The Biotech Beat: 7.22-7.28.24
by Joey Bose
??Upshot
The biotech industry is abuzz with transformative developments and high-stakes decisions, from blockbuster acquisitions to groundbreaking drug trials. ?? AbbVie's $8.7 billion buyout of Cerevel Therapeutics promises to bolster its neuroscience pipeline, while ?? Artiva Biotherapeutics raises $167 million to pioneer NK cell therapies for autoimmune diseases. ?? Gilead faces pressure to allow generic manufacturing of Lenacapavir to combat HIV globally, and ?? Eli Lilly's $3.2 billion acquisition of Morphic aims to challenge Takeda’s IBD treatment market. ?? Viking Therapeutics fast-tracks its obesity drug VK2735 directly to Phase 3, while ?? AstraZeneca's holistic approach targets diverse BMI categories in its ambitious obesity strategy. ?? Third Arc Bio, launched by J&J veterans with $165 million, is set to revolutionize antibody therapies for solid tumors and autoimmune diseases. Meanwhile, ?? CVS Caremark settles a $45 million rebate dispute with Illinois amid rising scrutiny of PBMs, and ? the EMA rejects Eisai and Biogen’s Alzheimer’s drug Leqembi over safety concerns, diverging from the FDA’s approval. These stories reflect a biotech landscape marked by innovation, competition, and regulatory challenges, promising significant impacts on global healthcare.
?? Research, Development & Drug Approvals ??
?? Innovent's GLP-1 Drug Poised to Challenge Lilly in China
The Facts
Innovent has achieved another late-phase victory for its GLP-1 drug candidate partnered with Eli Lilly, setting the stage for a regulatory filing in China. Granted rights by Lilly in 2019, Innovent's mazdutide has shown promise, significantly reducing HbA1c levels by 1.57% and 2.15% in its phase 3 trial involving 320 Chinese adults with type 2 diabetes. The drug also led to notable weight loss of 9.6% over 48 weeks. This positions mazdutide as a potential competitor to Lilly's tirzepatide, already approved in China for diabetes and weight management.
Our Opinion
Innovent's success with mazdutide is a crucial development for the biotech industry and China's healthcare sector. The promising phase 3 results highlight the drug's potential to address the growing type 2 diabetes epidemic in China, offering an alternative to Lilly's tirzepatide. This competition could drive innovation and potentially lower treatment costs. However, the lack of direct comparison between the two drugs and the cross-trial variability in baseline HbA1c levels warrant a cautious optimism. The biotech industry should closely monitor whether mazdutide can deliver long-term benefits and gain significant market share against established players like Lilly and Novo Nordisk.
Your Turn
Given the emerging competition between GLP-1 drugs in China, how might the pricing strategies of Innovent's mazdutide and Lilly's tirzepatide influence patient access and the overall market dynamics in the Chinese pharmaceutical landscape?
?? Sage and Biogen Halt Development of SAGE-324 Following Phase 2 Failure
The Facts
Sage Therapeutics and Biogen have decided to discontinue the development of their experimental oral drug SAGE-324/BIIB124 for essential tremor after it failed a Phase 2 trial. The study, which involved 147 participants, did not show a statistically significant dose-response relationship in reducing upper limb tremor. The failure of SAGE-324, which is also being considered for epilepsy and Parkinson’s disease, led to Sage's shares plummeting by nearly 25% and Biogen's shares dipping slightly by 1%.
Our Opinion
The termination of SAGE-324's development is a significant setback for both companies and highlights the persistent challenges in treating essential tremor, a condition with limited pharmacological advancements over the past five decades. This outcome not only impacts Sage's financial stability—exacerbated by previous setbacks such as the FDA's rejection of zuranolone for major depressive disorder—but also underscores the high-risk nature of neurological drug development. While Sage and Biogen evaluate the future of SAGE-324 for other potential indications, this failure raises critical questions about the viability of their current pipeline and strategic direction.
Your Turn
Given the consistent struggles in developing effective treatments for essential tremor, what alternative therapeutic approaches or emerging technologies could potentially fill this unmet medical need and advance the field?
?? Pfizer's Hemophilia A Gene Therapy Triumph: A Glimmer of Hope Amid Challenges
The Facts
Pfizer's gene therapy for hemophilia A, giroctocogene fitelparvovec, has achieved its primary objective in the Phase 3 AFFINE study, demonstrating a 98.3% reduction in bleeding rates compared to routine factor VIII replacement therapy. Despite these promising results, Pfizer faces significant commercial hurdles, as evidenced by BioMarin's struggles with the slow uptake of its hemophilia A gene therapy, Roctavian. Pfizer aims to present full results at an upcoming medical meeting and seek regulatory approval soon.
Our Opinion
Pfizer's achievement in hemophilia A gene therapy is a notable advancement, offering hope for patients with this chronic condition. The remarkable reduction in bleeding rates underscores the potential of gene therapy to revolutionize treatment paradigms. However, the commercial landscape remains fraught with challenges. Competing treatments like Roche's Hemlibra provide effective alternatives, making market penetration difficult. Moreover, Pfizer's history of setbacks with other gene therapies and BioMarin's commercial difficulties with Roctavian highlight the complex path to widespread adoption. Pfizer's success will depend on its ability to navigate these hurdles and effectively position its gene therapy in a competitive market.
Your Turn
Given the competitive nature of the hemophilia A treatment market, how might Pfizer leverage its gene therapy's clinical success to overcome commercial barriers and differentiate itself from existing therapies like Roche's Hemlibra?
?? Mapping the Placebo Effect: A Breakthrough in Pain Research
The Facts
Researchers have mapped the neural circuits responsible for placebo pain relief in mice, discovering that the effect is controlled by the rostral anterior cingulate cortex (rACC) and the pontine nucleus (Pn), regions not previously recognized as significant players in pain pathways. This study, published in the July 24 edition of Nature, demonstrated that when mice experienced a placebo effect, the rACC and Pn showed increased activity. Blocking rACC-Pn neurons disrupted the placebo effect, suggesting potential new targets for nonaddictive pain management drugs.
Our Opinion
This discovery marks a significant advancement in understanding the placebo effect and its implications for pain management. The identification of the rACC and Pn in placebo analgesia opens new avenues for developing nonaddictive pain treatments, addressing a critical need in the field. The study's innovative approach in using animal models to investigate these neural circuits offers valuable insights that could revolutionize pain therapy. However, the challenge remains in translating these findings to humans, a necessary step to harness the therapeutic potential of these pathways effectively. The biotech industry should keenly follow up on these developments, as they could lead to groundbreaking treatments for chronic pain without the risk of addiction.
Your Turn
How can the insights gained from this study on the placebo effect be integrated with current pain management practices to enhance the efficacy of existing analgesics through expectancy mechanisms?
?? Viking Therapeutics Fast-Tracks Obesity Drug to Phase 3
The Facts
Viking Therapeutics is accelerating the development of its GLP-1/GIP receptor agonist for obesity, VK2735, by skipping Phase 2b and moving directly to Phase 3. Despite positive topline results showing a 14.7% reduction in mean body weight over 13 weeks among 176 patients, Viking has yet to outline the trial design. The company also plans to explore less frequent dosing intervals, including monthly, and expects an end-of-Phase 2 meeting with the FDA later this year. Viking’s stock surged 18% in after-hours trading following the announcement.
Our Opinion
Viking’s bold decision to leap directly to Phase 3 highlights the intense competition in the obesity treatment market, aiming to rival established blockbusters like Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy. This move signals confidence in VK2735’s efficacy and safety profile, potentially speeding up the timeline to market. However, the lack of detailed trial design and the crowded field of competitors pose significant risks. Viking’s strategy reflects the high stakes and rapid pace of innovation in the obesity drug market, where achieving a first-mover advantage could translate into substantial commercial success.
Your Turn
Given the competitive landscape and Viking's aggressive timeline, what potential regulatory and market challenges could impact the success of VK2735, and how might Viking strategically address these to secure a strong market position?
?? AstraZeneca's Ambitious Obesity Strategy: Tailoring Treatments by BMI
The Facts
AstraZeneca is advancing its obesity strategy with plans to develop treatment options tailored to individuals with different BMIs, aiming to launch two mid-stage trials by year-end. CEO Pascal Soriot emphasized a holistic approach to weight management, integrating related conditions like hypertension and kidney disease. AstraZeneca's pipeline includes three early-stage candidates, each projected to achieve $5 billion in peak sales. The company is also progressing with its GLP-1 glucagon agonist and long-acting amylin programs, and preparing for Phase 2b studies for its oral GLP-1 receptor agonist, AZD5004, in type 2 diabetes and obesity.
Our Opinion
AstraZeneca's comprehensive strategy in addressing obesity signifies a robust commitment to capturing market share in a rapidly evolving therapeutic area. By differentiating treatment regimens based on BMI, AstraZeneca is poised to meet the diverse needs of patients more effectively than competitors. This approach, coupled with its integration of comorbid conditions, positions AstraZeneca to potentially lead in the obesity market. However, the ambitious projections and the crowded competitive landscape present significant challenges. The industry's keen interest in obesity treatments underscores the potential for transformative health impacts, yet also highlights the fierce competition AstraZeneca will face.
Your Turn
Considering AstraZeneca's holistic approach and the competitive landscape, how might the integration of treatments for related conditions like hypertension and kidney disease enhance the market positioning and patient outcomes for AstraZeneca's obesity therapies?
?? Investment, M&A, and IPOs ??
?? Artiva Biotherapeutics Raises $167M to Pioneer NK Cell Therapy for Autoimmune Diseases
The Facts
Artiva Biotherapeutics has raised $167 million through its IPO to advance its allogeneic NK cell therapy, AlloNK, currently in Phase 1/1b trials for systemic lupus erythematosus. The IPO, priced at $12 per share, fell short of its initial $14-$16 range but increased the number of shares sold. Artiva's approach uses donor-derived NK cells from cord blood, promising cost-effective and scalable therapy. The IPO funds will support trials for lupus and other autoimmune disorders, including rheumatoid arthritis and vasculitis, positioning Artiva as a first mover in NK cell therapy for autoimmune diseases.
Our Opinion
Artiva's successful IPO underscores the growing interest and potential of NK cell therapies beyond cancer, venturing into the challenging terrain of autoimmune diseases. The company’s innovative use of allogeneic NK cells from cord blood offers a scalable alternative to the autologous approaches that dominate the field, promising more accessible treatments. However, Artiva faces significant competition from other firms developing cell therapies using different immune cells. The ambitious goal of pioneering NK cell therapy in autoimmune conditions will require robust clinical results and strategic execution to solidify its leadership and capture a significant market share.
Your Turn
How might Artiva's approach of using allogeneic NK cells from cord blood compare in efficacy and scalability to other emerging cell therapies for autoimmune diseases, such as those based on regulatory T cells?
?? Biotech's Dual-Track Strategy: IPO or M&A for Maximum Leverage
The Facts
Private drug developers are increasingly pursuing both IPOs and buyouts, leveraging dual-track strategies amid a rise in biopharma M&A and a slight uptick in public debuts. This approach offers companies flexibility and potential higher valuations, as evidenced by Carmot Therapeutics' $2.7 billion acquisition by Roche shortly after announcing IPO plans. The trend reflects biopharma’s need to fill revenue gaps from patent cliffs, with median upfront deal sizes for private buyouts reaching $1 billion in the first half of 2023, according to HSBC.
Our Opinion
The dual-track strategy underscores the evolving landscape of biotech funding, where companies must remain agile to maximize their value and ensure clinical progress. This approach allows private biotechs to capitalize on favorable market conditions and maintain leverage in negotiations, potentially driving up their valuation. However, the complexity and uncertainty of managing both IPO and M&A processes simultaneously pose significant risks. The trend also highlights the critical role of strategic decision-making in biotech, where the ability to pivot and seize the best opportunity can determine a company's success or failure in a highly competitive market.
Your Turn
Given the increasing use of dual-track strategies in the biotech industry, how might private companies balance the benefits and risks of this approach to secure the best possible outcome for their stakeholders?
?? Dren Bio Partners with Novartis in $3B Cancer Therapy Deal
The Facts
Dren Bio has secured a $150 million upfront payment from Novartis, including $25 million in equity, for a partnership focused on myeloid engagers to treat cancer. This deal, which could yield up to $2.85 billion in milestone payments, follows Dren's earlier $1 billion partnership with Pfizer. Central to both collaborations is Dren's bispecific antibody platform targeting myeloid cell activation, seen as a safer and more potent alternative to T cell engagers. Dren’s lead asset, DR-01, is currently in Phase 1/2 trials for leukemia and cytotoxic lymphomas, with a second trial for DR-0201 recently initiated.
Our Opinion
Dren Bio's collaboration with Novartis marks a significant milestone in the biotech's journey, reflecting confidence in its innovative bispecific antibody platform. The substantial upfront payment and potential milestone earnings underscore the therapeutic promise of myeloid cell activation in oncology. This partnership not only validates Dren's approach but also positions it favorably within the competitive landscape of cancer immunotherapy. However, the true test will be the clinical efficacy and safety of these candidates, as well as their ability to outperform existing treatments. The high stakes and competitive pressures in the oncology market necessitate rigorous development and strategic execution to realize the full potential of this partnership.
Your Turn
Considering the emerging role of myeloid cell activation in cancer therapy, how might Dren Bio's approach compare to other novel immunotherapies currently in development, and what potential advantages or challenges could arise from targeting myeloid cells over T cells?
?? Eli Lilly’s $3.2B Morphic Buyout: Strategic Move in IBD Market
The Facts
Eli Lilly’s $3.2 billion acquisition of Morphic Therapeutics culminated a series of strategic discussions and negotiations beginning in 2020. Initial meetings did not yield immediate results, but interest reignited in 2023 following Morphic’s Phase 2a data on MORF-057 for ulcerative colitis. After initial offers were deemed too low, Lilly and Morphic agreed on a final price of $57 per share. The acquisition gives Lilly an oral α4β7 inhibitor, poised to challenge Takeda’s Entyvio in the inflammatory bowel disease (IBD) market.
Our Opinion
Lilly’s acquisition of Morphic is a strategic masterstroke, enhancing its IBD portfolio with an innovative oral therapy that could significantly disrupt the market. The deal underscores the importance of adaptive strategies and thorough due diligence in biotech M&A, particularly when acquiring promising yet volatile assets. Morphic’s ability to negotiate higher offers by providing additional data exemplifies the critical role of transparency and detailed clinical insights in securing favorable deal terms. However, the success of this acquisition hinges on MORF-057’s clinical performance and market adoption, given the entrenched competition from established treatments like Takeda's Entyvio.
Your Turn
Given the competitive landscape of the IBD market, how might Eli Lilly’s integration of Morphic’s MORF-057 influence future therapeutic developments and strategic acquisitions in the field of inflammatory bowel diseases?
?? Actuate Scales Down IPO Amid Clinical Trial Uncertainties
The Facts
Actuate Therapeutics has revised its IPO plans, now offering 2.95 million shares priced between $8 and $10 each, potentially raising $23.2 million, down from an initial goal of $45.1 million. The downsized IPO reflects cautious market conditions and has led Actuate to delay several clinical ambitions, including a phase 2 trial for its cancer drug elraglusib in refractory Ewing sarcoma and other trials for advanced cancers. These adjustments underscore the challenges biotechs face in securing sufficient funding for ambitious clinical programs.
Our Opinion
Actuate's reduced IPO highlights the volatile nature of biotech funding and the impact of market sentiment on clinical development plans. The company’s decision to scale back reflects prudent risk management but also underscores the financial constraints that can hinder progress in the biotech sector. Despite promising preclinical data for elraglusib, the need to defer key trials until further funding is secured raises concerns about the drug’s development timeline and market potential. This situation exemplifies the delicate balance biotechs must maintain between securing investment and advancing clinical pipelines.
Your Turn
Given the financial adjustments and clinical delays faced by Actuate, how might emerging biotech companies strategically navigate funding challenges to ensure the continuity and success of their drug development programs?
?? Third Arc Bio Launches with $165M to Revolutionize Antibody Therapies
The Facts
A team of Johnson & Johnson veterans has launched Third Arc Bio with $165 million to advance multifunctional antibodies targeting solid tumors and autoimmune diseases. Founded by Sanjaya Singh, Ph.D., co-inventor of Skyrizi, and led by former J&J oncology R&D head Peter Lebowitz, M.D., Ph.D., Third Arc aims to develop antibodies that can simultaneously bind multiple targets. The biotech has attracted prominent investors, including Vida Ventures and Goldman Sachs Alternatives, to support its ambitious clinical trial plans starting next year.
Our Opinion
Third Arc Bio's entry into the biotech scene marks a significant development in the quest for innovative antibody therapies. The company’s focus on multifunctional antibodies could potentially unlock new biological pathways and offer more effective treatments for complex diseases. The experienced leadership team, combined with substantial financial backing, positions Third Arc to make significant strides in the field. However, the challenge lies in translating this innovative approach into clinical success amid the highly competitive landscape of antibody drug development. The biotech industry will be keenly watching Third Arc's progress as it navigates the path from promising science to transformative therapies.
Your Turn
How might Third Arc Bio’s focus on multifunctional antibodies impact the future landscape of treatment options for solid tumors and autoimmune diseases compared to traditional antibody therapies?
?? AbbVie’s $8.7B Cerevel Acquisition Nears Completion Amid Strong Q2 Performance
The Facts
AbbVie's highly anticipated $8.7 billion acquisition of Cerevel Therapeutics is expected to close imminently, bolstering its neuroscience pipeline with promising treatments for schizophrenia, Parkinson’s disease, and Alzheimer’s psychosis. Despite regulatory concerns, CEO Rob Michael confirmed progress with the FTC and expects no divestments. Additionally, AbbVie reported robust Q2 revenues of $14.46 billion, driven by strong sales of Skyrizi, Rinvoq, and Humira, leading to an upward revision of its full-year earnings guidance.
Our Opinion
AbbVie’s strategic acquisition of Cerevel represents a significant expansion of its neuroscience portfolio, positioning the company to compete vigorously in the lucrative market for neurological treatments. This move underscores AbbVie’s commitment to diversifying its product lineup, especially as it faces biosimilar competition for its flagship drug, Humira. The deal's successful closure, free from FTC impediments, highlights AbbVie's adept navigation of regulatory landscapes. However, the company’s decision to halt its monotherapy anti-amyloid Alzheimer's drug development reflects the intense competition and rapidly evolving therapeutic approaches in the Alzheimer’s market. The focus on combination therapies and novel mechanisms indicates a forward-thinking strategy in a highly challenging field.
Your Turn
Considering AbbVie's strategic acquisition of Cerevel and the evolving landscape of Alzheimer's therapies, how might the integration of Cerevel’s pipeline influence AbbVie's long-term position in the neuroscience market, and what are the potential challenges they might face in differentiating their treatments from existing and emerging competitors?
?? Politics & Policy ???
?? Gilead Urged to Allow Generic Lenacapavir to Combat Global HIV Crisis
The Facts
Winnie Byanyima has called on Gilead to enable generic manufacturing of Lenacapavir, a twice-yearly injectable antiretroviral, by joining the Medicines Patent Pool. This move could provide affordable versions in low- and middle-income countries. Byanyima, executive director of UNAIDS, emphasized the potential historical impact, suggesting Gilead could help end AIDS as a public health threat and gain global recognition, possibly even a Nobel Prize. Lenacapavir, approved in the US and EU, is priced around $40,000 annually in the US and shows promise for pre-exposure prophylaxis (PrEP) use.
Our Opinion
Byanyima’s plea to Gilead underscores a critical juncture in the fight against HIV/AIDS. Lenacapavir’s potential to reach marginalized populations, such as gay men and trans women, and its efficacy in preventing HIV transmission, position it as a groundbreaking therapy. Allowing generic manufacturing could transform access to this life-saving drug, especially in regions with high HIV prevalence and limited healthcare resources. However, Gilead’s willingness to prioritize public health over profits remains uncertain. The biotech industry and global health community must advocate for equitable access to innovative treatments to truly impact the HIV epidemic.
Your Turn
How might Gilead's decision to allow generic manufacturing of Lenacapavir influence global health policies and the pharmaceutical industry's approach to pricing and accessibility of life-saving medications?
?? CVS Caremark Settles $45M Rebate Dispute with Illinois Amid Scrutiny
The Facts
CVS Caremark agreed to pay Illinois $45 million to settle allegations of withholding drug rebates. The settlement stems from claims that CVS obscured rebates through a group purchasing organization, depriving the state of owed funds. Despite denying the allegations, CVS agreed to a comprehensive settlement that may complicate future contracts. This settlement highlights ongoing scrutiny of pharmacy benefit managers (PBMs) like CVS, OptumRx, and Express Scripts, which control nearly 80% of U.S. prescriptions and are often blamed for driving up drug costs.
Our Opinion
This settlement is a pivotal moment in the ongoing battle over PBM practices, shedding light on the opaque nature of pharmaceutical pricing and rebate management. The agreement's stringent terms, requiring full disclosure of fees and unredacted contracts, sets a precedent that could impact the entire industry. As federal and state lawmakers increase their scrutiny and propose reforms, the role of PBMs in the healthcare system is under intense examination. This case underscores the urgent need for transparency and accountability in drug pricing, potentially leading to significant industry-wide changes.
Your Turn
Given the increased scrutiny and legislative pressures on PBMs, how might this settlement influence future regulatory policies and the operational practices of major PBMs in the pharmaceutical industry?
?? EU Regulators Reject Eisai and Biogen’s Alzheimer’s Drug Leqembi Over Safety Concerns
The Facts
European regulators have rejected Eisai and Biogen's Alzheimer’s therapy Leqembi, citing that its benefits do not outweigh the risks of severe side effects, particularly brain swelling or bleeding known as ARIA. Despite a 27% reduction in cognitive decline versus placebo in clinical trials, the European Medicines Agency (EMA) committee highlighted the drug's serious adverse events. Eisai and Biogen plan to appeal, though overturning the decision appears challenging given historical trends. The decision contrasts with approvals in the U.S., Japan, China, South Korea, and Israel.
Our Opinion
The EMA's rejection of Leqembi underscores the stringent safety standards applied by European regulators, especially for treatments with serious potential side effects. While the U.S. FDA and other global regulators have approved Leqembi, recognizing its modest benefits in slowing cognitive decline, the EMA's decision reflects a cautious approach prioritizing patient safety. This divergence highlights the complex balance between therapeutic benefit and risk, particularly for amyloid-clearing drugs in Alzheimer's disease. The outcome of the appeal and real-world data will be critical in shaping the future of Alzheimer’s treatments in Europe and beyond.
Your Turn
Considering the differing regulatory stances on Leqembi, how might the rejection by the EMA influence the development and approval processes for future Alzheimer's therapies, particularly those targeting amyloid plaques?
Disclaimer: The contents of this article are not to be construed with investment advice. The information presented in this article is a compilation of current events, technical analyses, corporate press releases, and the author's personal viewpoints about the biotechnology industry. While efforts have been made to provide accurate and timely information, there may be inadvertent errors, omissions, or inaccuracies. Therefore, investment decisions should not be made solely based on the content of this article. The article may contain statements that are forward-looking in nature, encompassing predictions and future expectations that are subject to inherent risks and uncertainties; as such, actual outcomes may significantly deviate from those expressed or implied herein. This article serves purely as an informational and entertainment resource, and should not be construed as an endorsement to purchase or sell any financial securities. Prior to engaging in any investment activities, it is imperative that you conduct comprehensive due diligence and consult with a qualified financial advisor.