Your Edge In Biotech.
8
Feb
2022

Behind the Scenes of BD: Maude Tessier on a Megamerger Curveball

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08 Feb 2022

Vikas Goyal, former SVP, business development, Pandion Therapeutics (now part of Merck)

[Editor’s Note: this is part of a series of interviews with business development executives about some of the surprises, subtleties, and human aspects of biotech dealmaking.]

Maude Tessier is the chief business officer of Boston-based Ikena Oncology, a developer of targeted small molecule cancer drugs.

Like a lot of people in business development, she considers herself a “recovering scientist.” She got a PhD in cancer biology before turning to the business side. Before joining Ikena in 2018, she worked in business development at Merck for about four years.

One of her first major jobs at Ikena was crafting a partnership with Celgene. That was an important validating event for Ikena while it was still a private company. But then a megamerger altered the landscape.

Today we’ll hear Maude tell the story.

Maude Tessier, chief business officer, Ikena Oncology

What deal would you like to talk about? What was your role in the process?

Ikena is a young, recently public, Boston-based targeted oncology company. We are really focused on biomarker-driven cancer R&D. We have a pipeline of programs focused on targeted oncology and the tumor microenvironment, and we have programs across several signaling pathways that we believe are drivers of cancer.

Today we’ll be chatting about a partnership we executed with Celgene, now BMS, in January 2019 on two of our tumor microenvironment programs.

Why did you do the deal?

Ikena really has a unique approach to the kynurenine pathway, with two interesting programs in development. First, we have an aryl hydrocarbon receptor (AHR) antagonist which at the time was really the only program available for partnering. Second, we have a kynurenine degrading enzyme (Kynase) which is a very differentiated approach to targeting the critical kynurenine metabolite in the tumor microenvironment.

In 2018 we had set a goal to finance the company, and we were pursuing parallel discussions with investors and partners. We had real optionality at the time based on the parallel approach we took as well as the interest in our science.

Partnering with Celgene rose to the top as a very attractive option. Celgene/BMS is a top-tier oncology company and there was great validation for Ikena’s work by collaborating with them. And Celgene also had a great approach to partnering with young companies, sharing long-term upside, giving companies like Ikena the independence to do our work, and offering meaningful upfronts. In exchange for an option to both our AHR antagonist and Kynase programs, Celgene paid $80M in non-dilutive cash plus $15M in equity upfront — this provided significant resources to fund Ikena’s operations and help us build our company.

Celgene also had a deep understanding of the kynurenine pathway and its therapeutic potential in cancer. And they really liked the way our company was approaching the science and developing our programs.

The partnership focused on two of our pipeline programs, while leaving us with full control of our lead program at the time, IK-007, an antagonist of EP4 (prostaglandin E2 receptor 4) which was just starting clinical development.

All of these factors made us want to go forward with this partnership.

Congratulations on some great economic terms!

The science discussions had been pretty advanced by the time I joined Ikena in July 2018. So I got started right away on preparing for due diligence and possible business discussions by evaluating a few different datasets.

I certainly looked at comparable deals to benchmark our programs. I also evaluated precedent deals that Celgene had done to understand the range of what might be possible. Though it’s important to note that comps never tell the whole story.

We also did an internal analysis to understand how much capital we needed to achieve our company goals. As a BD exec in a small biotech you wear a lot of hats. So I also built some high-level risk adjusted budgets to get comfortable that the proposed payments would be sufficient to support our R&D expenditures, both on the partnered programs and on our own programs.

And I gathered feedback from the rest of the management team and the Board to get comfortable that expectations were qualitatively aligned internally. I consulted with a subset of our Board, , on and off, as needed, during the negotiations to ensure continued alignment with my and our CEO’s vision for the deal. 

So we had the usual back and forth you’d expect for this type of deal, but when Celgene put their initial proposal in front of us, I felt we were in a close enough range to get something done.

How did you and Celgene approach the financial negotiation together?

The option deal structure meant we would be responsible for continuing significant efforts on our AHR antagonist and Kynase programs through the end of Ph1b. So we spent a lot of time working with Celgene on the potential collaboration plans themselves.

There was one key meeting on Halloween 2018 when we flew out to Seattle. No one was in costume but I did wear a Halloween themed scarf and our dinner with Celgene at a local restaurant was very festive! We were working through critical issues around future indication and clinical development strategies, designs and budgets for the Ph1 trials, evolution of the competitive field and the framework for our plans. Once we got a good handle on our shared scientific and clinical goals, the collaboration budgets and economics became pretty easy to work out.

It sounds like a very straightforward deal. Was there any drama?

This was actually really smooth for almost the entire process. From the very beginning I could feel that both parties were aligned on the science goals, had a shared collaboration vision, and wanted to get this deal done. Our BD and science teams also had great personal interactions. We worked with Celgene’s head of BD and CSO, as well as the heads of the oncology R&D teams, a lot of whom are still at BMS.

So the real drama was the absolute complete surprise announcement of Celgene’s acquisition by BMS on January 3, 2019. We were right at the end of our deal process and had planned to go into JP Morgan 2019 with our deal already announced. Both deal teams had been working frantically through the December holidays to get this done.

Suddenly I was now running up and down the San Francisco hills in the rain jumping from investor meetings to phone calls with Celgene and our counsel. And unfortunately I was definitely not using my JP Morgan week to talk up the deal like we had hoped.

How did you and your team (and Board) handle the surprise news?

Fortunately for us, Celgene handled it really well. We were on the phone with them within 20 minutes of the BMS acquisition announcement and they walked us through exactly what was going to happen and assured us the deal was still on.

And they worked with us right through JP Morgan, stealing any quiet spots we could in sushi restaurants, coffee shops, and even other company’s partnering receptions. Ultimately, we announced our collaboration just a few days later on January 18, 2019.

Looking back now, would you do the deal again?

Working with Celgene and BMS really helped us pave the way to where Ikena is today. The collaboration provided significant resources that let us build out the team, grow efforts like our Hippo /TEAD program, and build momentum for our subsequent Series B and IPO. A few months after the deal in late 2019 we actually completely rebranded from Kyn Therapeutics to Ikena Oncology to reflect the expansion of our pipeline and the new breadth of our pipeline.

And the collaboration has been really productive. For us it has not felt like “we’ve given the programs away”. It really feels like a continuation of our programs, now with the additional significant support and expertise of BMS. We are in the clinic with one program and in IND enabling studies with our second program. Celgene’s original collaboration vision and culture has been retained post their acquisition and we continue to work really well together. And BMS is providing great support, including their knowledge of the tumor microenvironment space, and clinical supply of nivolumab for our ongoing nivo + AHR antagonist combo study in bladder cancer.

What advice would you share with your BD peers based on how this all went with Celgene-BMS?

I’ll start by commenting on the deal structure. Like many biotechs we were of course focused on the upfront and total bio-dollar economics. But while that may have been top of mind, we also worked to protect our ability to regain ownership and control if Celgene/BMS chose not to move forward with the option exercise. So that’s the first point.

Next, I think this whole deal process reinforced two core principles I’ve had throughout my BD career. First, timing is everything in deal-making. Both parties had a relentless urgency to get our partnership done — this really helped us overcome the surprise of BMS’ acquisition. The whole negotiation was 6 weeks, including me redlining documents while sitting on a beach in Bermuda during my birthday.

Second, every deal has its ups and downs and twists and turns, and a deal is never done until it’s done. I think it’s important for a BD exec to be tactically and emotionally prepared for the curveballs. This was a great outcome where we closed the deal, but we all have war stories of deals that fell apart at the very end. And the BD exec has to keep even-keeled through all of this.

So my advice to my BD peers is to try to stay in a good emotional range, think through the range of possible long-term as well as short-term outcomes, and be prepared for surprises!

7
Feb
2022

The Cancer Moonshot Relaunched

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07 Feb 2022

Julie Grant, general partner, Canaan Partners

Last week, I had the honor of attending the Biden Administration’s relaunch of the Cancer Moonshot at the White House.

The Cancer Moonshot dates back to 2016, when then-Vice President Biden, mourning the death of his son Beau, spearheaded this bold initiative to accelerate the rate of progress against cancer on a national scale.

The initiative resulted in the 21st Century Cures Act, which included $1.8 billion for efforts including expanded NIH funding, new federal institutions within the FDA, new clinical trial networks, and much more.

When Obama and Biden left office, Joe and Jill Biden formed the Biden Cancer Initiative, a nonprofit organization that continued the work. I was invited to serve as a board member. It was one of the most meaningful experiences in my career and continues to motivate me when forming new oncology companies at Canaan Partners.

Julie Grant with President Biden at the Cancer Moonshot relaunch. Feb. 2, 2022.

Now in the White House, President Biden, Vice President Harris, and the First Lady are in position to bring back the early momentum and set new goals. Many of the headlines from this week’s ceremony focused on the goal of reducing the cancer death rate by at least 50 percent over the next 25 years.

But the Cancer Moonshot isn’t just an aspiration, it has matured into an action plan with many components.

It includes:

  • Accessible prevention screening for all Americans irrespective of race, gender, region, and resources – ideally at or near home.
  • Faster and more open distribution of scientific insights to accelerate the discovery of better treatments, including for rare and childhood cancers.
  • Navigators to reduce confusion, anxiety and trauma for families.

These are important components of a multi-faceted plan to reduce the toll of cancer over time. More leaps ahead in the biology, and the development of new treatments for specific malignancies, will be necessary to achieve the goal.

The interesting question for me and many members of the biotech community is how can we get there? Where should the country focus its efforts? Will this have sustained attention within the White House?

Despite the many urgent issues facing this administration, the President and his senior team showed up in person on Feb. 2, outlined clear priorities, and called out stakeholders to take action – including the public and private life science sector.

That caught my attention. There’s work here for us to do in the biopharma community.

I’d encourage you to watch the recordings from the White House here (start at time point 18:00). FAQs and priorities are outlined here.

Cancer Is a Priority for Biden and Harris

The President, Vice President and First Lady spoke at length about their personal experiences and motivations. They went well beyond a few welcoming words.

The event was hosted in the East Room, a large formal ballroom. It was full of mask-wearing attendees, including directors of the NCI Comprehensive Cancer Centers from around the country, leaders from the largest patient advocacy organizations, scientific luminaries, government staff, active military members, and the press. Members of Congress attended. Members of the Cabinet were on stage.

The President announced he is forming a new cabinet — a Cancer Cabinet.

This new Cancer Cabinet will coordinate the many federal agencies with a hand in this multi-dimensional health problem. The White House will be organizing people from the NIH, FDA, CMS, Department of Veterans Affairs, EPA, Office of Science and Technology Policy and more. This is the kind of high-level coordination among agencies that can really only be done by a fully-engaged White House.

The White House hired a full-time coordinator to drive forward the Cancer Moonshot objectives from the Executive Office.

The President also wants more resources for cancer, and not just through the traditional channels. He called on Congress to fund ARPA-H (the Advanced Research Projects Agency for Health), a new entity inspired by DARPA, the military agency best known for developing the Internet. The ARPA-H agency’s mandate is to invest in high-risk, high-reward capabilities to drive biomedical breakthroughs — ranging from molecular to societal — that would provide transformative solutions for all patients.

President Biden’s passion for cancer, which I remember from his private summits in 2017 and 2018, was evident.

“I committed to this fight when I was Vice President. It’s one of the reasons why, quite frankly, I ran for President. Let there be no doubt: Now that I am President, this is a presidential White House priority — period.”

Personal Narratives Have Purpose

First Lady Biden and President Biden bring the experiences of cancer patients and their families to life. They’re aware of the challenges. The confusing diagnoses. The waiting with nauseating fear for scans. The frustration when accessing medical records for a second opinion. Begging physicians for a bit more time and explanation. Guilt from accumulating bills resulting from expensive treatments. Sleepless nights wondering if this could have been prevented.

Many Americans can relate on a human level, regardless of their party affiliation. Many Americans know the Bidens care deeply about this issue because they have lived it. It is their story of their son, Beau, and their closest friends. They know the problems. They get it.

Being Bold and Ambitious

The Biden-Harris Administration’s stated goal is to reduce the cancer death rate by at least 50% over the next 25 years and improve the experience of living with and surviving cancer. Having worked in early-stage oncology drug development for over 15 years, I appreciate how rare it is to see overall survival increase by 50% for any particular form of cancer.

The White House is asking us to aim high.

“In America, we not only dream, we do,” Vice President Harris said in her closing remarks. “We not only see what can be, we see where we can go.”

In the last 20 years, the age-adjusted death rate from cancer has fallen by 25%. That’s an ongoing success story that many people haven’t heard. It’s also just a beginning. Last week, Carl June and colleagues reported in Nature about two severely ill leukemia patients who are still alive and in remission 10 years after receiving CD19-directed CAR-T cell therapy.

Because of these therapeutics and the work of thousands of life science workers across the private and public sectors, people like my mother who received a CD19 CAR-T and is currently in remission, have renewed hope for that ever elusive word — cure.

Many in biopharma can see where this is heading. Overall response rates approaching 100% (a measure of tumor shrinkage among trial participants) are increasingly common in clinical trials. Resources, information sharing, and improved technology reduce the time to develop inhibitors to emerging resistance mutations to targeted therapies. Surgery can offer the chance of a cure if disease is detected through improved diagnostic tests and removed early.

Perhaps the White House did set obtainable goals.

Direct Feedback When Necessary

The President, Vice President, and First Lady have convened world leaders across disparate fields to learn about the roadblocks holding back progress against cancer, so they can craft the most effective solutions. They have listened in forums large and small. They are willing to challenge academic scientists, and the private sector, to do better if they are standing in the way of patients’ goals.

Watch to the 47-48 minute mark of the ceremony. Here, the President shows he’s aware of one of the longstanding, thorny issues in cancer R&D – the career incentives and financial incentives that often discourage data sharing. He showed an understanding of this issue, and that he’s not buying some of the classic excuses people make when they defend the status quo.

“We don’t learn enough from patients’ experiences, or their data,” President Biden said. “When we first started this work, one of the first things we did was make sure that doctors, that researchers, work together, share information, and allow patients to share their data with other doctors and researchers to help others…

“I was told that ’Well, patients don’t want to share their data.’”

President Biden then paused, leaned over close to the microphone, and whispered as if to let everyone in on a secret.

“They all want to share their data,” he whispered.

The audience laughed.

“Sometimes you all don’t want to share what you know,” he added, pointedly.

He raised his eyebrows and surveyed the room.

There was less laughter. Maybe some nervous laughter. Then came a smattering of applause from those who saw that moment for what it was – a President willing to shake things up by challenging some dogma from people who say they stand for patients. It will take some follow-through to change the incentive structures to ensure more data sharing happens, and that we can get closer to a healthcare system that learns more from each and every patient.

Julie Grant with Janet Demeter, a parent who lost her son, Jack, to DIPG (Diffuse Intrinsic Pontine Glioma) and became a committed patient advocate. At the White House, Feb. 2, 2022.

The President is making specific requests. For scientists: “Share data as best you can.”

He then turned to industry. “I’m calling on the private sector to develop and test new treatments, make drugs more affordable, and share more data and knowledge that can inform the public and benefit every company’s research.”

Patients are being asked to take some responsibility as well. “I’m respectfully calling on people living with cancer and caregivers and families to keep sharing their experience and pushing for progress,” the President said. “You’ll have a voice and a seat at the table, I promise you.” 

One person can wear many hats when it comes to cancer – patient, caregiver, family member, scientist, doctor, advocate, industry. I wear more than one of these hats and you may, as well. The Biden-Harris Administration is asking for everyone to do something within their sphere of influence. They called out to us all.

More than anything, the Cancer Moonshot relaunch is a direct invitation for all of us to contribute toward a bold, shared goal.

2
Feb
2022

TR’s 7th Anniversary: Thank You

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02 Feb 2022

Timmerman Report is 7 years old today.

On Feb. 2, 2015, I rode my bike to the office on a wet Seattle morning and turned on the lights. I thought there was a need for clear, probing, contextual biotech journalism.

It was a leap of faith, like any entrepreneurial venture. I couldn’t have predicted 90 percent of what came next.

Thank you to all of the loyal subscribers who have made this happen.

I’m grateful to have built this platform for editorially independent biotech journalism, and to steward it as a trusted source. TR seeks to understand, to inform, to enlighten, and to challenge readers to think. It’s about exploring the frontiers of science and drug discovery, and thinking through the implications of all this work for society.

That’s not necessarily the formula for getting maximum clicks. Yet the business is thriving with record numbers of individual and group subscriptions. The Long Run podcast, similarly, has attracted an audience that has grown 40 percent year-over-year.

Looking at biotech from unusual angles.

Building Timmerman Report has opened up new avenues for me to give back, to mobilize the biotech community around good causes. My campaigns for the Climb to Fight Cancer at Fred Hutch, and Timmerman Traverse for Life Science Cares have raised more than $3.7 million combined for cancer research and anti-poverty nonprofits since 2017.

Those trips have been deeply meaningful. I’m proud that we, together, have catalyzed so much good work. This work will continue. The impact will grow.

Sometimes we all need to stop and think about what we’re doing, where we’ve come from, and where we’re going.

Thank you. For reading. For listening. For supporting quality journalism. And for doing the day-to-day, bit-by-bit work of improving human health and creating a better world.

1
Feb
2022

Targeting Integrins With Small Molecules: Praveen Tipirneni on The Long Run

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01 Feb 2022

Today’s guest on The Long Run is Praveen Tipirneni.

Praveen is the CEO of Waltham, Mass.-based Morphic Therapeutic.

Praveen Tipirneni, CEO, Morphic Therapeutic

Morphic Therapeutic is developing oral small molecule drugs aimed at integrin targets. There’s some fascinating biology and computational technology underpinning this work, which I discussed a couple years ago on The Long Run with Morphic scientific founder Tim Springer.

Just to review the basics, Morphic knows that integrin targets ‘morph’ from one conformational state to another. The challenge is how one might use that knowledge as part of a small molecule drug development strategy.

Morphic has started off with a lead candidate against the alpha-4, beta-7 integrin target that is well validated by Takeda’s blockbuster antibody drug vedolizumab, marketed as Entyvio for inflammatory bowel disease. Morphic showed last year that its orally available small molecule could replicate the mechanism of an antibody, but in the more convenient form of an oral pill instead of an IV-infused antibody.

Praveen and his team need to show that this initial program can live up to its promise in clinical trials, and that it’s not a one-off – there are other small molecules with potential in the pipeline.

He’s a fun and engaging speaker, and I think you’ll enjoy hearing how Praveen’s career led to this point of possibility with Morphic.

Now please join me and Praveen Tipirneni on The Long Run.

31
Jan
2022

Sridhar Iyengar on Figuring Out the Key Element to Success: Customer Needs

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31 Jan 2022

Lisa Suennen

Sridhar Iyengar (Sri) is one of those vaunted serial entrepreneurs. He had successfully sold his second company and was ready to do it all over again. 

Sri long ago learned that the trick to creating a successful startup was finding a difficult problem to solve – one that vexed companies that had money to spend.

It was 2015, and he was thinking about where to focus his entrepreneurial efforts. He reflected on challenges of his own making at previous companies.

Then he remembered. 

When Sri was leading engineering and product manufacturing at AgaMatrix more than a decade back, scale-up challenges in the commercial production process had cost the company dearly. Small shifts in the diabetes management environment led to very high device scrap rates. That meant millions of dollars down the drain, followed by many months of investigation trying to figure out how to collect data, identify the specific culprit, and act to make the problem go away.

Sridhar Iyengar, CEO, Elemental Machines

What made the problem even more painful was that it kept happening over and over. If only he had had real-time visibility into the details of the production line, this would not have been the case. 

Aha! he thought.

This is the perfect target for a solution that many companies face, especially life sciences companies, where small environmental glitches can make entire batches of product to go bad. By introducing data and analytics to the manufacturing line to enable rapid environmental and machine adjustments, Sri thought, you can create “non-linear value creation”—a small change in process which unlocks huge revenue opportunity.

“That’s the most boring problem I ever heard of,” said Sri’s constant co-founder and friend, Sonny Vu.

But to Sri, this was a personal challenge as well as a big professional opportunity. 

He himself had lost many hours of sleep over this specific problem in the past and he knew he was not alone. Sri knew more than most about sensors from his stints at AgaMatrix and Misfit Wearables. Now, instead of applying sensors to bodies, he set out to apply them to the manufacturing process. 

That insight led to the creation of Elemental Machines, a Cambridge-based company founded in 2015. The company makes connected process management sensors that enable production data analytics.

Sri and his team developed a system of simple connected sensors that can show how micro changes in environment and handling can have an outsized impact on what comes off the line. The system was fed by a symphony of potential troublemakers: humidity, visible light, ultraviolet light levels, air pressure, air quality, VOC contaminants, machine de-calibration were some of the suspects now subject to arrest. And it worked. 

But there was a problem.

Production leaders at biopharma companies would not buy. They were suspicious of putting everything into the cloud; they worried about information security; and, most of all, they worried about regulatory compliance – Elemental Machines would need to get ISO901, 27CFR Part11 and a multiplicity of other box-checking accreditations before manufacturing leaders would take a chance on the upstart company. Sri met with dozens of manufacturing leaders at biopharma companies and kept coming away without the sale. 

It wasn’t until someone suggested that biopharma research and development (R&D) labs had similar problems did Sri shift the business.

These labs dealt in materials that were the antecedents of future manufacturing lines. More importantly, biopharma products might never come to be if certain R&D failures go undetected. Best of all, the labs didn’t require the regulatory certifications that the manufacturing line did – the product could be used as is and bring a significant leap forward in simplicity, connectivity and analytic ability. 

The people running the labs quickly understood the potential value. And crucially, they didn’t see a lot of other options. Those who were gunning to build the “digital lab of the future” were unable to find simple ways of amassing the right data and bringing all their tools into one dashboard. Elemental Machines realized it could enable its own sensors to read virtually every type of environmental data point that lab instruments might throw off. Elemental could also build a system of application interfaces (APIs) that would allow R&D leaders to turn their own patchwork of hardware and sensors into a single tapestry of information read from Elemental’s small monitoring devices. 

That was the key that unlocked opportunity. Sri saw a way to turn a complicated thing for the right customers into something easy to monitor and manage. That was a way to save customers time, money and heartache.

Elemental’s first application connected cell culture incubators to look for variations in cell growth conditions (due to temperature, CO2, humidity, RPMs) to determine where points of failure may exist.  One lab tested the product and found out that fluctuating humidity was the mystery event causing their nascent medical device polymer to fail (not the human error that was previously assumed). 

Elemental even got asked to improve the age-old problem of refrigerator and freezer monitoring, a problem Sri thought to have been previously solved and commodified by others. It turned out that yes, temperature sensors were already ubiquitous, but the sensors didn’t really tell the right people about the real problem in the right way. Legacy products generally required WiFi (which can fail), wall plugs (which aren’t always nearby), and sent the alerts into the building’s alarm system, not to the lab manager. 

As a result, building security guards would routinely have to go on a treasure hunt to find the offending freezer. Elemental’s product turned out to be a better mousetrap. It relied on Bluetooth vs. WiFi, battery operation vs. wall plugs, and it provided one gateway to hundreds of devices to let lab directors know not just that someone left the fridge door open, but which one — all on one dashboard. 

One customer’s key insight was that certain refrigerators and freezers were opened and closed more than others. Now able to pinpoint the problem, the customer moved highly sensitive COVID testing reagents into rarely used freezers and refrigerators instead of storing them in the conveniently accessed ones on highly-populated routes. 

By avoiding the most-trafficked machines, the customer lost less of its precious materials. When the precious materials were lost, the lab director would know if it was because of a failed compressor, a door left ajar or a case of someone standing and staring into an open fridge for way too long, teenager-style.

The system, with its embedded artificial intelligence (AI), told the customer not just that there was a problem, but the likely root cause.

Interestingly, Elemental didn’t even need to promote the AI magic dust to drive labs’ adoption of their product. AI’s firepower wasn’t what was lacking – the void was just-in-time access to enough specific, integrated, basic information. By focusing on the small potential issues that drive big insight, a sophisticated and elegant system has led to large R&D partnerships. Big companies such as PerkinElmer and Eppendorf are using the system, along with several large pharmaceutical manufacturers, and smaller companies that include Insitro, Ginkgo Bioworks, and Quanterix. Incubators such as IndieBio and LabCentral have also adopted Elemental’s products. 

Since Elemental got itself in the door by providing something of value, the customers have gotten engaged in helping it enhance the product. The product now increasingly allows for any IOT sensor or Electronic Lab Notebook (ELN) or Laboratory Information Management System (LIMS) to connect through an open API. Some of Elemental’s clients have freestyled and thus helped the company add features for compliance monitoring, as well as location and utilization tracking of high-value assets.

Another shift, perhaps, has been moving from a sensor-focused business model to a platform one. This has been accompanied by a change in business model from charging for sensor hardware to charging a subscription for ongoing access to the platform.  

More and more data scientists are populating the halls of biopharma companies. There’s a growing focus on synthetic biology. More companies today are comfortable with the cloud. There’s a relentless appetite for more data and more analytics.

For Sri, this is affirming. But it has also reinforced what he already had learned in his prior two companies: you need to match your solution to what the market is ready to receive when it’s ready to receive it. This may mean leaping over a lower bar than what is technologically possible; but Sri has come to terms with that. He realizes that solving customer problems is what drives revenue, not seeking technical perfection.

For a PhD from Cambridge, this was a hard-won lesson, but a key shift in his own thinking that made success possible.   

27
Jan
2022

A Small Step on Drug Pricing

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27 Jan 2022

Luke Timmerman, founder & editor, Timmerman Report

Mark Cuban, the billionaire-turned-reality TV star, made news this week with the Mark Cuban Cost Plus Drug Company.

Cuban has been saying for a while that he wants to stick it to the man. The biopharma man.

“I could make a fortune from this,” Cuban told Texas Monthly in September. “But I won’t. I’ve got enough money. I’d rather f— up the drug industry in every way possible.”

That was the warm-up act. Now we’re getting a closer look at what he has in mind.

The Cost Plus Drug company model is simple. It purchases generic drugs, marks them up by 15 percent, and sells them online to consumers. It’s a good idea. It doesn’t threaten anyone’s patents in the innovative side of the biopharma world. It threatens middlemen who make substantial profits, but create little to no value. Most people would call it fair. It’s very much unlike the byzantine, opaque and perverse system we have today that most people in the biopharma industry don’t even understand.

There’s something attractive about a simple, fair approach to drug pricing.

But we shouldn’t get carried away patting Mark Cuban on the back for his gift to America just yet. Cuban isn’t in the business of discovery and development of new drugs. That messy work – the work that advances human health – is left to others.

What the world needs is a nuanced, balanced act. The trick will be to reduce prices of generic and branded medicines, make them more easily accessible to patients, and keep the incentives for people to develop new ones.  

The Cuban model, in a way, is in keeping with the original spirit of the Hatch-Waxman Act of 1984 that created the generic small molecule pharmaceutical industry. But it’s a small bite at the apple if you think about the types of drugs we are developing in the 21st century.

Cost Plus won’t help solve the biosimilar pricing problem. It won’t get us to cheaper cell and gene therapies down the road. It doesn’t fix our broken health insurance system, in which people pay through the nose every month in premiums, and then are expected to pay a bundle more in co-pays and sky-high deductibles whenever they actually need healthcare. It doesn’t clamp down on the runaway spending and price increases at hospitals (see the latest from the Massachusetts Health Policy Commission, for what Mass General Brigham charges).

For now, in the early days, the Cuban Cost Plus Drug Company has 100 generic medicines for sale. Some of its initial batch of drugs appear to be offered at modest discounts that could probably be found at the local pharmacy. Others are available quite cheap. The breakthrough drug for chronic myeloid leukemia from two decades ago, imatinib, is now generic. It’s available at Cuban’s store for $17.10 for a month’s supply. That’s down from the usual $2,502 (can someone explain that indefensible price for a generic drug?).

The cholesterol-lowering drug atorvastatin – once marketed as Lipitor, the top-selling drug in the US — is also available dirt cheap. UCSF cardiologist Ethan Weiss was impressed.

I hope the Cost Plus Drug Company can gain access to a lot more medicines, build up a loyal customer base in the millions, and use its growing purchasing power to extract even better prices from generic manufacturers. That would be a way to help more people struggling to pay the bills.

It’s nice to look at this all play out and applaud. But that’s part of the problem. We talk, talk, talk, see something we like, click like, and move on to the next shiny thing, the next raging controversy. Too many people are watching from the bleachers, cheering and booing the heroes and villains, all while furtively hoping someone else will get in the arena to do the hard work.

Our culture craves the quick and easy solution, the shortcut, the silver bullet. Cuban will get a lot of attention in part because his message — there’s a simple solution! — appeals to this base desire for a simple one-and-done answer.

But if we think this billionaire or any other billionaire is going to ride to the rescue and solve the drug pricing problem for us, or fix the broken US healthcare system, then we’re fooling ourselves. Ask Jeff Bezos. Indulging in this fantasy is another way of letting our elected officials off the hook, letting ourselves off the hook, and kicking the can a little further down the road.

We don’t need more snide Tweets and hot takes. We need more people grinding behind the scenes to rebuild our institutions and repairing our social fabric. This means smart people from the public and private sector – people of talent and decency – working together. Even if that means working with people who we disagree with, and who sometimes hold views we find abhorrent. That’s the work required for those of us who care about democratic self-governance of the sort we’ve had for more than 200 years.

It might sound too daunting now. We’re in the middle of a bleak COVID-19 wave in the dark of winter. But if we don’t rally around solving big problems for the common good, when will we? We have been kicking the can down the road for a long time. We know we can’t count on a billionaire celebrity entertainer to come in with a catchy slogan and fix things for us.

Financings

Boston-based Akili Interactive, the digital therapeutics company that won a trailblazing FDA approval for pediatric ADHD, said it’s going public through a SPAC merger. The company is getting a $412 million in gross cash proceeds, including $100 million from Social Capital, the fund led by Chamath Palihapitiya. (TR coverage of Akili, Aug. 2020).

Amsterdam and Boston-based Leyden Labs raised $140 million in a Series B financing led by Casdin Capital and GV. The company is working on treatments to fight respiratory viruses, and it’s thinking about doing something the current vaccines aren’t good at – inducing mucosal immunity in the nose and throat membranes. The company has in-licensed PanFlu, a program developed by Janssen Pharmaceuticals against influenza A and B.

New Haven, Conn.-based Simcha Therapeutics raised $40 million in a Series B financing led by SR One. The company is taking its newly engineered form of IL-18 into the clinic for solid tumors. (TR coverage)

Emeryville, Calif.-based Kyverna Therapeutics raised $85 million in a Series B financing led by Northpond Ventures. It’s working on engineering CAR-T cells for autoimmunity. (TR coverage)

Cambridge, Mass.-based Cellino Biotech raised $80 million in a Series A financing led by Leaps by Bayer. It’s developing automation systems for cell therapy.

South San Francisco-based Fluidigm received a $250 million strategic capital infusion from Casdin Capital and Viking Global Investors. As part of the reboot, the company brought in Michael Egholm as CEO. He’s the former chief technology officer at Danaher Life Sciences. The company is also changing its name to Standard BioTools.

San Mateo, Calif.-based Sierra Oncology, after releasing positive Phase III results for its myelofibrosis drug candidate, raised $135 million in a stock offering at $27 a share.

South San Francisco-based Septerna raised $100 million in a Series A financing led by Third Rock Ventures. The company is working on small molecules against GPCR targets.

Vancouver, BC-based Zymeworks, the antibody engineering company, raised $100 million in a stock offering at $8 a share.

Cambridge, Mass.-based Epizyme raised $85 million in a stock offering at $1.50 a share.

Emeryville, Calif.-based Metagenomi raised $175 million in a Series B financing to advance its in vivo and ex vivo gene editing systems, and to expand its automation and manufacturing capabilities. PFM Health Sciences, Farallon Capital Management, and a leading global investment firm led the financing.

Massachusetts biotech firms raised a record $13.7 billion in venture capital in 2021. Wow. (Boston Globe)

Data That Mattered

San Mateo, Calif.-based Sierra Oncology, which picked up its lead asset in a Gilead garage sale, showed positive Phase III clinical trial results for momelotinib for myelofibrosis. The drug was tested in patients were who symptomatic, anemic, and had previously been treated with an approved JAK inhibitor. The Sierra drug, orally bioavailable JAK1, JAK2 and ACVR1 / ALK2 inhibitor, hit all primary and secondary endpoints. Sierra seized on the momentum from its rising stock price, and raised $135 million in a stock offering at $27 a share.

Regulatory Action

UK-based Immunocore won FDA approval for tebentafusp-tebn (Kimmtrak) for unresectable or metastatic uveal melanoma. It’s the first T cell receptor therapy approved by the FDA, and the first bispecific T cell engaging therapy for a solid tumor.

Gilead Sciences said the FDA has placed a partial clinical hold on its anti-CD47 antibody program, magrolimab, in combination with azacitadine. There appeared to be more unexpected serious adverse events in the treatment group than the control group, although Gilead didn’t specify what they were. The drug is being tested for myelodysplastic syndrome (MDS) and acute myeloid leukemia. The hold casts some doubt on the program, which Gilead paid $4.7 billion to obtain through its acquisition of Forty Seven.

New York-based TG Therapeutics said its lead program, a combo treatment for chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, went on a clinical hold. The disclosure was made at an investor conference, and in writing through an 8-k filing with the SEC.

South San Francisco-based Cortexyme said the FDA placed a clinical hold on its atuzaginstat program, which is being evaluated for Alzheimer’s and Parkinson’s disease. The company said it’s doing a cost-saving plan, and will prioritize its next-generation program for Alzheimer’s.

Wilmington, Delaware-based Incyte said it is withdrawing the New Drug Application for parsaclisib, a PI3kinase delta inhibitor for lymphoma, after meetings with the FDA. The company called it a business decision based on the confirmatory study requirements from regulators.

Merck said it received a Complete Response Letter from the FDA, saying it wouldn’t approve its experimental drug for chronic cough, gefapixant. The drug was approved in Japan.

Gilead withdrew idelalisib (Zydelig) from the US market for two indications, after failing to complete the required post-marketing studies outlined when the drug received Accelerated Approval from the FDA in  2014. The drug will still be indicated for chronic lymphocytic leukemia.

Science
  • Pembrolizumab induces HIV latency reversal in people living with HIV and cancer on antiretroviral therapy. Science Translational Medicine. Jan. 26. (Tom Uldrick et al Fred Hutchinson Cancer Research Center)
  • Stanford University scientists led by Euan Ashley set Guinness World Record with fastest DNA sequencing, completing a human genome sequence in 5 hours, 2 minutes. Stanford Medicine News. Jan. 12. (Hanae Armitage)
  • Combining baloxavir marboxil with standard-of-care neuraminidase inhibitor in patients hospitalised with severe influenza (FLAGSTONE): a randomised, parallel-group, double-blind, placebo-controlled, superiority trial. The Lancet Infectious Diseases. Jan. 24. (Deepali Kumar et al University Health Network, Toronto, Canada)
  • Clonally Expanded B Cells in Multiple Sclerosis Bind EBV EBNA1 and GlialCAM. Nature. Jan. 24. (William Robinson et al Stanford University)
Science of SARS-Cov-2
  • Omicron, the great escape artist. Nature Reviews Immunology. Jan. 11. (Alexandra Flemming)
  • Omicron’s Radical Evolution: Thirteen of Omicron’s mutations should have hurt the variant’s chances of survival. Instead, they worked together to make it thrive. NYT. Jan. 24. (Carl Zimmer)
  • Multiple Early Factors Anticipate Post-Acute COVID-19 Sequelae. Cell. Jan. 24. (Jim Heath et al Institute for Systems Biology)
  • Cannabidiol inhibits SARS-CoV-2 replication through induction of the host ER stress and innate immune responses. Science Advances. Jan. 20. (Marsha Rich Rosner et al University of Chicago)
  • Early non-neutralizing, afucosylated antibody responses are associated with COVID-19 severity. Science Translational Medicine. Jan. 18. (Saborni Chakraborty et al Stanford University)
  • Selection analysis identifies unusual clustered mutational changes in Omicron lineage BA.1 that likely impact Spike function. BioRxiv. Jan. 18. (Darren Martin et al University of Cape Town)
  • Structural diversity of the SARS-CoV-2 Omicron spike. BioRxiv. Jan. 26. (Sophie Gobeil et al Duke University)
Epidemiology

Trends in Disease Severity and Health Care Utilization During the Early Omicron Variant Period Compared with Previous SARS-CoV-2 High Transmission Periods — United States, December 2020–January 2022. CDC Morbidity and Mortality Weekly Report.

Science Policy
  • What Japan Got Right About Covid-19. NYT. Jan. 24. (Hitoshi Oshitani)
  • The FDA said the Regeneron and Lilly neutralizing antibodies shouldn’t be used anymore to treat COVID-19 during the Omicron wave, because they aren’t effective at neutralizing the Omicron variant. WSJ. Jan. 24. (Joseph Walker)
  • COVID-19: endemic doesn’t mean harmless. Rosy assumptions endanger public health — policymakers must act now to shape the years to come. Nature. Jan. 24. (Aris Katzourakis, University of Oxford)
Vaccines
  • Unadjuvanted intranasal spike vaccine booster elicits robust protective mucosal immunity against sarbecoviruses. BioRxiv. Jan. 26. (Akiko Iwasaki et al Yale University).
  • A prospective cohort study of COVID-19 vaccination, SARS-CoV-2 infection, and fertility. American Journal of Epidemiology. Jan. 22. (Amelia Wesselink et al Boston University School of Public Health).
  • Myocarditis Cases Reported After mRNA-Based COVID-19 Vaccination in the US From December 2020 to August 2021. JAMA. Jan. 25. (Matthew Oster et al Centers for Disease Control and Prevention)
  • Moderna said it began dosing in a Phase II clinical trial of its mRNA vaccine candidate for COVID-19 that’s specifically designed to elicit immunity against the Omicron variant. Pfizer and BioNTech said they have an Omicron-specific vaccine trial underway as well.
Personnel File

Belgium-based Galapagos NV hired Paul Stoffels as CEO. He’s the former chief scientific officer of Johnson & Johnson, and was closely involved in the founding of Galapagos more than 20 years ago. He replaces Otto van de Stolpe, who is retiring.

The Bill & Melinda Gates Foundation, the world’s largest philanthropy and a power player in global health and development, added a few new members to its board of trustees to shore up its rather shaky institutional governance in the wake of Bill & Melinda’s divorce. Gates Foundation CEO Mark Suzman is joining the 6-member board of trustees, along with Zimbabwean telecom billionaire Strive Masiyiwa, Minouche Shafik, director of the London School of Economics and Political Science; and Thomas Tierney, co-founder and co-chair of The Bridgespan Group, a philanthropic consulting firm. (Associated Press). For background on why the foundation needed to make this move, see this editorial from May 2021 in Project Syndicate by a couple of foundation veterans — Alex Friedman and Julie Sunderland.

Cambridge, Mass. and Switzerland-based Enzyvant hired Johanna Rossell as chief commercial officer. The company won FDA clearance in October to market a tissue-based regenerative therapy for an ultra-rare and life-threatening pediatric immunodeficiency. She most recently worked at Biogen on the ill-fated commercial launch of aducanumab (Aduhelm).

The Cystic Fibrosis Foundation, based in Bethesda, Maryland, hired Steven Rowe as its chief scientific officer.

Boston-based Expansion Therapeutics, the RNA medicines company, hired Sudhir Rao as senior vice president of business development.

Seattle-based Chinook Therapeutics, the developer of precision medicines for kidney diseases, hired Charlotte Jones-Burton as senior vice president of product development and strategy.

UK-based F2G, an antifungal developer, hired Mark Baglin as chief commercial officer and Janelle Anderson as chief business officer. Sylvie Gregoire joined as Non-Executive Director.

Philadelphia-based Adaptimmune hired Cintia Piccina as chief commercial officer.

Deals

South San Francisco-based Atara Biotherapeutics sold its operations and manufacturing facility in Thousand Oaks, Calif. to Fujifilm Diosynth Biotechnologies for $100 million upfront. The deal will lower Atara’s operating costs, keep skilled manufacturing and quality people on the job, and allow for Atara to have flexible access to facility to meet its cell therapy manufacturing needs for as long as 10 years.

Our Shared Humanity
  • What Will It Take to Vaccinate the World? Q&A With Peter Hotez. Bloomberg News. Jan. 18. (Clara Ferreira Marques)
  • Racism as a leading cause of death in the United States. BMJ. Jan. 25. (Harlan Krumholz et al Yale University)
Strategy
Kudos

The Genetics Society of America announced a series of awards this week, honoring Michael Lynch of Arizona State University, Margaret Fuller of Stanford University, Shirley Tilghman of Princeton University, and Harmit Malik of the Fred Hutchinson Cancer Research Center.

11
Jan
2022

Antibody Engineering & Company Building: Bassil Dahiyat on The Long Run

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11 Jan 2022

Today’s guest on The Long Run is Bassil Dahiyat.

Bassil is the CEO of Monrovia, Calif.-based Xencor.

He’s been on a true Long Run.

Bassil Dahiyat, co-founder and CEO, Xencor

Bassil co-founded Xencor in 1997 after getting his PhD in chemistry at Caltech. He’s been through a lot of ups and downs in the biotech markets, and taken the company through a couple big strategic shifts.

The company is known for its work on engineering monoclonal antibody drugs, and engineered cytokine therapies. Few people may realize it, but the monoclonal antibody sotrovimab, developed by VIR Biotechnology and GSK as a broadly neutralizing antibody that still works against the Omicron variant of SARS-CoV-2, was made with help from the antibody engineers at Xencor.

Antibody engineering has come a long way over the past 20 years. These treatments are crucial to the present and future of medicine. Bassil has seen the evolution at close range.

Xencor is now aspiring to make a difference for its partners, but also to develop a few drugs of its own.

This is a fun, freewheeling, insightful conversation with a scientific entrepreneur.

Now, before we get started, a word from the sponsor of The Long Run.

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  • Integrating your business applications
  • Delivering validated reporting
  • Increasing your speed to market
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  • As well as delivering a fully compliant solutions that meets FDA’s strict standards.

Explore how Answerthink can streamline your business processes to ensure growth.

Visit Answerthink.com/timmerman and get a copy of the e-book- “Top Three Barriers to Growth for Life Science Organizations.“

That’s Answerthink.com/timmerman

Now please join me and Bassil Dahiyat on The Long Run.

11
Jan
2022

Brad Prosek on Getting to Know an Unconventional Acquirer

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11 Jan 2022

Vikas Goyal, former SVP, business development, Pandion Therapeutics (now part of Merck)

[Editor’s Note: this is the first in a monthly series with business development executives about some of the surprises, subtleties, and human aspects of biotech dealmaking.]

Cambridge, Mass.-based Constellation Pharmaceuticals lived through the ups and downs of the epigenetic drug discovery field for a decade, before it exited on a high note last year. The company was acquired by Germany-based Morphosys for $1.7 billion, or $34 a share, in June 2021.

The deal gave Morphosys access to Constellation’s two lead product candidates, pelabresib (CPI-0610), a BET inhibitor, and CPI-0209, a second-generation EZH2 inhibitor. At the time of the signing, pelabresib was in Phase III clinical development for myelofibrosis and the EZH2 inhibitor was in Phase II development for hematological and solid tumors. For some of the background on the lead program and the company journey, listen to CEO Jigar Raythatha on The Long Run podcast from December 2019.

One interesting wrinkle in this deal came in the form of a $1.4 billion upfront payment from Royalty Pharma to Morphosys.

I spoke with Brad Prosek, the chief business officer of Constellation at the time, about how this deal came to be.

Brad Prosek, former chief business officer, Constellation Pharmaceuticals

Why did the deal make sense for the two parties?

Morphosys has a long history of developing antibody and biologics products. They have close to 50 collaborations in their 30+ year history, several of which have started to pay off in terms of approved products, bringing royalties and profit shares back to Morphosys. So under the leadership of their CEO Jean-Paul Kress, they have started to turn the page from that platform basis to a product-oriented company.

I had originally reached out to them (as documented in the transaction’s 14D-9) around July 2020, though my initial outreach was not about partnering Constellation’s lead program. I had seen Morphosys print a deal with Incyte that put them on my map as a fellow traveler in the heme-onc space with money to invest in partnerships. Constellation was considering collaborations around our next generation EZH2 program. We felt our EZH2 inhibitor could be a best-in-class program and we wanted to build a data wall around the program – and we felt that with a partner we could deliver a bigger program faster than we could on our own.

As Morphosys got to know the company, I think we started to check a lot of boxes for them with respect to their growth strategy. They wanted to grow into small molecules to complement their monoclonal antibody base. They wanted to build a Boston research site. And they were looking for additional assets in the hematology and oncology spaces more broadly. So the more they looked, they liked a lot more than just what I had initially reached out to them to talk about.

How did you balance their desire to learn about Constellation more broadly vs. keeping them focused on the EZH2 program, which was your more immediate-term partnering goal?

As you’re going to do in any initial BD discussions, we did present the EZH2 program in some context – we showed our pipeline slide and maybe a strategy slide. But to focus on our objective, we did step off of that very quickly onto what I wanted to talk about. At least that was my initial approach.

Ultimately, in the subsequent discussions Morphosys asked us about pelabresib. [Pelabresib, an inhibitor of BET, was Constellation’s lead program and was in a Phase 3 clinical trial for myelofibrosis at the time of the acquisition]. They had seen some of the data we had presented publicly. We had made a few comments here and there about how excited we were in advancing the program. But I tried really hard not to get distracted by that.

I wanted to avoid the trap of getting onto the slippery slope of even discussing structures of interest. When the topic of pelabresib first came up, I had been pretty clear with them that Constellation was not interested to partner, for example, US rights for pelabresib. I tried to head that off at the pass pretty quickly.

Of course, sometimes the more you say no to someone, the more they want something. As Constellation was a public company, Morphosys had the ability to change the dialogue at any time by throwing in an unsolicited proposal. Which is what they did in October 2020. Morphosys must have done additional work on their side to get comfortable that this does check the boxes for something bigger.

How did you build your relationships within Morphosys?

In my view, you have to build multiplex conviction on the other side and use the relationships you build carefully over time to make sure things work. I got introduced to Barbara Krebs-Pohl [SVP and Head of BD&L and Alliance Management at Morphosys] through Mary Martin Roberts, a dear friend and former colleague at Biogen who had gone on to join Morphosys’ market access organization. Barbara had me talk to some of her team to begin the relationship, including Monika Bӓhner and other folks in Morphosys’ search and evaluation function.

As you know, if the technical team doesn’t have conviction, it doesn’t matter how hard you bang on the senior business leaders to make your case. Given the type of deal that I was focused on with our EZH2 program, it was OK for me to let those senior relationships recede into the background as we focused on technical discussions.

As things evolved, having had a good open relationship with Barbara from the beginning was important as we advanced through the later discussions.

How did you balance your ongoing Morphosys relationship-building with Constellation’s desire to get to the right kind of deal?

That is a constant and regular dialogue with your full management team, and sometimes on a more frequent basis with a subset of the management team.

We had what I liked to call our “Gang of Four” – our CEO Jigar Raythatha, our CFO Emma Reeve, our General Counsel Karen Valentine, and myself – that would get together sometimes a couple of times a week to share how we were thinking about things, what we were seeing, and to calibrate what made the most sense. We also regularly updated a strategy subcommittee of the Board, as well as our broader Board of Directors.

It’s good to be clear as a management team and aligned with your Board as to what your goals are for the company. Then you can use what you’re learning from the market to figure out what’s going to get you closer to your goals. Partnerships and straight financings are just two different strategic options in pursuit of your company goals.

At the end of the day, I believe in having as many options as I can on both the financing and BD fronts running in parallel as much as possible. You can’t always program that. But if you can keep things running in parallel, even if some of those options are not the right situations to pursue, it gives you the ability to really think about trade-offs. You can’t do stuff by remote control or through management consulting decks, sometimes you have to have specific opportunities with tangible trade-offs to really think about your path forward. And oftentimes it can be a bit like Goldilocks to get to the path that is just right.

What was the business situation at Constellation and why did you feel this was the right time to work with Morphosys?

It’s important to note that we had a good cash position at the time when Morphosys approached us. We had not gone out seeking an M&A. And the magic here was we had the ability in this period of time to be incredibly selective due to several other options on the table as part of our work towards 2021 goals. That allowed us to not feel like our back was against the wall to any option. So Morphosys’ proposal to us was sort of an epi-phenomenon on top of what we were already trying to execute.

Our goal was to build Constellation into a biotech company where the research engine could keep sustainably delivering even as the lead programs shifted to commercialization. We were building real conviction around pelabresib’s data and clinical opportunity. We also had a great asset in our EZH2 inhibitor and wanted to go fast with that. But wanting to move our EZH2 program fast could also create resource conflicts with the Phase 3 and additional development work on pelabresib.

As we looked at the plan to get to and through early commercialization, we had some really great options to move Constellation forward and manage our cash raises in a thoughtful way. But ultimately we were going to have to finance the company at some point. And there would be additional risk, particularly technical risk, and dilution.

So when we walked into the Board Meeting where Morphosys’ ultimate Spring 2021 M&A proposal was on the agenda, that certainty for shareholders that emerges out of an M&A process was an important consideration.

Why was Morphosys the right partner for Constellation?

Importantly, Morphosys’ proposal valued the full Constellation portfolio. We had worked to build a really exciting company with a broad drug portfolio. What Morphosys was emphatic about and has been very public about since the deal is that they came for more than just pelabresib.

Agreeing to a company sale is a multifactorial analysis, but we’re all in this business to get new therapeutic options to patients as fast as possible with as much data as possible. If that’s your lodestar and where your compass points, then the analysis of any option crystalizes around whether it helps with your goal and is it fair to shareholders. And that’s where we got comfortable with Morphosys.

Paraphrasing Jigar’s commentary, we had this vision of being a fully integrated commercial-stage company acting on a global scale with an ability to work in parallel across our portfolio. Partnering with Morphosys accelerated that vision.

Was there any dataset in particular that drove Morphosys’ interest to acquire you?

At ASH 2019, we revealed data showing proof of concept with pelabresib in front-line, JAK-naive, myelofibrosis patients. We had previously shared data in second line patients, but this first-line activity was the watershed dataset.

We knew the first-line efficacy was going to be a key dataset and we wanted the data to speak for itself. That’s part of why we did the PIPE in October 2019. The PIPE followed by the data enabled our December 2019 follow-on offering that enabled us to be choosy about where to go next.

Given you were publicly traded, how did you get comfortable that the Morphosys proposal would be attractive to your investors?

We spent a fair amount of time over the years that led up to this making sure we knew what sentiment was around all of our programs, including our lead program. So we weren’t starting from square one when Morphosys sent in their initial proposal.

There is this constant tension between looking at your company plans, the cash needs to fund that plan, the options available to raise that cash, and what taking any of those options might mean for your shareholders. Our bankers at Centerview were particularly helpful at boiling that analysis down to the potential risk versus the reward.

As a CBO, you’re not doing your job unless you have these pieces ready at hand. When the game changes as the CBO, you need to be able to confidently sit down with your CEO and your Board and say, “Here’s how we can think about this.”

How did the deal process go with Morphosys?

Every deal has lots of near-death moments. Part of what being in this CBO chair is about is thinking about and trying to anticipate what you can, having the ability to react fluidly in real-time, and always having back-ups to the back-ups to your back-up plans.

Again, you never want to end up against a wall.

One thing with respect to this deal is Morphosys had a very creative and transformational financing that they had to pull together to make this deal happen. When we started the journey with Morphosys’ first proposal in October 2020, from just looking at their financial statements, it was not clear where Morphosys would get the cash to pull off the acquisition.

This ended up becoming effectively a three-party deal with Royalty Pharma coming in with significant funding to Morphosys.

A two-handed deal is already hard to close, and a three-handed deal is very hard to pull off. This was really Morphosys’ problem and not ours, and we didn’t really see any of this come together until the very end, but a lot of this was evolving in parallel on Morphosys’ side. At the end, Jigar and Jean-Paul were communicating regularly so we did know what we needed to.

One thing I felt confident about on the BD side was that whoever Morphosys was going to talk to about their financing needs, we had probably also talked to them. Again, to keep our options open, I wanted the royalty funding groups to have a perspective on Constellation and our programs.

Deal competition also helps to signal that things are moving along, but we didn’t use that card until necessary.

When and why did you bring in Centerview?

Long before anything got hot and before anything like the deal we did with Morphosys was even apparent, I prioritized introducing Eric Tokat [a Partner at Centerview] to Jigar and the Board. An important thing to realize is that bankers like Eric and his team are not just in it for the immediate deal that you might be able to transact right now. Good bankers would far rather help you think about what your options are, would prefer you generate the best return for shareholders over the broad horizon, and ultimately may help you be acquired for more money later on instead of a deal that may be on the table today.

The Centerview team is tremendous. Eric had a long relationship with Jean-Paul Kress, which no doubt helped during the deal process. But having a good banking partner around the table will help a young company. Nobody has a monopoly on relationships, and different folks bring different perspectives and specialize in different types of deals.

You’ve done many transactions over your career – was there anything about this one that was just different?

Feedback can be a gift. I had done a lot of buy-side deals over my career, and one of my goals when joining Constellation was to do more sell-side. One of my learnings was to be incredibly diligent about asking for feedback from counter-parties, seeking clarifications, and really understanding what is happening on their side. We got a ton of free consulting from these discussions. And there is always your vision for the asset versus what is in the eye of the beholder.

And it’s important for any sell-side process to integrate the feedback you’re getting. This helped us understand what partners might have considered as warts in our programs, think of plans to maximize the value of each of our assets, and know when to come back to re-engage and update counter-parties. I really believe that this super-diligent approach to getting and integrating feedback from partners led to us having the multiple options that we did.

9
Jan
2022

Beware of the Expert Fallacy, But Don’t Fall Into The Cynicism Trap

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09 Jan 2022

David Shaywitz

In December, a team led by two University of Pennsylvania scholars, psychologist Angela Duckworth (best known as author of Grit) and behavioral economist Katy Milkman published in Nature the results of a colossal study on behavior change.

The researchers evaluated the impact of a huge range of behavioral interventions – 54 – that were thought to potentially influence gym attendance after four weeks. 

The research – termed a “megastudy” – involved 61,293 participant subjects, and 30 scientists from 15 different U.S. universities; each of the 54 conditions were studied in groups of at least 455 participants; the average group size was over 1,000 participants.

The authors’ main area of emphasis in the paper was methodological. Successfully executing such massive a field experiment encourages other scientists to take advantage of this powerful approach, the authors contend. “By enabling direct comparisons of diverse intervention ideas,” they write, “megastudies can accelerate the generation and testing of new insights about human behavior and the relevance of these insights for public policy.”

Angela Duckworth, professor of psychology, University of Pennsylvania

What did they learn about their interventions? These data were somewhat disappointing. While nearly half the approaches worked better than the negative control, the effects, while statistically significant, were relatively small. Moreover, few approaches proved discernably better than what was essentially a standard-of-care (active) control, an approach consisting of three, evidence-based elements:

  • Planning prompts: Participants was encouraged to specifically plan the dates and times of their exercise; (this approach, called “implementation intentions” has also been used to nudge voter turnout, in work spearheaded by Todd Rodgers – see here).
  • Reminders – Participants were texted reminders at their scheduled times;
  • Microincentives – Participants received a credit, worth about 22c, for each visit.

The supplemental intervention that seems to perform the best was offering microincentives (worth 9c) to participants who had missed a workout, as an encouragement to return. This resulted in a 27% improvement over placebo (amounting to an extra 0.4 days of exercise per week), and a 16% improvement over the active control.

Unfortunately, even the relatively modest benefits of interventions dropped off rapidly after the study concluded; in other words, the interventions did not seem to impart to participants improved behavior in a particularly durable fashion.

Harvard business school professors Michael Luca and Max Bazerman summarized (prepublication) these results in their book The Power of Experiments (my WSJ review here): “behavioral interventions that led to short-term gains were less effective when looked at over a multiple-month span.”

As professor Duckworth succinctly told Luca and Bazerman: “Behavior changes are really *#$@ing hard.”

Expert Fallacy

Perhaps the most interesting aspect of the megastudy was the inclusion of predictions of intervention efficacy by a range of impartial assessors, including behavior science professors and practitioners. Not only were there “no robust correlations” between predicted and observed treatment effects, but the predictions anticipated a level of benefit that was “9.1 times too optimistic.” In other words: experts thought the interventions were going to work far, far better than was ultimately observed.

These results are consistent with the large and growing body of literature on the limitations of expert prediction (see this magnificent Louis Menand discussion of Philip Tetlock’s scholarship). The megastudy also supports expansive literature on the epidemic of overconfidence (one of Nobel laureate Daniel Kahneman’s many areas of contribution – see here). 

I’ve discussed expert fallacy and the challenge of overconfidence in a number of Wall Street Journal book reviews (including Rosenzweig’s Left Brain, Right Stuff, and The Invisible Gorilla, by Chabris and Simons). I’ve also explored these issues in the context of biopharma – see this Financial Times op-ed with Nassim Taleb, and this piece in Forbes. 

Between these biases, and the burgeoning literature on irreproducibility, it’s tempting to embrace the famous William Goldman observation about Hollywood, “Nobody knows anything,” and quickly find yourself in a very dark place.

But, it turns out, cynicism is probably not the right answer either.

The Cynicism Trap

You don’t have to spend much time on social media – or in late-night college bullshit sessions – to appreciate the power and appeal of cynicism, defined in an academic paper as “a negative appraisal of human nature, a belief that self-interest is the ultimate motive behind all human actions, even the seemingly good ones, and that people will go to any lengths to satisfy it.”

As Stanford psychologist Jamil Zaki reviews in a fabulous, short TED talk (“How to escape the cynicism trap” – here), while we may not enjoy the company of cynics, we tend to think they are smarter, and that their grim view of others makes them better at detecting dishonesty, for example, and hence less likely to get ripped off (not true, as Zaki reveals).

Jamil Zaki, associate professor of psychology, Stanford University

There’s also the contrasting concern that a less cynical, more hopeful and generally positive attitude, as “Freakonomics” host Steven Dubner notes, “can be seen as a sign of weakness,” and “as something that might be exploited.”

Considerable research has explored the notion of “depressive realism,” the idea that those with a negative view of the world are the ones who are seeing it most clearly, as Stephanie Bucklin nicely discusses here.

Fortunately – at least for the many optimists and aspiring optimists – the dismal view may not be right either. A fascinating 2018 study, for example, examining global data from over 200,000 people, found that while most of us “tend to believe in cynical individuals’ cognitive superiority,” the numbers don’t bear this out.

Rather, the data show that “cynical (vs. less cynical) individuals generally do worse on cognitive ability and academic competency tasks.” 

Moreover, across a range of cultures examined, “competent individuals held contingent attitudes and endorsed cynicism only if it was warranted in a given sociocultural environment. Less competent individuals embraced cynicism unconditionally.”

In other words, it’s the people who know less who tend to be reflexively cynical, while those who know more are selectively cynical. 

As the authors suggest, this could represent an adaptive posture, preventing those most vulnerable from getting taken advantage of. Causality might also work in the other direction, and those who are reflexively cynical might not open themselves up to opportunities that could expand their knowledge base.

It’s this last point – the receptivity to opportunity – that represents perhaps most compelling argument for resisting the “cynicism trap.” It’s something I’ve heard tech VCs, in particular, emphasize – the importance of being receptive to possibility, and to the outsized potential of radical new ideas. You might be wrong, they say, but you can’t lose more than the value of the investment; yet if you’re right, your upside can be almost unlimited, a return that reflexive cynics will never realize. 

As VC Balaji Srinivasan points out here, every significant advance in the technology revolution was originally dismissed by cynical industry experts. There’s a reason for the popular Silicon Valley aphorism, “pessimists sound smart; optimists make money.”

The advantages of an optimistic mindset extend far beyond the financial.

A more positive, less cynical view also enables us to derive greater joy from engagement with other people, to share in their happiness and embrace their possibility. 

Both cynical and hopeful stories, Zaki points out, can “can become self-fulfilling,” and he urges us to deliberately choose the more optimistic path. “We can be skeptical,” he says, “demanding evidence before we believe in people — but hopeful, knowing they can change for the better.”

Similarly, as Penn’s Duckworth notes in a (captivating) discussion with Steven Dubner (here), she isn’t advocating for reflexive optimism, sometimes called “toxic positivity.” 

Instead, she says, “It’s both possible to have a high center of gravity when it comes to positive emotion and to be pretty stable around that, and I think it’s possible to allow your attentional field to encompass these other things.” 

What’s critical for both optimists and pessimists to recognize, Duckworth argues, is that we have choices:

“There are virtuous and vicious cycles; being unhappy, being negative, and always being hyper-critical can really be a spiral downward. If you do pay attention to that, you could say, ‘Hey, look over here, it’s this virtuous upward spiral. I think I’m going to join that one.’”

In essence: happiness is a choice – so choose it.

6
Jan
2022

Biotech’s Candle Burns Bright in the Dark

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06 Jan 2022

Luke Timmerman, founder & editor, Timmerman Report

Earlier this week, in need of an afternoon break, I went for a 15-minute walk to the local branch of the Seattle Public Library.

With KN95 mask snugly in place, I walked in, picked up my book on hold, and walked out. Two minutes, tops. No lingering these days.

At home, I flipped open Carl Sagan’s 1996 manifesto, “The Demon-Haunted World: Science as a Candle in the Dark.”

It’s truly haunting to read 25 years later. The man was ahead of his time.

For those who want to understand the long roots of decay, I’d also recommend “Amusing Ourselves to Death: Public Discourse in the Age of Show Business” the 1985 acid commentary by Neil Postman and “Fantasyland” by Kurt Andersen in 2017.

If Sagan were around today, I’m sure he’d be in awe of what today’s scientists achieve on a daily basis. The vaccines, the diagnostics, the monoclonal antibodies, the protease inhibitors. The genomic surveillance that provides sentinel early warnings of new variants to guide policy, and let people know when to adapt their behaviors. The way in which scientific results are communicated with lightning speed around the world, elevating everyone’s game in the process.

It’s stunning.

Carl Sagan

Sagan would also surely be terrified by how things have broken down into an Internet dark age of popular pseudoscience, cynicism, ignorance, willful ignorance, institutional mistrust, bad faith arguments and apathy. To see this much preventable suffering and death happening every day as a result of these social ills would be painful.

He saw it coming. Sagan wrote:

“Science is more than a body of knowledge; it is a way of thinking. I have a foreboding of an America in my children’s or grandchildren’s time – when the United States is a service and information economy; when nearly all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what’s true, we slide, almost without noticing, back into superstition and darkness.

The dumbing down of America is most evident in the slow decay of substantive content in the enormously influential media, the 30-second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance. As I write, the number one videocassette rental in America is the movie “Dumb and Dumber.” Beavis and Butt-Head remain popular (and influential) with young TV viewers. The plain lesson is that study and learning—not just of science, but of anything—are avoidable, even undesirable.”

He wrote that in 1996.

At the time, Sagan surely got pushback for sounding like a grumpy old man. Lighten up, right?

Sagan wasn’t trying to do the popular thing. He was saying something that needed to be said.  

He went on to hammer home why this disconnect between science and society matters.

“We’ve arranged a global civilization in which most crucial elements – transportation, communications, and all other industries; agriculture, medicine, education, entertainment, protecting the environment; and even the key democratic institution of voting – profoundly depend on science and technology. We have also arranged things so that almost no one understands science and technology. This is a prescription for disaster. We might get away with it for a while, but sooner or later this combustible mixture of ignorance and power is going to blow up in our faces.”

That’s especially hard to read on the anniversary of the Jan. 6, 2021 insurrection. It was something a lot of people didn’t imagine, didn’t see coming.

Irritated as he was in the mid-1990s, Sagan tried to balance his frustration with hope.

As any experimentalist knows, you get out what you put in. What if we planted some different seeds?

At the end of that blistering chapter, he wrote:

“An extraterrestrial being, newly arrived on Earth—scrutinizing what we mainly present to our children in television, radio, movies, newspapers, magazines, comics, and many books—might easily conclude that we are intent on teaching them murder, rape, cruelty, superstition, credulity, and consumerism. We keep at it, and through constant repetition many of them finally get it. What kind of society could we create if, instead, we drummed into them science and a sense of hope?”

Science has the potential to make a difference against the big challenges. Pandemics, climate change, poverty, pollution and plunder of Planet Earth. But science can’t fulfill its potential against any of these challenges in a vacuum, working and talking only to fellow members of this small tribe. These problems require scientific leadership and collective action.

It’s going to take long, hard work. It will require educating several generations about what science is and is not. It will require helping young people see how they can all engage with this way of skeptical, probing, and relentlessly curious thinking. Ultimately, it will require helping young people see science as a tool to help us tackle the big problems we need to solve to create a better world 100 years from now.  

Science Policy

A handful of prominent advisors to the White House published a series of articles in the Journal of the American Medical Association on some changes they recommend for how we adapt to the new set of circumstances we’ve been dealt by COVID.

Data That Mattered

BridgeBio’s stock crashed after it reported a Phase III trial failed to show a benefit for patients on its drug for transthyretin (TTR) amyloid cardiomyopathy (ATTR-CM). The trial ran for 12 months, and evaluated patients on the 6-minute walk test – how far they can walk in six minutes. Shares fell 70 percent. (Barron’s).

Personnel File

Copenhagen, Denmark and Boston-based Hemab Therapeutics, a company working on bleeding and thrombosis diseases, said John Maraganore will serve as its chairman of the board. Watertown, Mass.-based SQZ Biotechnologies also said Maraganore has agreed to become a strategic advisor. The former CEO of Alnylam Pharmaceuticals also has agreed to be an advisor to Arch Venture Partners and Atlas Venture, a pair of early-stage venture firms that were among the early backers of Alnylam. Maraganore has also agreed to chair a group of advisors to the n-Lorem Foundation, a nonprofit founded by former Ionis Pharmaceuticals CEO Stanley Crooke, which works on antisense oligonucleotide therapies for people with N-of-1 conditions. As if that’s not enough, Maraganore also plans to mentor a number young entrepreneurs, and write the occasional column for Timmerman Report in 2022.

Cambridge, Mass.-based Blueprint Medicines, the developer of cancer drugs, said Kate Haviland is being promoted to president and CEO, from COO, effective Apr. 4. Jeff Albers is moving upstairs to be executive chairman of the board. Haviland will also be joining the board.

Vancouver, BC-based Zymeworks, the antibody drug developer, said Ken Galbraith was brought in as chair and CEO to replace longtime CEO Ali Tehrani. It was an ice cold press release, in which Zymeworks didn’t even thank Tehrani for his service at the company, which he’s led since 2003.

San Francisco-based Spruce Biosciences, the developer of treatments for rare endocrine diseases, hired Javier Szwarcberg as CEO. Samir Gharib, the chief financial officer, was promoted to president and chief financial officer.

Akshay Vaishnaw was promoted to president of Alnylam Pharmaceuticals. He’s been with the company since 2006, in a series of R&D roles of increasing responsibility.

Cathy Friedman, a former biotech investment banker, joined GV as an executive venture partner.

Mira Chaurushiya

Mira Chaurushiya joined Westlake Village Biopartners as a senior partner. She comes from 5AM Ventures. (See Mira in this list of biotech industry leaders who identify as LGBTQ, Timmerman Report, June 2021)

Foster City, Calif.-based Terns Pharmaceuticals hired Jeffrey Jasper as senior vice president, head of research. Terns also promoted Diana Chung to SVP, chief development officer. The company is working on small molecule therapies for non-alcoholic steatohepatitis (NASH).

Deals

Edmonton, Canada-based Entos Pharmaceuticals pocketed a $50 million upfront payment from Eli Lilly. The deal calls for Entos to provide Lilly exclusive access to its proteo-lipid vehicles to deliver nucleic acid therapies to multiple targets in the central and peripheral nervous systems.

Absci announced a research collaboration with Merck. The Vancouver, Wash. company said it will use its Bionic Protein non-standard amino acid technology to produce enzymes for Merck’s biomanufacturing applications.

Illumina agreed to work with SomaLogic, to incorporate a proteomics assay into its next-gen sequencing platform.

Verily agreed to a research collaboration with Sosei Heptares to target GPCRs for immune-mediated diseases.

Novartis formed a three-year research collaboration with Cambridge, Mass.-based Alnylam Pharmaceuticals to develop siRNA drugs against molecular targets implicated in end-stage liver disease.

Amgen struck a partnership with Cambridge, Mass.-based Generate Biomedicines to use machine-learning technology to aid protein drug discovery. Generate will pocket $50 million upfront for initial work on five programs.

Boston-based i20 Therapeutics formed a research collaboration with Janssen Research & Development to work on ionic liquid technology for the oral delivery of macromolecules.

Boston-based Odyssey Therapeutics agreed to acquire Rahko, a quantum machine learning company, to aid with drug discovery. Odyssey raised a $218 million Series A in December. Terms of the acquisition weren’t disclosed.

Financings

San Francisco-based Waymark raised $45 million in a Series A financing co-led by Andreesen Horowitz and NEA. The company is working on helping healthcare providers who accept Medicaid to provide better care to low-income people, by delivering evidence-based medicine at scale to improve outcomes. It’s about going after populations that have been overlooked. According to a company statement:

“Today, the wealthiest Americans outlive the poorest Americans by 10-15 years. The one in four Americans who are on Medicaid are often overlooked by healthcare innovations, reinforcing disparities in health outcomes.”

That second paragraph of the press release shouldn’t be a surprise, but it is interesting to see that healthcare inequities have gotten so deep and pervasive that prominent VC firms don’t look the other way — they now see it as an investable category. See Vineeta Agarwala’s A16Z blog post for more.

Hayward, Calif.-based Eikon Therapeutics said it raised $517 million in a Series B financing. It’s working on super-resolution microscopy and advanced computation to advance drug discovery. T. Rowe Price Associates, Canada Pension Plan Investment Board (CPP Investments), EcoR1 Capital, and UC Investments are among the new investors. CEO Roger Perlmutter is the former president of Merck Research Laboratories. (See my interview with Perlmutter when he joined the company, May 2021)

Cambridge, Mass.-based Korro Bio raised $116 million in a Series B financing to advance its RNA editing platform technology. Eventide Asset Management led. (See this TR feature on Korro and two other RNA editing startups, Shape Therapeutics and Locanabio).

South San Francisco and Paris-based DNA Script, the company developing and marketing benchtop enzymatic DNA synthesis technology, added on a second tranche to its Series C financing, bringing the total from $165 million to $200 million. T. Rowe Price Associates and Baillie Gifford joined the second tranche. (TR coverage of DNA Script, Oct. 2021).

San Francisco-based Esker Therapeutics, a precision immunology company hatched by Foresite Labs, said it closed a $200 million financing led by AyurMaya, an affiliate of Matrix Capital Management, and an unnamed US healthcare fund. The company also changed its name to Alumis. (TR coverage of the company’s plan to develop a best-in-class Tyk2 inhibitor, May 2021).

San Francisco-based Ambagon Therapeutics announced it has raised an $85 million Series A financing led by Nextech Invest. The company is developing molecular glues to go after hard-to-target protein targets.

Carlsbad, Calif.-based Pardes Biosciences debuted as a public company through a SPAC deal sponsored by Foresite Capital, which brought in $274 million in total proceeds. The company is working on oral antivirals for COVID-19.

Seattle-based Curi Bio raised $10 million in a Series A. It’s developing a human stem cell platform for drug discovery.

Seattle-based Good Therapeutics raised $8 million to develop targeted protein drugs, including a targeted IL-2 program.

Our Shared Humanity
Strategy
  • How Early Is Too Early To Establish A Commercial Function In Biotech? LifeSciVC. Jan. 6. (Sush Patel)
Vaccines

Texas Children’s Hospital and Baylor College of Medicine said they received Emergency Use Authorization in India for a protein-and-adjuvant vaccine for COVID-19. The researchers there are partnered with Dynavax for the adjuvant, and with Biological E in India for manufacturing. The vaccine, Corbevax, has shown ability to induce neutralizing antibodies against the original SARS-CoV-2 from Wuhan, as well as the Delta variant, in a pair of Phase III trials that enrolled more than 3,000 subjects. The vaccine hasn’t passed the same kind of large Phase III trials passed by the mRNA and adenoviral vaccines, but it is a cheap and practical technology platform that could help with vaccinations in parts of the world in need. (Washington Post)

Science of Obesity
  • Effects on weight loss and glycemic control with SAR441255, a potent unimolecular peptide GLP-1/GIP/GCG receptor triagonist. Cell Metabolism. Dec. 20. (Martin Bossart et al Sanofi)
Science of SARS-CoV-2
  • SARS-CoV-2 spike T cell responses induced upon vaccination or infection remain robust against Omicron. MedRxiv. Dec. 28. (Wendy Burgers, Catherine Riou et al, University of Cape Town, South Africa)
  • Preserved T cell reactivity to the SARS-CoV-2 Omicron variant indicates continued protection in vaccinated individuals. BioRxiv. Dec. 30. (Lorenzo De Marco et al Santa Lucia Foundation, Italy)
  • SARS-CoV-2 vaccination induces immunological memory able to cross-recognize variants from Alpha to Omicron. BioRxiv. Dec. 28. (Alessandro Sette et al, La Jolla Institute for Immunology)
  • Ancestral SARS-CoV-2-specific T cells cross-recognize Omicron (B.1.1.529). Research Square. Jan. 3. (Marcus Buggert et al Karolinska Institute)
  • Divergent SARS CoV-2 Omicron-specific T- and B-cell responses in COVID-19 vaccine recipients. MedRxiv. Dec. 29. (Rory de Vries et al Erasmus MC, The Netherlands)
  • Clinical Severity of COVID-19 Patients Admitted to Hospitals in Gauteng, South Africa During the Omicron-Dominant Fourth Wave. The Lancet preprints. Dec. 29. (Lucille Blumberg, Cheryl Cohen et al National Health Laboratory Services (NHLS) – National Institute for Communicable Diseases, South Africa)
This Week in Drug Pricing

Reports from GoodRx and analysts at Raymond James estimate that pharma list prices are rising by about 5 percent at the start of 2022. That’s not outrageous on its face, especially because it doesn’t take into account rebates and discounts that are almost always hidden from view. But these numbers are all being calculated off of high baselines that really aren’t sustainable. See an overview of the macro pricing data from BioPharma Dive.

Last week, I wrote here optimistically that Novartis won FDA clearance for inclisiran (Leqvio), the siRNA molecule aimed at PCSK9 for lowering cholesterol. With fewer injections and a low price, it could reach many millions of patients and reduce their risk of heart attack, stroke and death from cardiovascular disease. So I was disappointed to read the follow-up this week by John LaMattina in Forbes. Novartis set the price at $3,250 per dose — $9,750 in year one and $6,500 each year after. That’s More, not Less, than the competing antibody drugs from Sanofi/Regeneron and Amgen. It’s a missed opportunity to change business as usual.

In case anyone needs a reminder, there are a lot of people out there suffering from financial hardship in the US after they get sick. See this Jan. 4 article in the Journal of the National Cancer Institute. It looked at 380 metastatic colorectal cancer patients – 77.7 percent of them white, and 98 percent of them insured. Researchers led by Veena Shankaran at the Hutchinson Institute for Cancer Outcomes Research found that nearly 3 out of 4 of these patients suffered a Major Financial Hardship – “defined as 1 or more of increased debt, new loans from family and/or friends, selling or refinancing home, or 20% or more income decline.” The researchers conclude that the results “underscore the need for clinic and policy solutions that protect cancer patients from financial harm.” I’d like to expand that protection beyond cancer patients, when we get serious about what’s broken in US healthcare.  

Biogen is still trying to sell an unproven Alzheimer’s medicine at the still-hefty price tag of $28,000 a year. The next big act in the Aduhelm saga is an important reimbursement decision by the Center for Medicare and Medicaid Services (CMS). Peter Bach weighed in with an editorial in Bloomberg, calling for CMS to demand further testing before it pays the bills.

A large majority of the American public, consistently about 70 percent or more, says it is fed up with high drug prices. Many are demanding the Build Back Better legislation being negotiated on Capitol Hill put drug prices on some kind of leash. It’s not an unfounded concern. Like a lot of people, I want to see some sensible policy that can provide a safety net for people who get sick in this country, so they aren’t terrified of going broke. One big reason I was able to start Timmerman Report seven years ago is that I’m healthy, my family is healthy, and I don’t need to go take a job at Microsoft just to get health insurance. Our system right now is perverse and stupid and cruel. It puts way too much burden on individuals. But I also don’t want to see some ham-fisted over-correction that takes away the incentive to spend a lot of time and money on risky biomedical R&D. That would hurt a lot of people in the long term as well. Peter Kolchinsky and Michael Gilman wrote this week about some of the problems with the current legislation, especially the part that would disincentivize the development of small molecules. See their Jan. 4 editorial in The Well News. For a chaser, see also Alex Harding’s Jan. 3 TR article on why this is actually an auspicious time to invest in small molecule development.

The Best of Times

The end of a year always brings articles on the number of New Chemical Entities, the number of novel new drugs, approved by the FDA. This year, there were 50 such approvals, according to a tally by Asher Mullard at Nature Reviews Drug Discovery. The trend is clear over the first two decades of the 21st century. There are a lot more scientifically interesting and medically meaningful therapies coming down the pike. If we can figure out how to more fairly distribute the progress here and around the world, and thread the needle on fair prices that incentivize creators, we can probably expect this trend to continue heading up and to the right.

 

The vaccines took our breath away with their outstanding balance of safety and efficacy, and the seemingly speed at which they were developed. That’s story has been, and is being, well told. But the development of Paxlovid, an oral protease inhibitor that works against all known variants, is another tour de force that could save millions of lives. John LaMattina, a former president of Pfizer R&D, interviewed one of the unsung heroes of that program at today’s Pfizer, Dafydd Owen.

An Opportunity for Grownups

Some people raised objections back in October about whether kids ages 5-11 should be getting the Pfizer / BioNtech COVID-19 vaccine. They said they weren’t sure it was safe, given the reports of myocarditis in adolescents, especially adolescent and young men. Pfizer / BioNtech cut the dose down from 30 micrograms to 10 micrograms for the kids. Now we have more data. At last count, about 8.7 million shots were given to kids ages 5-11.

That’s a big real-world database to cull through to look for potentially rare side effects of consequence.

What did the CDC find? See the following key line in the Dec. 31 edition of the Morbidity and Mortality Weekly Report:

“Among 15 preliminary reports of myocarditis identified during the analytic period, 11 were verified (by provider interview or medical record review) and met the case definition for myocarditis; of these 11 children, seven recovered, and four were recovering at time of the report.”

In other words, myocarditis is less than a one-in-a-million event in kids with the low dose. That’s an extremely rare risk. Yet here we are, and the vast majority of kids in this age group are still unvaccinated. As I wrote in the Dec. 9 Frontpoints, this lack of vaccination is a missed opportunity for grownups. There is still time for kids to get the shot, which will keep them from getting severely sick with COVID and reduce the probability that they’ll transmit the infection to more vulnerable adults.

Legal Corner

Elizabeth Holmes was found guilty on four charges of defrauding investors during her time at the helm of Theranos, the blood testing company. I’m glad to see that crime didn’t pay for her, as it often does for many people in the public eye. Now that the jury weighed the evidence, I hope that we can banish Ms. Holmes from the attention economy. She sucked up way too much oxygen, attracted too many clicks, and distracted people from considering real issues and solving real problems. I think there was little to see here other than a bunch of people who got bamboozled. The takeaway is common sense — investors ought to do their own diligence before writing checks.

Debbie Nickerson

RIP

Debbie Nickerson, a professor of genome sciences at the University of Washington, and a leading researcher in human genetics over the past 30 years, died just before Christmas. She had an aggressive abdominal cancer.

Tweetworthy

Are the vaccines doing any good? See data below from the White House Chief of Staff, and shared on Twitter by former FDA commissioner Scott Gottlieb.

6
Jan
2022

The Omicron Wave: A Review of the Research on Spread and Severity

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06 Jan 2022

Mara Aspinall, managing director, BlueStone Venture Partners; professor of the practice, biomedical diagnostics, Arizona State University; advisor, Rockefeller Foundation

The vast majority of people in the US have at least partial immunity to many forms of SARS-CoV-2, either from prior infection, vaccination, or both.

The past few weeks have shown us that the Omicron variant transmits faster than any of its predecessors. That essentially guarantees that the unvaccinated plus early vaccinees (last dose/boost more than 6 months ago) will contract COVID-19 over the next few weeks and months. 

Early reports from hospitals are telling us that people with Omicron infections are suffering less severe symptoms. If this phenomenon — the combination of airborne transmissibility and mild lower airway symptoms holds up over time — then it is likely that COVID-19 will join the common cold, Influenza and Respiratory Syncytial Virus (RSV) among endemic infectious diseases.

We aren’t going to eradicate COVID. We’re going to have to live with it.

Let’s consider a couple key questions in some depth:

  • What evidence is there that we are entering a COVID endemic era in 2022?
  • What will a COVID endemic world look like (especially for diagnostics)?
1. What evidence is there that we are entering a COVID endemic era?

Omicron has become the dominant variant of concern in an even shorter time than Delta, the previous record holder. Because of its plethora of mutations on the Spike protein, Omicron has effective resistance to most previously developed antibody drug cocktails and substantially reduces vaccine effectiveness.

On the good news front, Omicron is causing far fewer hospitalized, ICU or ventilated patients per infection. Laboratory work suggests several compelling hypotheses of why this might be so. Our confidence is mounting that Omicron has higher transmission but lower morbidity and mortality than prior variants of concern: perhaps to the level of seasonal flu. 

However encouraging that may be, influenza fatality rates can be tragically high (e.g. 61,000 deaths in 2017-18 in the US). A world with both flu and COVID circulating at the same time will inevitably increase respiratory distress mortality and morbidity, and put tremendous pressure on hospitals.

Is there real-world evidence of lower morbidity and mortality? Early indications: Yes

The best data on Omicron comes from South Africa and the UK, where Omicron developed the earliest and where surveillance has been the most comprehensive. The UK is running about 4 weeks behind South Africa, where the drop in Omicron’s death rate was particularly striking. 

The UK pre-existing Delta death rate was already much lower than South Africa, but that too has more than halved in the Omicron era. 

The rate of asymptomatic Omicron cases is much higher than prior variants, according to a Dec. 27 study from South African researchers and colleagues at the Fred Hutchinson Cancer Research Center. Researchers found that almost one-third (31 percent) of people with HIV who enrolled in a Moderna vaccine study in South Africa in December were found to already have COVID. That’s up from about 1-2 percent of people who showed up in a comparable vaccine study months ago, when the Beta variant was circulating. These asymptomatic carriers were shown to have high levels of viral shedding based on samples from nasal swabs.

This high rate of hidden cases, and the high levels of viral shedding, means that many people will inevitably transmit their infections to others. Some of these people will end up with severe symptoms.

That’s a glimpse at the biology. Now let’s take a look at the clinical implications.

Researchers at Imperial College London looked at data from the first two weeks of December, when Omicron rose to prominence. The team reported 40-45% lower hospital admissions for Omicron versus Delta (Table 1: note UK “hospitalization” includes emergency department visits, admissions is more representative of severity). Prior infection and vaccination reduced the risk of Omicron hospital admission risk by ~70% (Table 2).

By the end of December, with more data coming in every day, the hospital admission rate in London was about 80 percent lower during this Omicron wave than the prior Delta wave.

How are the vaccines holding up?

The UK Health Security Agency has published an update on vaccine effectiveness after 198,348 UK Omicron cases (Omicron update 12/31/2021).  

Bottom-line, a two-dose mRNA vaccination series confers essentially no protection against Omicron infection after 6 months, whereas the two-dose mRNA vaccine retained ~60% effectiveness against Delta (down from 98% initially). A subsequent booster increases Omicron immunity at the 9-10 week point from a rapidly declining ~40% back up to ~50% (Pfizer boost), or ~70% (Moderna boost).

There has not yet been enough time to evaluate longer term effectiveness versus Omicron. 

Prior infection, current vaccines and boosters do reduce severity, but cannot be considered effective against infection beyond 6 months. The saving grace of the vaccines, however, can be seen in the hospitalization data referenced above. They are keeping people out of the hospitals.

There hasn’t been enough time yet to fully evaluate the US clinical experience, at least compared with the UK and South Africa. But all the signs are that it will be consistent here (for an always helpful US perspective, see Paul Sax MD’s blog of Dec. 30)

Evidence from the Laboratory to Explain Reduced Disease Severity

Over the past month, there have been many excellent studies (I have 16 on file currently and more arrive every day) examining the pathology of Omicron infection in animal models and human cell cultures. There are two arenas contributing to a consensus on why Omicron is demonstrating lower morbidity and mortality (see Eric Topol’s excellent “Ground Truths” newsletter on Substack):

Omicron infects primarily the upper respiratory tract – especially the nose and throat. That’s likely causing more coughing and viral aerosol dispersion and transmission. The virus appears to be less able to migrate further the lower respiratory tract, deep into the lungs where prior variants dramatically damage the cells – alveoli – responsible for clearing carbon dioxide and transferring essential oxygen to the bloodstream. This is an evolutionarily favorable path for viral mutation, as evidenced by Omicron’s competitive advantage over Delta, which is more efficient at getting deep into the lungs. This does not preclude a more virulent future path for Omicron, but it does reduce its likelihood.

See the following studies below for more detail:

    • Lungs have 1,000x lower viral load and no damage (12/26/21 animal model)
    • Omicron 70x higher virus in Bronchus; 10x less in lung (12/15/21 human tissue)
    • Omicron viral load and damage lower in lung (12/29/21 human tissue)
    • Cell fusion reduces white cell effectiveness, only evident in severe cases (5/12/21 Commentary/Review)
    • Damaging cell fusion (syncytia) are common in viral diseases (9/21/21 math model)
    • Omicron causes lower cell fusion closely related to pathogenicity ( animal model)
    • Lower lung absence of cleavage protein (TMPRSS) inhibits lung infection (12/22/21 cellular model)
    • Less lung infection and inflammation from Omicron (12/28/21 humanized mouse model)
    • Milder infection in all tissues, limited pathology (12/28/21 animal model)
    • Broader set of tissues infected, but less in the lungs (1/3/22 human cells)

Although neutralizing antibody counts from prior infection or vaccination do decline toward zero after 6 months, memory B cells (the cells that produce these antibodies) and memory T cells (that mobilize the immune system and attack pathogens directly) both become more broadly effective against unencountered variants after repeated prior exposures.

Generally speaking: the more exposure the better, especially with longer delays between encounters (implies minimum 12-16 week spacing of each initial and booster dose). One of the key early findings of the Omicron wave is that T-cell immunity from prior infection and vaccination appears to be longer-lasting, and this second-line of immune defense is likely a big reason why so many people are getting mild infections that don’t end up sending them to the hospital.

See a few key studies that look beyond neutralizing antibody assays below:

    • Longer infection/vaccination intervals increase resistance (1/1/22 multi-country)
    • Enhanced memory B cell effectiveness on repeated exposure (1/1/22 patient cells)
    • 70-80% of T cell effectiveness is retained across all variants (12/28/21 patient samples)
    • Omicron infection provides cross-immunity to prior variants (12/27/21 patient samples)
    • Broad immune escape but little lung damage (1/3/22 cells and epidemiology)
2. What will a COVID endemic world look like (especially for diagnostics)?

First, let’s look at this in the short term to mitigate the damage from an ongoing airborne threat.

  • In the US, we need to persist in efforts to vaccinate the remaining 40% of the population that remains unvaccinated (including children). The vaccination push should require boosters at 6 months. Efforts should continue to revise vaccines for novel-variants and conserved epitopes. If successful, these updated vaccines could be available by late 2022/early 2023
  • Continue masking in, and/or avoidance of, enclosed spaces
  • Continue and systematize surveillance through viral genomic sequencing (and PCR)
  • Empower individuals and institutions with widely available and inexpensive self-tests

There has been massive demand in the US for rapid testing. Individuals have become more familiar with self-testing. This is not about to decline. The industry needs to develop expanded availability of rapid tests to allow self-diagnosis to distinguish among the broad range of respiratory diseases – tests that can discriminate among both bacterial and viral respiratory infections – COVID-19, Influenza, RSV, tuberculosis, pneumonias etc.

Without adequate testing and surveillance, it’s hard to answer a key question — how will we know if it is “over” (at least in its current form)? 

Official counts of cases are becoming less reliable. Few of the rapid self-test results are reported to public health authorities who manage the official databases. Omicron’s increased asymptomatic cases will largely go untested — people will have COVID and walk around infecting other people without ever knowing they were positive.

In this context, reported case numbers understate the reality, even as the total number is rising exponentially. Given this reality, some have suggested we should primarily track hospital admissions since this is generally a reliable indicator of serious disease (although COVID deniers are advocating ignoring the hospitalized with COVID and only counting the hospitalized for COVID).  

Unfortunately, we now know that viral loads and hence transmission can be just as high in the asymptomatic – we cannot afford to lose track of the total number of cases.

A continuing unknown is the long-term effect of past infection. We do know that virus is found in many organs on autopsy; a trend likely exacerbated by Omicron as a result of its reduced ACE2/TMPRSS dependency. A 1/2/2022 University of Waterloo Canadian paper suggests that executive function is significantly affected during post-acute COVID-19 recovery, but we do not yet know what circumstances drive vulnerability to Long COVID-19, nor what types of infection cause it.

This is one of the big research questions that will take time to answer – to what extent does Omicron infection lead to various forms of Long COVID? What biological phenomena are driving the chronic symptoms? How many people will be affected, and for how long? What kind of symptoms will they have to endure?

It will take time to gather data to help us understand what’s going on.

It has been 100 years since the devastating 1918-1921 Influenza pandemic. That avian H1N1 virus infected one-third of the global population, with nearly 5% mortality among younger adults. We have been fortunate that COVID-19 has had a relatively low mortality rate of 1-2%, but it is clear that 21st century travel and COVID-19 show that infection can spread quickly to more than just one third of the global population – by the time this pandemic is over, 70-80% of the global population will have been exposed, infected and/or vaccinated.

We have been negligent preparing for inevitable waves of epidemic infections. We have few effective viral therapies in hand. We are rapidly exhausting the antibiotics that have protected us from bacteria scourges for the past 70 years. 

Given that it is highly unlikely that COVID-19 disappears, we are beginning the transition to an influenza-like endemic COVID: a continuing threat of more virulent mutation-fueled outbreaks driving ever-present danger to the respiratory impaired and those with compromised immunity. 

The last 50 years have taught us that animal reservoir pathogens can mutate and spread without warning — we cannot allow ourselves to fall under the spell of complacency ever again.

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