Monday, February 8, 2016

AIM healthcare industry update by Daniel Drew. During hearing Congress slams Valeant and Turning

Healthcare Industry Weekly Review: Jan. 31, 2016 – Feb. 6, 2016

By: Daniel Drew, AIM Student Analyst at Marquette University

Congress slams Valeant and Turning during hearing on drug prices
Martin Shkreli

Thursday’s House Committee on Oversight and Government Reform hearing on drug pricing was full of excitement. Members of Congress criticized Valeant (VRX) and Turning Pharmaceuticals for dramatic prices increases. Congress took shots at former Turing CEO Martin Shkreli, who remained silent during the hearing.

Rep. Elijah Cummings (D-MD), the top Democrat on the House Committee on Oversight and Government Reform, scolded Valeant and Turing for buying drugs and then raising prices to increase company profits.

"They bought them, jacked up the prices, took as much money as they could out of the pockets of patients, hospitals and others, and then put those funds into their own coffers," Cummings said.

Back in August, Turing bought toxoplasmosis drug Daraprim and raised its price by 5,000%, receiving criticism from Congress and Hillary Clinton. Valeant has also come under fire for price increases, especially for the two cardio drugs Isuprel and Nitropress. Valeant raised the drugs' prices by 525% and 212%, respectively.

Predictably, Shkreli did not respond to Cummings' remarks, invoking his Fifth Amendment right. Nonetheless, Cummings still had a few words for the ex-CEO, who sat silent and smiled during the hearing.

"I'm know you're smiling but I'm very serious, sir," Cummings said. "You have a spotlight and you have a platform. You could use that attention to come clean, to right your wrongs and to become one of the most effective patients' advocates in the country and one that can make a big difference in so many people's lives." After the hearing, Shkreli spoke out via Twitter. "Hard to accept that these imbeciles represent the people in our government," Shkreli tweeted.

Turning was not the only that Congress ripped into, Valeant was also targeted for price increases. Interim CEO Howard Schiller recognized at the hearing that Valeant made missteps but said "we're listening and we're changing." Schiller stated that going forward Valeant would increase drugs prices "within industry norms, and much less than" it did for Isuprel and Nitropress.

However another committee member, Rep. Carolyn Maloney (D-NY), didn’t buy Valeant's explanations.

"The only strategy I saw was, 'Let's increase the price of the drugs,'" Maloney said about the company's price hikes. The hearing was the first in what will likely be a long year of discussion regarding drug prices, as it is an easy way for politicians on both sides of the aisle to gain favor with the public. 



Alphabet wants to take over CMS according to Biogen executive
Adam Koppel, Biogen's VP of Corporate Development and Strategy

Alphabet (GOOG) has surpassed more than a few milestones during the past year, including partnering with medical technology companies and pharma heavyweights to expand its influence in the life sciences industry. Alphabet’s next step is to take over the Centers for Medicare and Medicaid Services (CMS).

That’s according to Adam Koppel, VP of Corporate Development and Strategy for Biogen (BIIB). Koppel, who spoke at a panel at this week's Harvard Business School Healthcare Conference, stated that he concluded this through Biogen's discussions and data sharing with Alphabet. Alphabet understands that the current payer system is "like the 19th century" and that they can utilized their scale and technology to improve it, Koppel stated.

Biogen may have an ulterior motive for pushing this idea. Previously Biogen worked with Verily (formerly Google Life Sciences), on a project that uses sensors and data analytics to better understand multiple sclerosis (MS) in patients. Biogen’s main revenue stream is a drug which helps treat MS in patients.

"We're actually looking to build a consortium with them to pool this data, to understand the biomarkers and safety markers, Koppel stated, adding Alphabet has "the queries and search tools to create signals from noise in a way I don't think any of us can do on our own."

Without a doubt Alphabet has set its sights on big data previously. Last year the company attempted to win a $11B HER contract with the Department of Defense, MedCity News points out. Additionally, Verily said last year that it would partner with French drug maker Sanofi (SNY) for a diabetes monitoring data collaboration. Together they are working to discover a better way to collect, analyze and various sources of information for diabetes. Neither party revealed financial details, but Verily stated that it’s aiming to develop devices that can collective patient-reported data and blood glucose levels into one system for better diabetes management.

The Biotech IPO drought ends with two offerings this week
Editas CEO Katrine Bosley

After enduring more than 60 days without a single successful biotech IPO, a pair of drug developers listed on the NASDAQ, going public without offering discounts and signaling faith that a gloomy market might pick back up.

Editas Medicine (EDIT), a Cambridge, MA, newcomer working on gene editing technologies, raised $94.4M by pricing 5.9 million shares at $16. The offering valued Editas at about $571M altogether. Editas, founded in 2013, uses newfangled gene editing technology to develop treatments for inherited diseases, advancing more than a dozen discovery-stage programs with the intent of starting clinical development in 2017. The company plans to use its IPO proceeds to bankroll its early-stage research efforts and support its partnership with Juno Therapeutics (JUNO), which is focused on immuno-oncology.

BeiGene (BGNE), a Chinese-headquartered drug developer, raised $158.4M by pricing 6.6 million ADR shares, each good for 13 regular shares at $24 apiece. BeiGene is using the money raised to enhance its pipeline of targeted cancer treatments, led by a Phase II blood cancer drug that, like Johnson & Johnson's (JNJ) blockbuster Imbruvica, stops the enzyme BTK to kill malignancies. Additionally, BeiGene is working developing a checkpoint inhibitor, a Merck KGaA partnered therapy for solid tumors and an oral drug with potential in ovarian and other cancers.

The listing of these two companies marks 2016’s first IPO pricing for any company, biotech or otherwise. The positive market reaction to the listings may encourage other companies to go public.

Valuations in Biotech have fallen substantially, causing the firms to halt IPOs. Concerns about drug pricing and overvaluation have pulled stock prices down across the industry. The NASDAQ biotech index (NBI) fell more than 20% in January without a single negative event, contributing to the idea that biotech's years-long outperformance is ending.



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