modulator, rapastinel, are expected to be released in the first half of 2019. This will represent a significant milestone for the company this year and a meaningful development milestone for Aptinyx, the newly listed company spun off from Naurex, the drug-development firm acquired by Allergan.
Rapastinel is an intravenously administered drug under development for the treatment of major depressive disorder (MDD), with three Phase III studies evaluating the therapy as an adjunct to standard care. Data from these three clinical trials are expected to be released in the first half of this year. If the trials are successful, these data will support regulatory filings for the drug in the second half of 2020.
Allergan’s Executive Vice President and Chief Research and Development Officer, David Nicholson, stated in an interview with JPM that Rapastinel is an intravenous drug that is easy to administer and can be injected rapidly.
Nicholson also pointed out that the intravenous administration route does not pose a barrier to patients currently participating in the open-label trial of Rapastinel, with approximately half of the patients receiving injections on a weekly basis.
Rapastinel garnered significant attention in Phase IIb trials after late-2014 report data demonstrated its rapid onset of action and pronounced efficacy. At that time, it was still owned by Naurex under the name GLYX-13. Subsequently, Allergan acquired Naurex for $560 million and allowed the NMDA modulator platform to operate independently within a separate company.
This independently operated company is Aptinyx. The company raised $65 million in its Series A financing round in May 2016 and completed a $70 million Series B financing round by the end of 2017. In July 2017, the company went public with an IPO raising a total of $117.8 million to develop its NMDA modulator product pipeline. Reportedly, the purpose of Aptinyx’s initial public offering was to provide the company with financial resources to strengthen its competitive position.
Aptinyx CEO Norbert Riedel revealed in an interview with JPM that, as of the third quarter of 2018, the company had raised a total of $165 million through venture capital financing and its initial public offering (IPO).
The company will report Phase II data for NYX-2925 in diabetic peripheral neuropathy (DPN) for the first quarter of 2019 and in fibromyalgia for the first half of the year, as well as Phase I data for NYX-458 in patients with Parkinson’s disease. Phase II data for NYX-783 in the treatment of cognitive impairment disorders and post-traumatic stress disorder will be announced in the second half of 2019.
He stated that Aptinyx has the capability to independently conduct two to three Phase III trials of NYX-2925 for DPN, and may wait until closer to commercialization before seeking partners for the asset.
“I don’t think we can commercialize chronic pain therapies on our own; it would be best to partner with a large pharmaceutical company,” said Riedel.
Sangamo Therapeutics CEO Sandy Macrae said in an interview at a JPM conference, “Collaboration is very important because some things can only be achieved by partnering with large companies.”
Sangamo has five programs, with four expected to enter clinical trials this year. Its Phase I/II gene therapy for hemophilia A, SB-525, is being developed in collaboration with Pfizer, while its Phase I-II cell therapy for beta-thalassemia, ST-400, is being developed in partnership with Sanofi.
Sangamo’s BIVV-003, which entered clinical trials in 2019, was also co-developed with Sanofi, while its CD19-targeting chimeric antigen receptor T-cell therapy for sickle cell disease was jointly developed with Gilead and Kite Pharma.
ST-920, a gene therapy for Fabry disease, and chimeric antigen receptor-modified T-cell candidates designed to induce immune tolerance in solid organ transplantation, were acquired through the recently completed acquisition of TxCell SA.
Macrae stated, “We choose to collaborate in highly competitive commercial spaces or on pilot projects that are still too large for a company of our size. Having worked at GSK and Takeda, I have come to realize that large and small companies excel in different areas; the key lies in identifying the right solution for each project.”
For example, Sangamo has a muscle-reduction program that could be applied to smaller indications such as Alzheimer’s disease or frontotemporal dementia. Macrae explained that the latter would require a clinical trial program and a commercial strategy manageable for a small company like Sangamo, whereas a $1 billion Alzheimer’s disease program and the vast market for this condition would necessitate a large pharmaceutical partner.
He pointed out that Sangamo has established strong partnerships with Sanofi, Pfizer, and Gilead. Shire, which was recently acquired by Takeda Pharmaceutical, has licensed Sangamo’s Huntington’s disease program and will operate it independently.
Regarding the clinical data on patients with MPS II who discontinued enzyme replacement therapy after receiving SB-913 treatment, Macrae disclosed on January 9 that the company is unlikely to present these findings at the symposium in February. Following Macrae’s remarks, Sangamo’s stock price closed down 14.2% on January 9. Subsequently, Macrae stated that while the company might not be ready to submit the data by then, it is expected to be released later this year.