1. Meeting Update: Hepatitis C – 2010 EASL
This month on we review headlines from EASL, AAN, discuss the healthcare reform, the implications of the Myriad Genetics suit for the biotech industry, and review the state of the financial markets with a focus on IPOs and Follow-ons.
The annual meeting of the European Association for the Study of Liver (a.k.a. EASL), is one of the most important meetings of the year for Hepatitis C developers, and it was held last week in Vienna.
Here are some of the headlines from EASL 2010 : – There seems to be continued interest from the investment community in the HCV space, and the meeting was reasonable well attended this year. Not as much data from the Streets’s favorite, Vertex, so perhaps not as much ado as EASL 2009. – EASL 2010 illuminated the profiles of agents in different drug classes, including polymerase inhibitors, various types of protease inhibitors, and NS5A inhibitors. Of particular interest were data from Vertex, Idenix, and Bristol Myers. – Many expect HCV treatment to evolve toward oral combination therapy to maximize cure rates, which is why investor focus on these new classes of compounds is high. – There seems to be a growing level of data and interest regarding drug responsiveness to specific genetic variants of the hepatitis C virus, as well as the genetic composition of the patient, which could play a role in guiding therapy over time.
With over 3M Americans infected with the disease, and mid and late stage drug development candidates that appear to be highly curative, HCV has potential to become one of the largest therapeutic classes in Pharma history. Hepatitis C is becoming the new battle ground for novel anti-viral treatments; quite similar to what was happening in HIV during the last decade.
2.Meeting Update: Neurology – 2010 AAN
Back from one of the most important neurology meetings of the year, Joel Sendek shares some recent developments. The American Academy of Neurology (a.k.a. AAN) meeting was important for many biotech and pharma companies (in particular those that have programs in Multiple Sclerosis). Joel talks about : – Acorda’s Amypra extension study, launch, and Lazard’s predictions for sales this year – Disease modifying therapy that can compete with traditional ABCR therapies, Biogen Idec’s Avonex, Cladribine, and FTY720.
3.Obama’s Healthcare Reform, Good for Pharma, Biotech, and Generics?
On March 23, President Obama signed the narrowly passed healthcare bill, which will extend coverage to over 32 million people, eliminating discrimination against people with pre-existing conditions and establishing a set time period of market exclusivity relating to drug patents.
At first glance, it seems that the healthcare overhaul announced by the Obama administration will not be terribly detrimental to the healthcare industry.
Pharma stocks rallied, given that there were no apparent pricing caps introduced into the system, rather, just a dramatic increase in the number of people who will be using drugs and subsequently paying for them. It is a bit too good to be true? How does the generics factor play into all this? Will the US follow the European model that would stipulate greater use of generics?
Joel Sendek comments on the outlook “from the income statement.” Companies seem to be taking charge. The impact is transitory, and while stocks may be volatile as a result, after adjustment we should be back to the previous trajectory, with the added benefit of 30M additional patients in the system.
Looking at Biotech, it seems the industry got what it wanted. Does this curb some of the investor concerns regarding generic biologics? Will these decisions taken in Washington have an impact on biotech innovation?
Dennis Purcell comments on the decreased interest he is seeing, of venture capitalist in generic companies, after the passing of the healthcare bill. Joel Sendek presents some of the benefits for biotech, namely the potential reinvestment of cash flows from increased sales of branded drugs to R&D, as well as some of the drawbacks, such as the excise tax.
4.Implications of the MYGN Suit, the Future of Genetic Testing
Federal judge Robert Sweet recently invalidated some of the patents held by Myriad Genetics relating to the identification of mutations and sequencing of the 2 genes (BRCA 1 and 2) whose mutations have been associated with breast cancer risk, classification and treatment.
In a telephone interview, David Resnick of Nixon Peabody explains that it puts a cloud over some patents until the federal circuit speaks, and that more than likely it will be appealed and reversed by the court of appeals, and could potentially be picked up by the Supreme Court. Myriad has invested a lot of money in figuring out what these mutations mean. While the tests may not be expensive to perform, the cost to validate them is significant.. and someone is going to need to invest that money. With the patent system and some exclusivity you can recoup your investment. Some commentators have said this is a place where the Federal Government should step in
Denis Purcell and Joel Sendek comment on the promise of personalized and the importance of diagnostics in the future healthcare system. Incentive structures should be put in place to encourage people to work with genetic testing, while making research is not limited by excessive patent estates.
5.Status of the Financial Markets, IPOs and FOs in the YTD
Here are some YTD numbers from DealLogic:
- 4 IPOs for 2010, vs. none in 2009, and 4 in 2008 – 27 follow ons in 2010, vs. 7 in 2009, and 12 in 2008 – in terms of total $ raised, that’s over $2.2bn in 2010, vs. $625M in 2009, and a bit over $1bn in 2008
Marina, Dennis, and Joel talk about the activity and the challenges in the public markets. Public buyers want the private guys to spend money de-risking programs, and yet they are not willing to pay for it. With regard to acquisitions, Pharma “bailing-out” Biotech, Dennis remains unconvinced, and shares the following data point :”If half of all biotech companies were for sale, any one company has less than a 1% chance of being acquired.” On a more positive note, Joel comments on how the success of mid-cap companies could help smaller companies enhance their appeal to investors, and their value as a result.
This interview was conducted at the NASDAQ Marketsite, on March 17th, 2010, in New York City.
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