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
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Martin Shkreli
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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
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Adam Koppel, Biogen's VP of Corporate
Development and Strategy
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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
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Editas CEO Katrine Bosley
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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.
