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Please subscribe and tell your friends why it’s worthwhile. Quality journalism costs money. When you subscribe to Timmerman Report at $169 per year, you reward quality independent biotech reporting, and encourage more.
Please subscribe and tell your friends why it’s worthwhile. Quality journalism costs money. When you subscribe to Timmerman Report at $169 per year, you reward quality independent biotech reporting, and encourage more.
Please subscribe and tell your friends why it’s worthwhile. Quality journalism costs money. When you subscribe to Timmerman Report at $169 per year, you reward quality independent biotech reporting, and encourage more.
David Shaywitz
Medicine is plagued by a feedback gap, or perhaps more accurately, a feedback paradox.
On the one hand, clinicians are bombarded by feedback. Every day, there are a slew of process and billing metrics to review, providing an accounting of the volume of patients seen, and the intensity of each visit.
How thorough was the exam? What procedures may have been performed?
Even beyond the measures related to billing are an ever-growing number of measures related to guideline adherence. Doctors have an increasingly long set of questions to answer, boxes to check.
Did you ask about seatbelts use? Did you ask about home safety? Have you scheduled an eye exam for your patient with diabetes? These are often, individually, sensible and relevant considerations. In aggregate, however, they can be overwhelming and lead to guidance fatigue and ethical slippage, as Bill Gardner (here) and Drs. David Blumenthal and J. Michael McGinnis (here) have discussed, and as I recently reviewed in the context of COVID-19.
Yet for all these metrics and assessments, what’s often lacking is any sense of how the patients are actually faring – the thing that matters most.
It’s not at all clear whether all the carefully documented and billed work is leading to improved outcomes for patients. Are there approaches for some patients that are leading to better outcomes than other approaches, and which could be generalized? Are there other approaches that should be abandoned?
The heart of the problem is how most clinical research is done. On the one hand, to demonstrate, scientifically, that a particular approach (whether a novel drug or a new approach to therapy, like placing sick COVID-19 patients on their stomachs instead of their backs when they’re in the hospital) works, a clinical trial – ideally, a randomized, double-blind, placebo-controlled, to the extent possible – is performed. This is a highly choreographed exercise, where the exact characteristics of the subjects to be enrolled, the evaluations to be performed, and the criteria for success are all spelled out, clearly, in advance (or at least, ought to be). Enrolled subjects are tracked meticulously, and ultimately, you should be able to determine if the intervention was more effective than your control at achieving the pre-specified outcomes.
This is the way medical science advances – through rigorous clinical studies, and then the adoption of these results in clinical practice.
The conceit of this approach is that the results from a rigorous clinical study will be widely generalizable, meaning that the patient you’re treating will respond like the subjects in the study, and the treatment you’re providing will mirror that offered in the study.
Of course, we all know side effects can emerge over time that weren’t seen in clinical trials, and we recognize that certain groups – women and minorities in particular – have historically been underrepresented in clinical trial populations.
To the extent that you accept the basic premise that a well-run clinical trial yields results that can guide care, then it makes sense for health systems to impose processes that try to ensure patients with a particular condition receive the treatment indicated by clinical trials.
This approach has given rise to the idea of “disease pathways,” that provide a template for managing patients with a particular condition, and the embrace of process metrics, that try to ensure doctors are following the updated guidance – rather than, say, doing what perhaps they’ve always done because it’s what they know.
In practice, there are two problems with this system: one stemming from doctors who disregard these pathways, the other related to doctors who adhere to them.
Many physicians (perhaps especially in august academic institutions) worry most about their colleagues, especially those who practice in the community.
These physicians are often presumed by their university colleagues to be less attuned to the latest scientific literature, and hence neither of relevant advances in care nor practicing in a setting that encourages them to do so. Consequently, their patients may not be receiving the most optimal care, and have no way of knowing it.
But a second category of challenge involves the physicians who are attuned to guidelines, perhaps because they closely follow the literature, or perhaps because their health system nudges them to adhere. While arguably the patients in the care of these physicians are on balance better off than those in the first group, there are still important challenges – and embedded opportunities.
For starters, subjects in clinical studies are notoriously unrepresentative of the more general population – enrolled subjects tend to be healthier and to have fewer co-existing conditions, in effort to enable a clearer evaluation of the intervention, and provide a sort of “best case” read-out.
In addition, subjects in trials tend to be followed unusually closely – they may be reminded to take their medicine, for example, and encouraged along the way by study staff. While inclusion of a placebo group controls for the therapeutic impact of the extra attention (known as the “Hawthorne Effect”), it doesn’t account for the combined effect of experimental intervention plus attention – the increased likelihood that a subject in a study will reliably take a given medicine, say, compared to a patient in a doctor’s office, where the medication adherence rate can be astonishingly low. (It’s also why tech-enabled health service companies that feature a strong coaching and tracking component, like Omada and Virta, have gained considerable traction.)
As UCSF’s Dr. Fred Kleinsinger noted in a 2018 publication:
“Medication nonadherence for patients with chronic diseases is extremely common, affecting as many as 40% to 50% of patients who are prescribed medications for management of chronic conditions such as diabetes or hypertension. This nonadherence to prescribed treatment is thought to cause at least 100,000 preventable deaths and $100 billion in preventable medical costs per year.”
Finally, some patients in clinical practice may actually respond better than expected to a particular intervention – perhaps because of an intrinsic characteristic (involving their genetics or their microbiome, for example), or perhaps because of something subtle a particular physician or care provider did, a tweak that might goose the patient along a little bit. These are opportunities to learn from “happy accidents,” to institutionalize serendipity, so to speak, and benefit from the ingenuity of inquisitive physicians (medicine’s lead users, to use von Hippel’s term) –opportunities that are easily missed in the course of routine care.
The common feature of all these clinical care scenarios is the almost complete absence of tracking the one thing that matters most – actual patient outcomes over the long term.
A new medicine may get approved on the basis of robust clinical trials, but the approval of a drug, as I’ve argued, doesn’t necessarily equate with the improvement of outcomes of real world patients.
Why aren’t outcomes tracked in routine care the way they are in clinical trials? For one, it’s surprisingly hard to track patient journeys, especially as patients often get care from multiple medical systems – though even rigorously determining the outcome for a patient entirely within one medical system can be remarkably difficult, especially in the context of real life, when appointments are missed, and assessments can be spotty and inconsistent, and documentation unreliable.
But the second reason the information isn’t tracked is, essentially, no one (besides the patient!) really cares, in the sense of being personally invested in (and accountable for) the outcome. Certainly not in fee-for-service systems, where doctors (who, to be clear, obviously try their best for each patient) charge based on their activity rather than patient outcome. Hence, the extended push for approaches that seek to prioritize improved care, and specifically, improved outcomes. But even here it’s challenging – doctors will always argue that their specific patients are different – more complex or sicker, say, so of course they’ll do worse.
Often, the doctors may be right, and efforts to increase transparency around the success of certain surgical procedures has naturally led to notorious gaming of the system, where a mediocre heart surgeon who selects only the easiest cases scores higher than an exceptional surgeon who takes on the most difficult ones.
Attempts to adjust for complexity, inevitably, go only so far.
What emerges from this is a health system that, despite what may be the best intentions of providers, essentially, is flying blind, and lacks the basic ability to see what’s it doing, a system that lacks the fundamental ability to iteratively optimize and improve.
Yes, care improvement occurs – but over incredibly long periods of time, driven by the slow pace of robust clinical trials, rather than by the opportunities to systematically learn from patients and providers every single day.
For years, we’ve championed the concept of a “learning health system,” and today, it remains largely an unrealized aspiration.
What is to be done?
Mark McClellan, professor, Duke University
A remarkable recent two-day conference organized by Dr. Mark McClellan and colleagues at the Duke-Margolis Center (all materials available here) dug into exactly this challenge, drilling into the question of whether there can be some kind of convergence between the process of collecting and analyzing data for clinical trials and doing the same for clinical care; data collected outside of traditional clinical trial is often called “real world data,” or RWD.
While it would be a disservice to condense such a rich conference into tidy conclusions, there were nevertheless several powerful lessons that I took away.
For one, I was reminded yet again of the rigor and meticulousness of clinical trials. I knew this, of course, having designed, written and executed a number of studies, and having been immersed for years in research environments focused on this process. Even so, it was instructive to go through the challenges of defining who, exactly, has a particular condition – what is the definition of a “case?” What is the definition of an “outcome?” In the context of clinical trials, the criteria tend to be exceptional explicit, and evaluation of results can often require a deliberate, pre-defined process of adjudication.
The challenge, many speakers emphasized, is that doctors, busy taking care of patients – perhaps seeing patients every 15 minutes or 20 minutes (not uncommon, and I’ve heard of less) – barely have enough time to perform the minimum services (and documentation) required to get paid.
The detailed evaluation typically required in clinical trials feels like a luxury few busy physicians have as they fly through their day. Many speakers highlighted the importance of not contributing to provider burden, and several noted the increasing rate of doctor burnout, which some have attributed to the “death by a thousand clicks” nature of existing interactions with the electronic health record system.
Another huge challenge is that, while clinical trial data is typically captured in a dedicated database explicitly built with the desired analysis in mind, patient care data is often scattered across a healthcare system, or multiple healthcare systems, where it can be difficult to even know what other relevant data exist and might be germane.
For at least one speaker, UCSF breast surgeon and clinical trial innovator Dr. Laura Esserman, the right solution would involve the radical re-engineering of care delivery — “a sea-change in how clinicians practice,” so that clinical-trial quality data are routinely captured. By doing a much better job collecting data, and by improving how we gather and share data, she argues, we can ultimately both save time — by entering data once, and using it many times — and improve care.
Laura Esserman, professor, surgery; UCSF
As Esserman points out (and I couldn’t agree with this point more), “Imagine a business where you have no idea what your outcomes are, no idea what your metrics are. We must be in the business of quality improvement.”
For many other speakers, the priority was searching for ways to improve the system while not requiring extensive changes in the way doctors practice. For all the discussion of stakeholder alignment, the intrinsic tension between providers and researchers was palpable, and acknowledged by a number of the presenters.
In one of the day’s best talks, Chhaya Shadra of Verana Health, a startup focused on real world data in several specialties including ophthalmology, neurology, and urology, argued “If you have to take time to improve documentation to help researchers, it’s not fair to clinicians whose primary responsibility is patient care.”
Similar sentiments were expressed by UCSF’s unfailingly insightful and articulate health IT policy researcher Julia Adler-Milstein, in a recent Annals of Internal Medicine commentary on a paper revealing that physicians spend around 16 minutes per patient engaging with the EHR system, about a third of the time on chart review (i.e. trying to find information), another quarter of the time on documentation (adding their own notes), and another 17% of the time on order entry – all told, a remarkable amount of hunting and pecking.
The dilemma we face, Adler-Milstein observes, is:
“How do we generate the foundation of clinical data needed to support the EHR’s many high value uses (including but not limited to clinical care) while doing so efficiently (for example, improving user interface design, using digital scribes, and simplifying documentations)? Even with the most efficient approach, physicians (and many other types of clinicians) will never obtain a direct return from future use of their documentation equal to their time cost of documentation. At a minimum, acknowledging this mismatch and making physicians feel valued for the time they spend in the EHR is needed. (emphasis added)
Many of the mitigation approaches Adler-Milstein described were also highlighted by speakers at the Duke conference: for instance, the founder of Google Glass company Augmedix described the company’s focus on serving as a digital scribe; other presenters emphasized the need for improved EHR user interface, and more generally, for more human factors research and design.
Julia Adler-Milstein, professor of medicine, UCSF
A number of presenters also emphasized the importance of understanding the questions you are trying to ask, and pointing out that for a number of applications – some population trends, for example – you may not need perfect data, and may be able to extract real value from what you have. But, even there, you still need to have a sense of both the quality of the underlying data and the nature of the existing imperfections, so that you don’t subsequently use the data inappropriately, and draw misguided conclusions.
Dr. Paul Friedman, chair of cardiology at the Mayo Clinic, offered examples that highlighted both the possibility and the limitations of using existing data. On the bright side, he highlighted a project demonstrating the use of artificial intelligence to deduce, with remarkable accuracy, a patient’s ejection fraction (a measure of heart output typically determined using cardiac echocardiography) from routinely collected electrocardiograms (ECGs) archived by the Mayo.
On the other hand, Friedman described the frustration of trying to predict COVID-19 infections (which may impact heart cells) using the sort of detection technology commonly available on smartphones and some wearables. In this case, he says, a key barrier turned out to be the lack of underlying standardization among these tools.
While all may report out something looking like a “standard” ECG, their approaches to deriving this are so different that you really struggle to develop an algorithm from these disparate data. Alignment around some set of standards involving sampling rate and dynamic range would help, he suggested.
Speakers evinced particular interest in the ability to stitch together multiple data types (say EHR data with claims data and specialty clinical data) using privacy-preserving technology like that offered by Datavant, a Bay Area startup cited by several presenters. This approach obviously won’t solve issues related to underlying quality of data that’s being linked, but it can help not only develop the rich data set representing a patient’s longitudinal journey, but by bringing together a range of sources, the technology may help surface — and in some cases, resolve — data entry errors and other ambiguities.
The opportunities – and the risks, especially around privacy – of collecting and including more data from wearables and other “consumer” products in a patient’s health record were also highlighted by several speakers. This 10-minute talk by Elektra’s Andy Corovos may be among the best overviews I’ve seen on this topic — a topic that for years has been especially near and dear to my heart.
As Veradigm’s Stephanie Reisinger noted in (another) compelling presentation, the consumerization of healthcare, including the increased use of devices and apps, represents a major healthcare trend, “empowering us to see and share health data,” and “driving informed consumers to demand a greater say over health journeys. Human bodies are becoming big data platforms.”
Of course, this possibility also relates directly to the sorts of security concerns Coravos and others highlighted.
What’s also clear is that pharma is looking at these large integrated datasets in different ways than they once did. Initially, pharma companies turned to real world evidence primarily in the context of health economics – typically “health technology assessments.” Primarily, pharmas were seeking evidence of real-world performance, to facilitate engagement (and negotiations) with payors (and, ex-US, regulators who require a discussion of relative value).
Today, Veradigm’s Reisinger says, the most common questions from pharma partners involve protocol optimization (understanding the impact of various inclusions and exclusion criteria and the number of patients you might be able to recruit, for example), patient finding (recruitment – an effort to connect eligible patients with suitable trials) and the development of synthetic control arms for some studies (for situations when a suitable control arm may not be feasible or ethically appropriate but a relevant basis of comparison is required, for example).
Finally, several speakers, including FDA’s Dr. Amy Abernethy, highlighted the potential value of real world data in understanding and developing effective therapeutics for COVID-19; this is the focus of the COVID-19 Evidence Accelerator, for example. The recent Surgisphere scandal involving COVID-19 data (I discuss this in detail here) was cited by several speakers including Abernethy, who highlights the need for “ruthless transparency.”
I left the conference feeling neither entirely elated nor thoroughly despondent – though perhaps with a healthy mixture of the two emotions. As Abernethy observed, “doing science is messy, and we’re doing science together as a community.”
There are real opportunities here, as well as intrinsically difficult hurdles – many presenters pointed out that the social/political/”psychological” (as one speaker said) hurdles are far greater than the technology hurdles. That said, it’s also quite possible that improved technology could catalyze advances that might highlight the potential value here and motivate further collaboration.
Another hope would be that an innovative health delivery system, perhaps reimagined along the lines that I’ve described here, and that Esserman has championed, emerges somewhere and proves so compelling to patients that it becomes the immediate gold standard, and is widely adopted.
A more immediate step might be the voluntary adoption of some of the technical standards for devices that Friedman describes.
In short, I came away impressed by the urgent need to improve how our healthcare system captures and shares data, and thus learns – or, presently, fails to learn – from patient experience. I also appreciate, along a range of dimensions, just why this seemingly urgent and obvious problem has remained such a stubbornly difficult nut to crack.
Above all, I’m struck, by the need – in the phrase of legendary NASA flight director Gene Kranz – to continue to work the problem.
David Shaywitz
Entrepreneurial stories, often told through the narrative framework of the hero’s journey, are by now well past the point of cliché.
Yet, it’s important, perhaps even instructive, to remind ourselves every now and again about the exceptional, transformative power of entrepreneurship, the can-do thinking it motivates, and the remarkable progress it can propel.
This potential emerged as a central theme of Dr. Jill Hagenkord’s recent appearance on the Tech Tonics podcast that Lisa Suennen and I regularly host, as Hagenkord shared her journey that Suennen nicely characterized as “a rags to riches story in the most American of ways.”
Hagenkord grew up in rural Iowa, an already difficult childhood made worse, she says, by her parents divorce when she was ten. Dependent on government assistance for housing and food, she was a self-described “behavior problem” throughout school.
Jill Hagenkord
She chose to attend college — an almost unheard of decision for girls in her area, according to Hagenkord — because she wanted to get away, and heard there were “great parties and cute guys” at the University of Iowa, in Iowa City, 90 minutes away.
At college, she partied hard but also worked hard, both in her classes — she made the Dean’s List first semester, despite the nearly complete absence of college prep in high school — and beyond, where she typically held down 2-3 jobs to make ends meet.
Initially, she focused on fortifying the humanities education she realized she missed in high school.
However, her life direction was then profoundly influenced, as she tells it, by a “jerk boyfriend,” a medical student who she dated for six years. When the guy told her she was only doing well because she was taking easy humanities classes, she took science classes in order to prove him wrong – which she did.
Then he bet her she could never succeed in the most difficult pre-med classes, a biology lab. She aced it, despite lacking any of the prerequisites. She won the wager and claimed the prize: dinner at the “nicest restaurant in town” – the local Red Lobster.
Unimpressed, Hagenkord’s perversely significant other assured her she could never get into Harvard or Stanford University. So she applied and won admission to the MD/PhD program at Stanford.
Hagenkord was excited about coming to the Bay Area, but never felt “culturally comfortable” at Stanford’s campus in suburban Palo Alto. So she lived in the city, almost an hour away, and never showed up for class, just for the exams, which she apparently crushed anyway.
She dropped the PhD part, and decided to pursue a medical residency in pathology — a discipline without a lot of one-on-one contact with (living) patients. She had found aspects of clinical medicine — like telling a patient or a family that there was nothing that could be done — overwhelming sad.
She started her pathology residency training at UCSF, but was drawn away by the lure of a startup. It was the boom of the late 1990s, she said, and it seemed everyone in the Valley was joining a startup, where new millionaires appeared to be minted by the day.
The experience, she said, was “exhilarating.” She was surrounded by “all of these super bright science PhDs and tech people, super bright and super ambitious.”
She added, “I learned so much and it opened my mind up so much to the possibility of how can I be an entrepreneur in medicine.”
Hagenkord joined the company when it was relatively small, stayed with it through growth to over 500 people, saw it expand internationally, and was there for its IPO. While it doesn’t sound like she saw a large financial return, the startup experience clearly affected the way she thought about problems.
Even when she returned to finish her pathology residency — which she did back in Iowa — “every step of the way,” she said, “I was constantly thinking — this could be done better, this could be done more efficiently, how do we do this better?”
As Suennen points out on the podcast, this must have represented a huge contrast for Hagenkord: “After hearing all your life that ‘things cannot be done’ or ‘you cannot do this,’ on the entrepreneurial side, things are characterized by ‘you can do anything, if you work hard enough.’”
It sounds like this more hopeful attitude suited Hagenkord. “It’s such a long shot but you can will it to happen,” she explains. “It was something that had never been done before. And I did get criticized — but it gave me all the courage I needed to think, ‘I can start my own company.’”
Even so, she initially elected to continue her training in Iowa because:
“I tried to be a ‘normal’ pathologist, live a quiet life, make a good paycheck pushing glass slides — but as I finished my residency, there was too much happening on the bleeding edge. What I saw coming were these massively parallel testing technologies, where instead of looking at one analyte at a time, we were looking at hundreds or millions at a time, and were going to need computational tools to distill this information into medically meaningful nuggets. That’s what I was the most excited about and wanted to learn the most about.”
Consequently, she pursued a customized dual pathology fellowship program. The faculty at the University of Pittsburgh Medical Center liked her proposal so much that they “invented” the fellowship for her. The program allowed Hagenkord to gain specialized pathology training in both molecular genetics and oncology informatics – a combination she says has since become more common.
When she told the head of her residency program about her plans, Hagenkord says, he told her “Jill, why don’t you do a real fellowship? You’re never going to get a job.”
She adds, with a grin, “When the old curmudgeonly white dude is telling you that you don’t know what you’re doing, you should feel reassured that you’re onto something.”
She then returned to Silicon Valley, in a series of roles at genetics companies. Early on, she got to know the co-founders of 23andMe. As she tells the story, “I got to know [23andMe co-founders] Anne [Wojcicki] and Linda [Avey — see her Tech Tonics episode here] through the Silicon Valley network. We’re around the same age, have kids, are working moms, live in the same town.”
She continues, “I could look at what they were doing from a regulatory point of view and recognize gaps. I would always say [to Anne and Linda] the consumer aspect of health is so exciting and you are leading the charge, let me help you any way I can. It wouldn’t hurt you to fix these gaps.”
For while, it seems, Hagenkord offered occasional, informal advice. But “after they got the warning letter [from the FDA] in November 2013, this led to another long conversation and wound up in a job offer [as Chief Medical Officer]. So I joined the company after they were shut down by the FDA, to try to re-build bridges with medical community.”
Hagenkord worked through that thorny set of issues with the team at 23andMe. These efforts paid off, and over time the company worked itself back into the Agency’s good graces. While Hagenkord left the company, she distinctly remembers the day she sold her 23andMe shares (on the secondary market, as the company hasn’t sold shares to the public). Her shares in the private company were worth enough to be “truly life-changing.”
On vacation in Mexico, when she heard the funds had been deposited in her account, she says she left a $1,000 tip for the bartender.
“It felt awesome — and we got really good service rest of time we were there.”
Reflecting on the experience, she describes it as “one of those Silicon Valley moments — not a ‘founder of Google Silicon Valley moment,’ but a decent Silicon Valley moment, when you have more money that you ever, ever, ever thought you’d have shows up in your bank account one day.”
She then reveled in the opportunity to play what she called, tongue-in-check, “Hillbilly Millionaire”:
“I called family — in Iowa — flew back, and said ‘everybody, get in the car, we’re going to the mall, buy anything you’ve ever, ever wanted.’ They were really bad at it, at first. They went into Target, went back to the clearance sale rack — spent like $250, and I was like, ‘I didn’t fly back here so you could buy $250 at the clearance sale rack — now get out there and really shop!’ They really did.”
The experience, she says, was “the best feeling ever” — though she also apparently enjoyed the 50th birthday present she treated herself to — a trip with 22 family members on a private yacht around coastal Turkey,” which she viewed as a chance to appreciate the “people who really supported me.”
After several more years advising health tech companies, she recently took on a new role, as head of genetics at Optum a subsidiary that’s been described as “the information technology and services arm” of UnitedHealth Group.
Once again, she is thinking of moving back to Iowa.
In addition to her inspiring story, Hagenkord shared several lessons about her experiences as an entrepreneurial physician working with technology entrepreneurs in Silicon Valley.
Although my own life journey could not have been more different from Hagenkord’s, we seem to have come to remarkably similarly conclusions from our experiences at the intersection for technology and medicine.
“In the last ten years,” Hagenkord says,
“tens of billions of dollars have been invested in healthtech, with very, very few success stories. It’s like watching the same movie over and over again, and it’s pretty torturous, especially as I’m usually the only person with a medical background in the company.
I know the recipe — there are no shortcuts, and if you try to skip a step, you’re going to set yourself back three years. But to watch these brilliant tech entrepreneurs, who’ve been wildly successful in consumer tech, try to take the recipe that’s worked in consumer tech — go fast and break things, fake it ‘til you make it. If you get it wrong trying to sell somebody a pair of shoes online, and they have to wait three days for their shoes instead of one day, it’s going to be OK.
The same recipe does not work well when you apply it to a real health product –what we call that is ‘unconsented human subjects research’ in healthcare. You can’t sell someone a finished product that you know is full of bugs without telling them. The philosophical and cultural differences between tech and health need to be better balanced.
Taking the best of these brilliant tech and design people and combining it with the best of the people with the medical experience and the understanding about how to access the medical market — having that balance are the healthtech companies that are going to be the most successful.
Hagenkord also weighed in on whether coastal entrepreneurs think about people in the middle of the country, and whether one can imagine Silicon Valley-type innovation in places like Iowa.
On how Silicon Valley tech entrepreneurs tend to see the world:
“One of the things you see is someone in love with their own technology looking for a place to stick their technology, as oppoed to looking at a problem and trying to solve the problem.
The Bay Area is such a weird bubble place — so not like middle America where I grew up. To be able to really understand — especially when you’re thinking about your commercialization strategy — the idea that ‘people will just buy this.’ People who can’t really pay their mortgage, and have their lights turned off, and are struggling to get milk — for them, looking at their genetics is a huge luxury that’s beyond comprehension, and I think that gets lost sometimes. But often times there are representative people like me in [startups] to remind them of that aspect.”
And the idea of entrepreneurship in the Midwest, as promoted by champions like J.D. Vance and Steve Case?
“I did spend a lot of time thinking about it — it’s really too hard to be an entrepreneur in the middle of the country, because none of the venture money is there.
There are very smart people in the Midwest; if I had a good loving family, I’d have wanted to stay there and raise my family there. It’s a matter of access — [to capital] and to mentors — so much of the Silicon Valley game is who you know, and who can introduce you to who, and who can vouch for you. When you’re living in Des Moines, it’s hard to make those connections.”
I raised a final point with Hagenkord, by email, after the podcast, asking her about the thought process leading to her recent decision to join not a venture capital firm or a startup, but rather at a massive insurance company — over the summer, she took at new job as Vice President of Genetics at Optum.
My own top of mind reaction echoed Hamilton’s King George III’s response to the news that President Washington would be succeeded by John Adams: “Good luck.”
But here’s how Hagenkord sees it:
“Health tech startups can raise an ungodly amount of funds, but they often struggle to 1) identify a real, tractable problem in health, and/or 2) try to apply a consumer tech go to market strategy to a health-related product. They are smart people and they learn and iterate, but often they waste valuable time and money learning how the health care market works and what kind of evidence they need to achieve widespread adoption.
At Optum, I can help tech entrepreneurs understand how to get on the market legally and how to successfully get to widespread adoption and payer coverage (if desired). Since Optum invests, partners with, and acquires health-related startups, the tech entrepreneurs and investors have a vested interest in engaging with Optum. They are more inclined to generate proper evidence data when Optum says they need it. I also have the support of an amazing team at Optum Genomics who are all aligned with this same vision. In short, I could do more good more quickly at Optum as part of a team than as an individual consultant.”
I hope her lived experience at Optum ultimately matches up to these lofty, worthy expectations.
One thing I know for sure: I wouldn’t bet against her!
Stacy Lawrence
When I started to go to the J.P. Morgan Healthcare Conference, it was still known as H&Q after boutique bank Hambrecht & Quist that had originated it.
This means that, as a journalist, I have been able to watch biopharma grow up over the last 20 years.
Those first few events I attended had so little diversity that the upstairs women’s bathroom, tucked in next to the Westin St. Francis chapel — now infamous for being packed to overflowing during the Q&A sessions from the Grand Ballroom presenters — was entirely empty. It seemed like a personal sanctuary.
Over 20 years, that’s shifted dramatically. That bathroom is rarely empty anymore. Many, many more women, as well as Indian and Asian attendees and presenters, are everywhere. But by my measure, Black presence has barely changed a bit.
All the Westin St. Francis’ security guards are Black. I know because every one of them always takes note of me with a smile, a hello or a too-forceful insistence to see my badge. One day, I thought, the number of Black executives presenting on stage and attendees of the conference would surely outnumber those security guards.
But that day has not yet come. Believe me, I can’t help but take a count every year.
The life sciences industry is brimming with optimism. It has to be. The work, conducting science intended to improve upon the quality and quantity of human life, is difficult. A relentless, enthusiastic spirit is essential to get through this careful, cumulative endeavor. It’s infectious, and one of the things I enjoy about covering this industry. That same upbeat, future-oriented outlook can also blind people to hardships and injustice in our midst.
I’m well aware of racial injustice. I grew up on a farm in southern Ohio, attending public schools that were almost all white. I am nothing if not a realist about the prospects for change when it comes to systematic racism in America.
I am a part of the Loving Generation, the cohort of mixed race children born in the United States in the years just after the 1967 Supreme Court decision Loving v. Virginia that legalized interracial marriage throughout the country. As promising as that sounds, my white mother’s family split when I was born into those who accepted me and those who could not — and therefore would pretend I did not exist.
That was entirely characteristic; they were from a long line of small Ohio and Indiana farmers who were among the earliest colonizers of the region and deeply invested in white supremacy. Many of their ancestors had originally been Virginia planters and slaveholders, in fact my seventh great-granduncle was a signer on the Articles of Confederation for the thirteen colonies.
Race was at once everywhere and nowhere in my upbringing. My high school years included a Ku Klux Klan rally that passed one block from my house, sparked because a classmate had been suspended for a few days after wearing his uncle’s entire white-sheeted Klan costume to school. The rally was in response, an objection to that scant punishment.
I grew up arguing my way into honors classes that weren’t assigned to me, then aced them. Academic success became my ticket out of a place that had no room for me. I used it to hurtle my way into an urban future, where I was sure I could flourish, find my people and make my home.
I won a full tuition scholarship to New York University through its Martin Luther King Jr. Scholars Program. Terrified of debt even then, I chose NYU over Columbia University, which was my preference but had admitted me without sufficient aid.
Then I headed to graduate school at UC Berkeley, where I was backed first by a fellowship from the Ford Foundation and then by another from the National Science Foundation.
I am a student of history, having spent a chunk of grad school in the mid-1990s at Berkeley interviewing sickle cell patients and their families about the paucity of pain relief and their fears and realities around a lack of access to adequate healthcare.
Like so many other racial disparities, this is one aspect of our country’s history that remains unaddressed and unresolved.
I was born just after the Civil Rights movement. There were historic achievements, yet in the many years since, major measures of racial disparities have barely budged and voter disenfranchisement remains rampant.
School segregation simply reshaped itself through housing segregation, while income and wealth gaps remain as wide as ever. Health disparities remain glaring with significantly disproportionately high rates of maternal and infant mortality, diabetes, cardiovascular disease, cancer, asthma and other chronic diseases. Black Americans also are less likely to have adequate health insurance to address these ailments. The list goes on.
White supremacy is the reason America doesn’t have basic public benefits, like universal health insurance as well as affordable daycare or university education. Rich European countries that were racially and ethnically homogenous, where people are largely seen as deserving of potential support, were willing to provide all the public goods. That’s getting tested now, as many of these countries become more diverse, often with an influx of immigrants of color from former colonial countries.
All of America’s racial disparities remain true despite massive advances on Black achievement of college degrees. Advancement through education doesn’t insulate us from the sting of racism; I’ve often felt it.
Realtors have actively discouraged me from buying in a white neighborhood. Neighbors have welcomed us with a slashed car roof and punctured tires along with countless noise and permit complaints. Hotels and restaurants have tried to deny me service because they presumed that I was a prostitute on the hunt for a client.
There was once a boss who loaded me with multiples of the work assigned to my co-workers — and then turned around and yelled at me in the office for being “stupid” after an error and, separately, for loving hip hop music.
I was told by the recruiter assigned to replace me at that position after I left that he was unable to find anyone able and willing to do all the work I had done — for a similar salary to what I had received. I mean, I do consider myself the James Brown of life sciences business journalism, always hustling the hardest for the story, but that’s just ridiculous.
But it didn’t really hurt until I got older and started to see it unspool against my family. Overachievement and hypervigilance can only get you so far — and at great personal cost, believe me. I’m so good at sublimating my feelings to function in a hostile environment, that sometimes I only know I’m angry or upset because my rib cage hurts like a giant hand is squeezing me.
Like the time a couple years ago, when my now 80-year-old father was ill in a hospital that attempted to prematurely discharge him. The hospital had fudged the paperwork to note that he was ambulatory, even though he was not, on the assumption that no one would advocate for him or ask questions.
Whispered guidance from Black hospital staff, including a nurse, a resident and a social worker, instructed me on how to officially appeal his status and get him all of the treatment that he needed and deserved. He needed an advocate, and I was the only one he had.
That’s the most difficult part, watching people and institutions treat your loved ones like they don’t deserve care, respect or the benefit of the doubt.
I spend a lot of time trying to ensure that people with power get to know my children and my father, so I can try to believe that they see at least some little bit of what I love in them.
For example, in middle school, I had to go visit the assistant principal every trimester. My son was earning top grades. I needed to go in there because the assistant principal kept putting my son in easier classes, when he needed to stay enrolled in the harder classes.
When we were picking a high school for our eldest son, I called the best public one in town. I talked to one of the only Black professionals there, a guidance counselor, after about a half-dozen Black former school students and parents advised me not to send him. Hoping for reassurance, I instead got a warning. She told me that she herself had a complaint pending against the district — and that she would advise against me sending my son there because the academic environment isn’t supportive of Black students.
If we did send him, the advisor suggested that both parents attend every event and underscore how committed we are to supporting his education with all of the administrators and teachers — otherwise they wouldn’t see him as a serious student.
We instead chose a very small, public early college high school where the teachers could get to know him.
We repeatedly have what is now widely known as “the talk” with our sons advising them of how to best navigate a hostile, dangerous environment, starting heartrendingly early. And, sadly, at ages 11 and 15, it’s already proven useful for them both.
I had been deeply hopeful that the diversity of the Bay Area, where I have made my home for almost 30 years, would meet with the burgeoning Internet and biotech industries that have come to fuel the region’s prosperity to help buoy the Black and brown communities. But that is not what has happened. Instead we’ve largely gotten pushed out — again.
We embody our history. My wife, who is second-generation from Mexico, likes to remind me that our house was built only a few short decades after California was no longer a part of Mexico. Her family moved back and forth several times over the generations between what is now the U.S. and Mexico. Calafia, for whom the state is named, is a fictional Black warrior queen from a 16th century Spanish novel.
There used to be such a large Black community in Oakland because it was the terminus of the first transcontinental railroad. Black people worked on the railroad as porters — and in many of the dangerous jobs building and running it.
My own great-grandfather was a brakeman, which then entailed running outside on top of the train to throw a brake on each railroad car. Another great-grandfather was a Georgia sharecropper, with his son, my grandfather, being the fourth and final generation on the plantation after ‘emancipation’.
Today, with housing prices soaring, more and more Black people have been forced out of Oakland. In 1980, almost half of Oakland’s population was Black, now that’s down to less than one-quarter. I cried my way all the way through the film The Last Black Man in San Francisco, which highlights the city’s historically Black neighborhoods, the Fillmore District and Hunter’s Point, whose Black residents are squeezed out by prosperous, newcomer neighbors.
That’s the real rub, that we keep pushing, striving, building and learning only to be served up again and again merely as exploitable fodder for American capitalism, rather than its intended beneficiaries. Unlike many Americans, we could never count on accessing a good job without pulling out all the stops like moving to a new state or getting an expensive education — and even then that remained out of reach for most.
Interestingly, that top-flight education has been found to be a key ingredient for successful women and people of color — but far less necessary for white men since they are typically perceived as exuding promise even without the sign-off of the most elite institutions of higher education.
All of this plays out in life sciences, like every other industry in America. Corporations are amoral entities; they serve the interests of their shareholders. No one expects life sciences companies to lead when it comes to racial justice.
Still, the life sciences industry can start by owning up to their own historical and current participation in racial exploitation and neglect in pursuit of healing.
Now is the time to examine how institutional racism influences how you and your company interact with Black and brown neighbors, employees, contractors and service providers, not to mention the patients receiving your company’s treatments, the clinical trial participants, and the clinicians prescribing your products.
Only 3% of biotech employees are Black, according to a recent BIO report. Since the University of California system had to dismantle affirmative action in 1996 under Proposition 209, schools across the board have seen Black enrollment plummet. UC Berkeley saw its Black freshman enrollment fall from about 7% prior to that to less than 3% currently.
(There is a current movement to repeal Prop. 209 and a push to make admissions more like the University of Texas system that admits the top 6% of students from each high school in the state, thereby both diversifying the universities and reducing the incentives for parents to drive up real estate prices in areas with “good” schools.)
Black Americans have long been mistreated research subjects (see Tuskegee Syphilis Experiment, gynecology experimentation on slaves and Henrietta Lacks) as well as underserved and poorly served patients whose doctors often have racist misperceptions about even their basic anatomy.
Not to mention the potential threats from emerging technologies. If social media can be weaponized to imperil democracies and AI facial recognition offers more opportunities for discrimination, it’s not much of a stretch to see how gene editing opens the door to eugenics. Already, genetic tests are being used by governments to more effectively control and manipulate ethnic minorities in China.
If now is the time to heal America’s traumatic past, life sciences companies and institutions have the opportunity to examine, reveal and clean out the racial wounds that they have been a party to inflicting — and to determine their obligations to ensure reparations and a more equal future.
I hope for real changes to address structural racial inequality, but I won’t hold my breath. For me, at the barest minimum in this industry, if we ever have another J.P. Morgan Healthcare Conference that’s jammed in the Westin St. Francis again, I hope to see that the Black attendees outnumber the full ranks of Black security guards.
“For a very long time, America prospered—or seemed to prosper: this prosperity cost millions of people their lives. Now, not even the people who are the most spectacular recipients of the benefits of this prosperity are able to endure these benefits: they can neither understand them nor do without them, nor can they go beyond them. Above all, they cannot, or dare not, assess or imagine the price paid by their victims, or subjects, for this way of life, and so they cannot afford to know why the victims are revolting.
James Baldwin
They are forced, then, to the conclusion that the victims—the barbarians—are revolting against all established civilized values—which is both true and not true—and, in order to preserve these values, however stifling and joyless these values have caused their lives to be, the bulk of the people desperately seek out representatives who are prepared to make up in cruelty what both they and the people lack in conviction. This is a formula for a nation’s or a kingdom’s decline, for no kingdom can maintain itself by force alone.”
― James Baldwin, No Name in the Street
Luke Timmerman, founder & editor, Timmerman Report
When Donald Trump first considered a run for president in 2000, he never rose above 1 percent in the polls.
America changed in the early years of the 21st century.
Trump was always good at harnessing tabloid media weaknesses to his advantage. When our information commons shifted to a 24/7 advertising-based attention-grab economy on the Internet and TV, he was uniquely positioned to seize the moment.
Through feeding the beast with an endless stream of outrage and conflict and provocation and distracting infotainment, he put himself in a position to drive cultural and political conversation in America. By dominating the attention economy, he ended up winning the Presidency in November 2016.
Here’s what we know has happened as of July 23, 2020.
This is a test.
We have a chance to correct this mistake by voting in overwhelming numbers this fall.
If we fail this test, we can expect long-term erosion of US leadership in biopharma. Driving away legal immigrants, 25 percent proposed budget cuts to the NIH, and crude drug price controls are just a few of the anti-biotech policies that this Administration and its enablers supported in office.
Entrepreneurs around the world see an opportunity to poach US biotech talent. See the increasingly bold appeals by ex-US companies, like the one below.
I appreciate our friends in Canada and around the world. But this is up to us in America to chart a different course.
When our information commons is algorithmically transmogrified into a psychological warfare battle zone – not a marketplace for ideas – then it stands to follow that you can’t have a reasoned debate over serious topics like what the price ought to be for a COVID-19 vaccine.
The infodemic, and our nation’s resulting dalliance with a cynical entertainer-in-chief, is the main reason why the US has failed – and continues to fail — to respond properly to the COVID-19 challenge.
Boston-based Longwood Fund closed its fifth fund with $170 million to put to work into biotech companies, largely around company creation.
Burlingame, Calif.-based ALX Oncology raised $185.7 million in an IPO at $19 a share. The company is working on drugs that block the CD47 checkpoint pathway.
Emeryville, Calif.-based Berkeley Lights, a digital cell biology company, raised $204.9 million in an IPO at $22 a share.
Watertown, Mass.-based Pandion Therapeutics, a developer of treatments for autoimmune diseases, raised $135 million in an IPO at $18 a share. (See TR coverage of the company’s Series A financing, January 2018).
London and Raleigh, NC-based Verona Pharma, the developer of treatments for respiratory diseases, raised $200 million in a private placement.
Columbus, Ohio-based Forge Biologics raised $40 million in a Series A financing led by Perceptive Xontogeny Venture Fund. The company is seeking to manufacture viral vector gene therapies for other companies on contract, and to develop its own novel therapies.
New York-based Elevation Oncology raised a $32.5 million Series A financing, led by Aisling Capital. The company is going after genomically defined cancers.
Boston-based Cerevance, a company working on brain diseases, tacked on an additional $20 million to close its Series B financing at $65 million.
San Francisco-based Olema Oncology raised $54 million in a Series B financing to advance its work against breast cancer.
Germany-based BioNTech, the mRNA vaccine and therapeutics company working on a COVID-19 vaccine in partnership with Pfizer, raised $511.5 million in a stock offering at $93 a share.
South San Francisco-based Cytokinetics, the developer of treatments for muscle diseases, raised $201 million in a public offering.
Kiniksa Pharmaceuticals raised $155 million in a stock offering. It says it’s based in Bermuda, which we all know is a place where companies go so they can pay their fair share of taxes to support the education and research that makes for a thriving biotech hub.
Wilmington, DE-based Incyte said its JAK inhibitor ruxolitinib (Jakafi) met the primary endpoint and key secondary endpoints in a Phase III trial of patients with Graft-vs.-Host disease. The results support findings from two previous studies.
New Haven, Conn.-based BioXcel Therapeutics passed a pair of Phase III clinical trials with its sublingual film formulation of dexmedetomidine. The first study was in schizophrenia patients, and the second was for bipolar disorder. The drug appeared to work fast (within two hours), it worked at both a low and high dose, and had a clean safety profile.
San Diego-based Amplyx Pharmaceuticals said in a topline press release that it passed a Phase II clinical trial of a first-line treatment for invasive fungal infections with Candida.
GSK stepped up its game in the mRNA vaccine and therapies arena by partnering with Germany-based CureVac. The big drugmaker paid 120 million Euros upfront in cash, and another 150 million Euros in equity investment to work on as many as five mRNA vaccine and therapeutic candidates against infectious diseases.
Cambridge, Mass.-based EQRx in-licensed a CDK4/6 inhibitor from G1 Therapeutics, to develop a low-cost challenger in that therapeutic category of cancer treatment.
South San Francisco-based Assembly Biosciences struck a deal with BeiGene, which obtained China rights to Assembly’s three drug candidates for hepatitis B virus. Assembly is getting $40 million cash upfront.
Foster City, Calif.-based Gilead Sciences paid $300 million for a 49.9 percent ownership stake, and the exclusive right to acquire South San Francisco-based Tizona Therapeutics, the developer of a novel checkpoint inhibitor against cancer.
France-based Genfit said it will stop investing further in its lead drug candidate for NASH, and will release a new corporate strategy by the end of September.
Chris Morrison, editor, RA Capital Management
Sometimes there are good, patient-friendly reasons to raise drug prices. Proposed legislation that aims to eliminate price hikes on prescription drugs will have unintended consequences.
San Francisco-based Jaguar Health, for two years in a row, lost more than $30 million a year. Revenue from its only product, a diarrhea treatment for HIV patients, was only $5.8 million in 2019.
Peter Kolchinsky, managing partner, RA Capital
The drug works, and it addresses a real need. Market research suggests about one out of every five HIV patients suffers from diarrhea related to their antiretroviral treatment regimens, and there are more than a million HIV patients in the US.
But the drug, crofelemer (Mytesi), wasn’t being prescribed anywhere near that widely. Worse, when the drug was prescribed, insurance companies often refused to pay for it, wearing down doctors and patients with onerous paperwork and phone calls.
Jaguar couldn’t go on like this forever, and had to make a decision earlier this year. It could take the drug off the market, cutting its losses. Or, it could raise the drug’s price to try to get the company to profitability.
So, Jaguar raised the price, roughly three-fold from $668 for a 60-pill supply to $2,206.
Predictably, Jaguar took heat in the press, in part because the hike came after a failed attempt to gain Emergency Use Authorization from the FDA to treat COVID-19-related diarrhea (expanded use into COVID-19 patients might have allowed the company to break-even without raising the price). And Jaguar briefly caught the attention of lawmakers who might soon be considering legislation that would impose mandatory rebates from drugmakers that increase their products’ prices more than inflation. Legislation under consideration by the Senate Finance Committee, the Prescription Drug Pricing Reduction Act, would penalize big price increases, like Mytesi’s, especially for drugs covered under Medicare Part D.
Price hikes are routinely pilloried as attempts to wring every dollar from a vulnerable patient’s wallet. But are all large price increases a form of gouging?
Jaguar’s new price puts it on a path to sustainability. It lets it continue treating HIV patients who were benefitting from Mytesi and provides extra revenue that it can use to expand its patient assistance programs that provide free drug to low-income patients falling through various holes in the US safety net. With higher revenues from the few prescriptions that are covered, Jaguar now helps cover patients’ out-of-pocket costs. It also funds a service that helps physicians navigate prior authorization roadblocks insurers ostensibly rely on to prevent inappropriate utilization; these end up also interfering with appropriate treatment with Mytesi.
An experienced drug marketer might have done all this from Day One, knowing just how hard insurers would push back on paying for a drug like Mytesi. But Jaguar, which sells Mytesi through its subsidiary Napo Pharmaceuticals, wasn’t an experienced drug marketer. In fact, it never expected to be selling Mytesi itself, having counted on a larger partner, Salix Pharmaceuticals. But after a legal dispute in which Jaguar accused Salix of failing to adequately commercialize Mytesi (then known as Fulyzaq), Jaguar regained its rights in 2016, inheriting a drug for a relatively small group of patients, yet being sold at a mass-market low price.
To Jaguar, the common US practice of setting artificially high prices and offering hefty rebates to insurers to remove access barriers was foreign territory. Jaguar eventually learned it needed to inflate Mytesi’s list price just to allow the middlemen to extract a rebate, a sliver of which they would keep to pad their own profits.
It’s not unusual for a drug to be mispriced. Nor is it rare for companies to raise prices for drugs that reach a smaller patient population than originally expected. These tweaks typically go unnoticed when price increases are in the single-digit percentage range, and the companies implementing them are larger. Any corresponding price reductions are typically hidden in negotiated rebates.
For already profitable, large companies, net price increases can preserve or boost profits. For small companies like Jaguar with only one marketable product, the ability to re-price a mispriced drug can mean the difference between surviving and going out of business.
The Prescription Drug Pricing Reduction Act ignores other reasons to raise prices. Sometimes a higher price is necessary for a company simply to manufacture enough of it to meet demand.
Take Bacillus Calmette-Guerin (BCG), an inexpensive, hundred-year-old, live-attenuated tuberculosis vaccine made from bacteria that infect cattle. In the US where TB is rare, the vaccine is used as an immune-stimulating bladder cancer treatment.
When manufacturing problems drove Sanofi from the BCG market a few years ago, the pharmaceutical giant Merck remained as the sole manufacturer. Despite being left with a monopoly, Merck did not do what economists might expect in such a situation – it didn’t raise the price, and it didn’t boost its production capacity enough to serve all the US patients who had previously been getting supplied by Sanofi.
This meant that a lot of bladder cancer patients were being left in the lurch, without access to an effective drug.
Ken Frazier, CEO, Merck
During remarks at the annual BIO convention in June 2019, Merck CEO Ken Frazier acknowledged the problem, noting that Merck only supplied 28% of the US market for BCG when the other manufacturers dropped out. Merck doubled its output fairly quickly, he said, but it is now capacity constrained.
BCG isn’t patented, so anyone is free to jump into the market. There isn’t a strong market incentive to invest in new manufacturing capacity, in part because manufacturing of a live-attenuated virus is non-trivial.
This means Merck is all alone, the sole supplier of an old, tricky-to-make drug, and not making enough of it. If the company wanted to, it could cash in on its monopoly by doubling, tripling, quadrupling, quintupling the price. “But that’s not the right thing to do,” Frazier said. And yet, Merck has not sufficiently invested the necessary millions of dollars it would require to expand production to ensure that patients don’t go without.
This failure is confusing and frustrating to many observers, given Merck’s size and skill in the treatment of cancer.
Merck charges a high price for its newer oncology drugs, like the PD-1 inhibitor pembrolizumab (Keytruda). That monoclonal antibody drug is approved to treat several cancers, including bladder cancer in patients who do not benefit from treatment with BCG. Merck has invested in substantial manufacturing capacity for Keytruda. There is a market incentive to do so, with a patented drug that generates $11 billion-per-year in revenue. Merck has invested to ensure that there will not be any supply shortages of this drug.
Why is Keytruda worth keeping in stock but BCG not worth it? Probably because Merck charges such different amounts for these two drugs. To patients who need BCG, it would be well worth it for Merck to charge whatever it needed to justify keeping BCG as well stocked as Keytruda.
If Merck is trying to be charitable, then it should invest in expanding BCG production. Keeping the price static while not investing in production is robbing patients of a drug that only Merck can currently provide.
But Merck is a business. It shouldn’t be expected to give away its products for free, or charge less than it costs to make them. So then what if raising the price of BCG is the right thing to do?
At some price point, at some level of revenue, it would be worth Merck’s time and capital to expand BCG manufacturing to make enough for every patient who needs it.
Merck should do that, starting today.
Here are two ways this could play out.
Were Merck to raise the price of BCG so steeply that it became a blockbuster on par with its newer cancer drugs, it would certainly attract unwanted attention. Elected officials, and the media, would accuse the company of price-gouging. Raising the price would also invite competitors, who could enter the market, expand the supply and eventually help drive down profit margins.
Or, Merck could raise BCG’s price modestly, making it profitable enough to merit investment in high-quality, reliable production. In this scenario, Merck is unlikely to attract competitors. And while it might attract some attention for increasing its price at all, any negative publicity would be undeserved. Rather, Merck would be striking a balance between charity and gouging, protecting its brand and profitability for the long run.
Hopefully the public, media, and Congress would see this as an act of responsible stewardship of an important medical resource.
In fact, all off-patent, generic drugs should be priced in this zone: high enough to be worth making reliably and low enough that they can still be considered commodities.
Patients who can’t get BCG today because of supply constraints would take either scenario. Any means of increasing production would be an improvement over the status quo. BCG is clearly priced too low. Repricing it would enable Merck and others to treat more patients with a drug that saves lives and spares patients from invasive (and expensive) surgery that often results in permanent impairment. And yet, if Merck raised BCG’s price it could run afoul of proposals like the Prescription Drug Pricing Reduction Act.
For Merck, a huge company generating billions of dollars per year in profit, there is a third scenario. Pressured from all sides, Merck can afford to spend the few tens of millions necessary to expand its manufacturing supply without increasing BCG’s price at all. It would probably lose money doing so. But it would be a true hero to patients while avoiding the PR headache of explaining a perfectly reasonable price hike. Were Merck to do this, it would only be because Keytruda and other branded drugs Merck sells are profitable enough to subsidize investment in BCG supply expansion.
But few companies are as large and diversified as Merck.
Jaguar, for example, couldn’t afford to continue funding production of Mytesi without raising its price. It’s too early to know whether Mytesi’s new price and access programs that this new price supports will save Jaguar. But the price hike gives it a chance to ensure that it can keep supplying patients who rely on the drug.
Any legislation that caps drug price increases should carve out exceptions for the Jaguars of the world facing do-or-die situations that would leave patients in the lurch if they go out of business. New legislation should account for companies that misprice their drugs because they didn’t anticipate the US insurance system’s ability to keep drugs from patients who need them. Commercializing a prescription drug cannot fall under the adage of “measure twice, cut once.” It can take years for a company to undertake “price discovery” and for a drug to find its footing and niche in any therapeutic marketplace.
A more reasonable version of the Prescription Drug Pricing Reduction Act would delay imposition of price increase caps for several years after a drug’s launch to enable companies to determine how payers will handle access. How many patients a drug might reach is a key element of price discovery. This Act would also allow manufacturers to make price adjustments that would support funding of adequate, high-quality supply as a market evolves.
Beyond putting Jaguar out of business and keeping BCG in short supply, passing the Prescription Drug Pricing Reduction Act would have another unintended consequence. It would logically lead companies to launch new drugs at even higher prices than they otherwise might have, to make sure that they don’t risk underpricing them.
If a company knows it cannot tweak its drug’s price, it will err on the side of caution from the start. That means pricing high on the assumption that few patients will be allowed to get the drug (a self-fulfilling prophecy – the higher the price, the more payers push back). That would leave room to negotiate bigger rebates with payers if more patients get treated than expected. But if pricing that drug with the needed safety margin also means setting a price so high that it would trigger outrage, the safest thing might be to not develop that drug in the first place.
That would be the worst unintended consequence of all.
The Prescription Drug Pricing Reduction Act, like other bills circulating around Congress, contains an important reform that is worth preserving. It calls for lowering out-of-pocket costs for patients. Caps on price increases are merely the concession Congress wants in trade. The trade-off between increasing affordability for patients (which also makes it easier for drug companies to sell their products) and seeking value for society goes back to the Hatch-Waxman Act of 1984.
Hatch-Waxman traded an extension of the patent-protected period for branded drugs for the abbreviated generic drug approval pathway and generic interchangeability that brought about the modern era of generic drugs and patent cliffs. Later, the Affordable Care Act expanded insurance coverage to more Americans (which also made it easier for drug companies to sell their products) and established biosimilars as a new path toward affordable, off-patent biologics.
Drugs going generic is the price control we have long had and is the one we need to shore up. As the only aspect of healthcare that can go generic and drop in price, drugs are unique. When factoring in all the money losing biotech companies, the drug industry’s overall profit margins are only around 10-12% – a clear sign that drugs are not systematically overpriced. That patients can’t afford them is purely a function of out-of-pocket costs that insurance reforms can fix.
And so, there is indeed a grand bargain to be struck today that continues in the tradition of Hatch-Waxman and the ACA. Let’s lower out-of-pocket costs for patients (all patients, not just those on Medicare). And let’s make sure that once a drug’s patents expire, society has a reliable, inexpensive supply, protected against both profiteering and shortages. These products should be treated as a National Strategic Resource, the way we treat medical countermeasures to combat pandemics or biological attacks.
For those situations, the US agency BARDA contracts with companies to make medicines at pre-negotiated prices. Those prices are high enough to ensure a quality supply but far lower than what a theoretical monopolist might charge during a pandemic or attack. A similar contract with Merck to produce BCG at some reasonable margin over its cost of reliable production would provide all the BCG doses that US patients need.
Mytesi, by the way, is also complex to manufacture. Jaguar’s drug is purified from the sap of a tree found in the Amazon rain forest. It reached the market in 2012 and remains the only oral medicine approved under the FDA’s botanical drug product pathway. When Mytesi’s patents expire, competing manufacturers would probably struggle to replicate that complex supply chain and might not bother to try, leaving Jaguar with a perpetual monopoly.
Jaguar should harvest a substantial reward for having invented the drug. But when its patents expire, a BARDA-like supply contract would allow society to get long-term value from Jaguar’s invention, simulating genericization.
During the patent-protected years of a new drug’s life, Congress should avoid price controls and their unintended consequences. While there will always be those who assume every price-hike is an act of gouging, it is essential that Congress not fall for that facile conclusion and certainly not adopt harmful legislation in response to it.
America needs Congress to be more sophisticated about pursuing the right reforms to bring about affordable biomedical innovation.
Chris Morrison is an editor at RA Capital Management, where he covers the biotech and pharmaceutical industries. Peter Kolchinsky is managing partner at RA Capital Management and the author of “The Great American Drug Deal.” RA has no position in any of the companies mentioned in this article.
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Today’s guest on The Long Run is Abe Ceesay.
He’s the CEO of Cambridge, Mass.-based Tiburio Therapeutics.
Abe Ceesay, CEO, Tiburio Therapeutics
The company is developing a couple of drug candidates for rare neuroendocrine tumors. It raised $31 million in a Series A financing in January 2019 from NEA, Lundbeckford Ventures, Longitude Capital, and Alexandria Real Estate Equities.
Abe is in his early 40s, and has gotten to this point as a first-time CEO through a pretty unusual journey by biotech standards. He didn’t go to medical school, or get a PhD. He didn’t really know what he wanted to do for a while after graduating from college. He learned about biotech, fixed his gaze on the amazing things happening around Kendall Square, and basically worked his tail off to get in the door as an intern at Genzyme.
Abe thrived in a series of roles at that pioneering biotech company, and that experience propelled him to where he is today.
Abe also happens to be African American. His life experience, especially his youth, is quite different from most people who end up occupying the corner office at biotech companies.
He’s thoughtful and open in this conversation. I think Abe is an inspiring person, and I’m thankful that was he willing to come on the show, and reflect a bit on how the industry can create more space for people from diverse backgrounds who don’t always get the opportunity, but who do have something substantial to contribute if given a chance.
Please join me and Abe Ceesay on The Long Run.
John Maraganore, CEO, Alnylam; immediate past chair, BIO
As a first generation American (John Maraganore) and a proud immigrant (Jeremy Levin), we’re appalled by the relentless, short-sighted assaults by this Administration on legal immigration.
The latest attempt specifically aims to limit, and potentially shut down, immigration to America of the world’s best and brightest minds.
This is precisely the time we need these bright minds.
Jeremy Levin, CEO, Ovid Therapeutics; chairman, BIO
Thankfully, in light of a suit brought by MIT and Harvard, the Administration dropped its proposal that would have prohibited international students holding F-1 visas from staying in the United States if they were taking their classes online, as most students will be doing come fall.
Many international students are in the biological sciences and in medical schools. With COVID-19 spiraling out of control here, there is no good reason to limit the entry of international students and workers. There are good reasons to welcome them and their creative problem-solving skills.
Actions that prevent the best and the brightest students, scientists and technologists from coming to America are an assault on American innovation. These corrosive attacks are coming at an increasing pace. The threat to international students came just weeks after the Administration proposed restrictions on new H1-B worker visas. Officials claimed that the impact of such actions, when combined with extended restrictions on new green cards, would bar as many as 525,000 foreign workers from the country for the remainder of the year.
These workers are needed to do critically valuable work, including helping our country better respond to COVID-19.
These anti-immigrant directives, one after another, are like waves striking a shore; they relentlessly erode the competitiveness of many sectors dependent on driving innovation, including America’s biotechnology sector.
For decades, the U.S. biotech industry was envied around the world for its success in attracting brilliant minds from abroad who sought to advance their education and careers here. The formula for success is rather simple. The generous support of US taxpayers for the National Institutes of Health, the farsighted establishment of excellent research institutions that compete for those federal grants, and a dynamic entrepreneurial economy that translates scientific discoveries into medicines are all part of what have combined to make the US the world leader in biomedicine.
All of it begins with people.
The people drawn to be part of this amazing enterprise as young students – immigrants who came here, began to fulfill their career potential, settled down and started families here – they are the ones who helped make our country the most powerful producer of novel medicines, vaccines, diagnostics and innovations in environmental, industrial and agricultural biotechnology.
Just over half of the 69,000 biomedical researchers in the United States are foreign-born. Of the Nobel Prizes in medicine awarded between 1960 and 2019, nearly half were awarded to immigrants who came to the United States to study and work. International students represent over 20 percent of all STEM degrees at American universities and 44 percent of PhDs.
Many of these graduates gain skills here in the US and then go home to save lives and contribute in their own countries. But the majority choose to stay here: The National Science Foundation reported that nearly three out of four foreign doctorate recipients were still in the United States 10 years after receiving their degrees.
CEOs born outside the U.S. now lead some of the most important biotechnology companies racing to find treatment and vaccines for COVID-19. Research suggests that immigrants are overrepresented compared to the general population as founders of biotech firms, and are more likely to start companies focused on human therapeutics.
Raising barriers now against inventors and scientists places obstacles in front of what our industry can accomplish – and make no mistake, our industry is key to restoring normalcy through new treatments, prophylaxis and vaccines for COVID-19.
The virtual “Go Away” sign we’ve posted in the form of immigration restrictions means scientific researchers, biomedical entrepreneurs, IT experts, doctors and nurses will find someplace else to study and then contribute to the nation that educated them.
We cannot afford to drive them away. Our competitive advantage as a country rests in large part on our ability to continue to attract the best and brightest immigrants.
Diverse perspectives enrich problem solving and lead to scientific breakthroughs. Every time we further restrict immigration or turn away foreign students, we put America and Americans at risk.
Instead, we need to welcome and encourage the best and the brightest to come to the USA. This is a great nation and with them we will retain and enhance our leadership.
Over the past decade, eight top pharmaceutical companies alone have received H-1B approvals for over 3,300 scientists. We’d like to double that, not reduce it. Rather than putting hurdles in front of foreign students, we’d like to welcome them with grants and loans to help them pay for the cost of American higher education.
Rather than giving in to short-sighted policies, we’d like to build upon America’s remarkable scientific achievements and vision of a nation that welcomes immigrants to our shores.
In his final speech as President, Ronald Reagan issued a warning:
“If we ever close the door to new Americans, our leadership in the world would soon be lost.”
It isn’t only the future prosperity of our nation that is at stake. It is our lives, the lives of our children and importantly America’s leadership of the world.
John Maraganore is the CEO of Alnylam Pharmaceuticals and immediate past chair of BIO; Jeremy Levin is the CEO of Ovid Therapeutics and the chairman of BIO.
David Shaywitz
There’s an emerging sense among early stage investors that there are profound opportunities at the intersection of healthcare and technology, and no shortage of white papers from consultants and venture groups addressing this topic.
Consultant white papers tend to be focused on the inevitability of “digital transformation,” emphasize the $X billion dollar opportunity, and argue that if large organizations don’t want to get further behind their peers, these are the steps they need to take, right now.
Basically: carrot, stick, call-to-action.
VC white papers in this space are often written by tech investors seeking to take their talents to the giant pool of money they assume awaits them in healthcare. Having seen the impact of emerging technologies on other industries, they are keen to coax benighted healthcare services and biopharmaceutical companies into a brilliant, tech-enabled future.
These vision documents typically reveal a sophisticated understanding of digital technologies, but a generalized, somewhat broad-brush, somewhat naïve, somewhat condescending view of the industry they’re proposing to either serve or disrupt (ideally one, then the other).
Enticed by what many see as a huge greenfield opportunity, more and more tech VCs seem to be taking a serious run at healthtech, as manifest in a series of dedicated investments.
Most life-science VC firms, on the other hand, seem content, as one leading Boston-based life-science VC partner told me, “to stick close to our knitting.”
In part, this may reflect the remarkable contemporary explosion of life-science innovation, largely independent of digital/data technologies. Given the range of approaches now viewed as viable involving cell therapies, gene therapies, and “multi-specific” drugs, I can appreciate (and have also seen, first-hand) how many life-science investors feel they have their hands full just sorting through this embarrassment of intellectual riches.
Even so, some venture investors with established health credibility clearly are embracing the pharma/tech interface.
By far, the most compelling expression of this I’ve encountered so far was a recent white paper from Bessemer Venture Partners, based in Boston and California. (Disclosure: I have no relationship with the group.)
One of the oldest venture firms around, and known for their arrestingly candid anti-portfolio (missed opportunities), Bessemer has historically pursued investments in both technology and health, including both healthcare services and life sciences. Recently, at least, their focus seems to be on the former — but I may be biased by the entrepreneurs featured on “A Healthy Dose,” a fantastic podcast co-hosted by Bessemer partner Stephen Kraus and focused on companies at the interface of healthcare services and technology.
The recent white paper reveals an insightful view (which is to say, one with which I largely agree) of the promising, emerging interface between tech and pharma.
The whole piece is worth a read, but there are a few highlights that seem particularly noteworthy.
Their central thesis is that the “greatest entrepreneurial opportunities live across the clinical trials value chain.” They acknowledge the activity in other areas (such as “drug discovery engines” — where so much of the AI-in-pharma buzz seems to reside — and digital therapeutics – think of Akili’s EndeavorRX, described by the FDA (the FDA!) as “the first game-based digital therapeutic to improve attention function in children with ADHD.”
In identifying clinical trials as an especially promising area, Bessemer echoes the thinking of pharma leaders like J&J head of data science Najat Khan and others, who consistently emphasize the outsized importance of finding ways to make clinical trials faster, better, and ultimately cheaper using technology.
The Bessemer team also clearly recognizes some of the key adoption hurdles emerging technologies face in pharma. These include both the general challenges of introducing change (overcoming institutional inertia, or perhaps, more accurately, lack of inertia) as well as the more specific challenges of bringing novel digital clinical trial tools and approaches into a highly regulated environment. Uncertainty around FDA acceptance of these approaches, the authors suggest, remains among the most significant hurdles.
Within clinical trials, the Bessemer team sees five somewhat distinct areas of opportunity:
While these represented areas of interest pre-COVID-19, the pandemic has clearly thrown into sharp relief both the value and need for the intensification of investment in these areas.
In their analysis, Bessemer astutely identifies key distinctions and value drivers. For example, within decentralized trials, they wisely distinguish between approaches that basically enable trials at home (like Science37), approaches that emphasize the increased inclusion of community doctors to “diversify the pool of principal investigators” (i.e. expand beyond typical academic honchos from leading centers), and platforms that seek to integrate existing silos.
I also applaud their recognition of the central importance of patient recruitment – a central preoccupation of nearly every single person involved in clinical drug development in biopharma. This is likely to be a point of increasing emphasis as companies explicitly recognize the need to diversify clinical trials to enroll people who historically been underrepresented in the research enterprise.
Bessemer also appreciates that the ubiquity of consumer digital devices doesn’t mean the data generated by these wearables are suitable for use in clinical trials – often, they are not of high enough consistency or quality to be considered “regulatory grade.” One interesting opportunity suggested by Bessemer involves developing regulatory-grade tools on top of these devices.
Not surprisingly, I was especially interested in the discussion of real world evidence, and again, the Bessemer team seemed to capture so much of the nuance.
For example, they distinguish between “traditional” (as much as anything in this fairly new market segment can be considered “traditional”) uses of real-world data to support so-called HEOR (health economics and outcomes research) activities, generally related to reimbursement, and emerging uses.
Of particular interest: the use of virtual/synthetic control arms, which under some circumstances can help support regulatory approval; reportedly, it was this capability that prompted Roche’s $2 billion acquisition of Flatiron Health.
Bessemer also notes that many startups are concentrating (at least initially) on oncology data, while some are emphasizing other areas, like ophthalmology (Verana), rare disease (RDMD), neurological illness (Blackfynn), and mental health (Holomusk). Even here, some focus on extracting value from existing data sources, while others are trying to create “novel and differentiated data sets.”
Finally, Bessemer highlights the opportunities in “supply chain optimization,” and in particular, the need to “connect various stakeholders to improve upon manufacturing execution systems.”
Here, my improvised reaction was “yes, and….” As we’ve repeatedly heard from Novartis and others, there are huge opportunities to drive unsexy but critically important operational efficiencies throughout pharma, and tools that can catalyze this will be critically important.
Bessemer also highlighted several subtle strategic points that were especially insightful. One example: emphasizing the value of close collaboration with the FDA, not only in seeking specific approval, but, at a deeper level, in helping the agency evolve its policy, as it seeks to define where it needs to go in the future.
This seems exactly right; agency leaders including former Commissioner Scott Gottlieb and current Deputy Director Amy Abernethy have explicitly recognized the rapid evolution of this area, and have acknowledged the need to find a way to incorporate the opportunities afforded by new technology while remaining laser-focused on the FDA’s underlying commitment to ensuring public safety. By engaging in this policy discovery process, entrepreneurs can support their own companies while also helping the agency achieve this shared long-term goal.
One area that I might have explicitly emphasized as well is the need to similarly engage with biopharma partners; successful pharmatech (as Bessemer calls this space – I like the term) entrepreneurs will appreciate the need, especially initially, to deeply engage with and learn from pharma partners, so the technology the startup is developing is aimed squarely at a critical problem the pharma company faces.
Companies skilled at enterprise sales (Palantir comes to mind) are especially good at burrowing in really intensively, to surface the most suitable problems to effectively address.
My advice to pharmatech entrepreneurs:
Startups afforded the opportunity to work with pharma partners would do well to use their time searching for and constantly refining what they could be doing, not just pitching and pushing what they’re already doing.
At the same time – and this is something Bessemer explicitly emphasizes, in the context of platform-as-a-service offerings, and may be true more generally – entrepreneurs must balance the ability to deliver highly bespoke solutions with the goal of developing “scalable platforms that can be deployed quickly and generate predictable recurring revenue.”
Successful examples of this, I’d argue, include Veeva in biopharma, and Epic in healthcare. The traction of Epic, in particular, highlights the value of even highly-customized solutions, provided they are viewed (at least by those paying for them, and hopefully — though perhaps not in Epic’s case — by those using them) as delivering exceptional value to the client as well.
There are tremendous opportunities in pharmatech for entrepreneurs who understand not only the potential of emerging technologies but also the business needs – and organizational dynamics – of contemporary biopharma organizations. The almost unimaginably high costs and exceptional complexity of clinical drug development represents an attractive, high-value attack surface, where the utility of effective solutions can be rapidly, palpably appreciated.
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Luke Timmerman, founder & editor, Timmerman Report
Last week in these pages, I wrote a full-throated defense of Tony Fauci.
A few days later, the White House sadly started doing what it so often does. It embarked on a dirty tricks smear campaign against someone who speaks inconvenient truth to the public.
Peter Navarro, who doesn’t know what he’s talking about when it comes to public health or epidemiology or virology, published a rather unconvincing 269-word hit piece against Dr. Fauci in USA Today.
This scurrilous attack backfired, as predicted. I continue to stand in defense of Dr. Fauci, and continue to stand in defense of science itself as the best method we have for understanding the world.
On this, we cannot yield.
We are the world’s No. 1 biomedical superpower, thanks to decades of public-spirited investments that people of both parties have supported since the end of World War II. Now we are the absolute worst in the world in caring for our citizens and protecting our country from the COVID-19 scourge. It’s July 17 and we still have no national testing strategy.
We’re racking up 75,000 cases a day, and the numbers keep going in the wrong direction.
We are now starting to see refrigerated trucks parked outside hospitals in hotspots of Texas and Arizona, to keep the dead bodies from decomposing as they stack up faster than the funeral industry can handle. It’s time to place bulk orders of body bags.
It didn’t have to be this way, more than 4.5 months after COVID-19 officially arrived on US soil. We didn’t have to suffer this badly.
This catastrophe has nothing to do with our scientific abilities, and everything to do with our divisions, our cynicism, our polluted information ecosystem, and our dark political moment.
The only choice is for people to stay vigilant. Masks, distancing, and hand-washing are what we have to reduce the toll of suffering and death. Remdesivir may be helpful for some in the hospital, dexamethasone looks to be quite encouraging for severe hospitalized patients, and therapeutic antibodies and vaccines look promising.
There’s a path out of this mess, if we can muster the patience and empathy for our fellow citizens who have given in to despair. How else can you explain people defending the Administration as “doing the best it can” after reading this chilling piece by Gov. Larry Hogan of Maryland, a Republican?
Our country can do much, much better. We will.
Dr. Fauci is tough as nails. He has no office to run for. He will not be distracted. He’ll keep his eye on what matters – real-time science-based advice that saves lives.
Crucially, in America, civil servants like him can’t be fired by some political hack.
He’s not going anywhere. He’s standing firm.
So must we.
Vaccines
Cambridge, Mass.-based Moderna, the developer of the mRNA vaccine candidate for COVID-19, said it passed Phase I with a safe vaccine candidate. All 45 volunteers developed neutralizing antibodies against the SARS-CoV-2 virus. The mean titers – the average concentration of these important antibodies in the blood – was higher than what’s typically seen in convalescent plasma from recovering COVID-19 patients. This detailed Phase I report – much more clear than the premature company press release from May 18 — was published in the New England Journal of Medicine. Based on the findings, Moderna is moving ahead with Phase III development, with the 100-microgram dose. The still-early findings can now be compared roughly against the Pfizer / BioNTech vaccine candidate. Pfizer CEO Albert Bourla, in an interview with TIME magazine, repeated his bullish belief in his company’s vaccine program.
The labs, test sites, and recruiting infrastructure for HIV vaccine trials represent a massive public investment in the US since the 1980s. Now, a huge effort has gone into turning this aircraft carrier in the direction it must go – toward COVID-19 vaccine studies that can enroll tens of thousands of subjects at the drop of a hat. Read the Washington Post article on this effort spearheaded by the NIH. I will be interviewing Larry Corey, the principal investigator of the HIV Vaccine Trials Network at Fred Hutch and a key architect of the COVID-19 vaccine trial initiative, today (July 17) at the Life Science Innovation Northwest virtual conference.
The Oxford University team, partnered with AstraZeneca, tells The Guardian it hopes to move ahead with the controversial decision to run human challenge studies. For the unfamiliar, this is a study where subjects get the experimental vaccine, and then get directly exposed to the SARS-CoV-2 virus to see if the vaccine offers direct protection from getting sick. Researchers have generally shied away from this design, as there’s a chance of someone becoming deathly ill from the virus, with little in the therapeutic toolkit to rescue them in that event. Young people perceived to be at lower risk will be the ones enrolling. If the gamble pays off, it could give strong evidence of effectiveness in a short study and with fewer people necessary for statistical power.
Treatments
San Diego-based Equillium said its partner in India, Biocon, ran a study that showed hospitalized patients with ARDS from COVID-19 had a significantly better rate of survival in a small study of 20 patients on itolizumab, compared with 10 patients randomly assigned to best supportive care. The drug is thought to work against cytokine storms, by inhibiting the activity and trafficking of pathogenic T cells that release pro-inflammatory cytokines. The drug is also being tested for uncontrolled asthma and lupus nephritis.
Gilead issued a press release with a retrospective – not a gold-standard prospective, randomized, controlled study — which suggested remdesivir improves survival rates for patients with severe COVID-19.
Hydroxychloroquine didn’t work for hospitalized COVID-19 patients, according to the investigators in the UK on the RECOVERY trial. Separately, researchers in Spain reported it didn’t help people with mild cases.
Politics
Public Health
Features
The Worst of Times, and Best of Times (for some)
Science
Patient Access
Schools
Financings
Cambridge, Mass.-based Relay Therapeutics raised $400 million in an IPO priced at $20 a share. The computational drug discovery company boomed on first-day trading to close at $35.05 a share. (Listen to CEO Sanjiv Patel on The Long Run podcast, Jan. 2020, and TR coverage from December 2018).
South San Francisco-based Nkarta Therapeutics, the developer of engineered Natural Killer cell therapies for cancer, raised $252 million in an IPO at $18 a share. It closed yesterday at $36.35 a share – a $1.1 billion valuation. (See Nkarta in Stacy Lawrence’s TR article from May on how engineering techniques from CAR-T are being brought to other cell therapies).
San Diego-based Poseida Therapeutics raised $224 million in an IPO at $16 a share. The company is working on genetic engineering for cell and gene therapies.
Waltham, Mass.-based Adagio Therapeutics was founded with $50 million in a Series A financing. It’s a spinout from Adimab, the antibody discovery shop founded by Tillman Gerngross. Adagio is turning its antibody discovery expertise toward neutralizing antibodies against SARS-CoV-2, SARS-CoV-1, and other related bat coronaviruses that virologists are watching.
Philadelphia-based Imvax raised $112 million in a Series C financing to advance its personalized neoantigen based therapy for glioblastoma and other solid tumors.
Deals
Cambridge, Mass.-based Dewpoint Therapeutics, the company developing biomolecular condensates for drug discovery, formed a collaboration with Merck to work on a new treatment approach to HIV. (See TR profile of Dewpoint’s “membraneless organelles” by Asher Mullard, April 2019).
Cambridge, Mass.-based Blueprint Medicines struck a partnership with Genentech to develop and market pralsetinib for patients with RET-altered cancers. Blueprint is getting $675 million in upfront cash, $100 million upfront equity investment, and retains 50-50 commercial rights to US profits.
Personnel File
Cambridge, Mass.-based Scholar Rock said Tony Kingsley is replacing Nagesh Mahanthappa as CEO. Nagesh has been CEO since 2012, and took the company public among other achievements. Kingsley was previously CEO of Taris Bio.
C4 Therapeutics, a protein degradation drug discovery company, hired William McKee and Jolie Siegel as chief financial officer and chief legal officer, respectively.
Arkuda Therapeutics added Pascale Witz to its board of directors.
Ribon Therapeutics named Jodie Morrison as chair of its board of directors.
Racial Equity
MassBio, the trade group in Cambridge, Mass. led by CEO Robert Coughlin, issued an Open Letter to executives, outlining specific things the industry pledges to do to fight back against the centuries of injustice against African Americans in this country. See the letter, and the many prominent people who have signed it.
Some people apparently don’t think white privilege exists. They might want to read this piece on Professionalism 101 for Black Physicians, by Duaa AbdelHameid in the New England Journal of Medicine.
Ken Frazier, CEO of Merck, had some strong words for America’s power elite in the wake of George Floyd’s killing. But his own son has had some barbed comments about whether it’s all just talk. Read Ken’s thoughts about this moment of reckoning in Harvard Business Review. See excerpt below tweeted by Meg Tirrell of CNBC.
Ruth Etzioni, Full Member, Division of Public Health Sciences, Fred Hutch Cancer Center
Long ago, in the early days of the pandemic, models were everywhere in the news.
As our lives were upended and everything became uncertain, models were there to provide some predictability in the face of the unknown.
Never mind that predictions varied wildly – between models, and even within the same model at different time points. The models agreed that this was going to be bad (though at the time it was hard to believe).
They scared us, and we listened.
This is a story about models and how they help guide us as we navigate the coronavirus crisis. But it is also about guidance itself – and where to look for it.
The early models that predicted the course of the pandemic were almost uniformly epidemiologic or SEIR (Susceptible-Exposed-Infected-Recovered) compartmental models.
SEIR compartmental models envision disease as progressing through the SEIR phases and they keep track of how many people are in each phase at a given time. By using data about how long it takes to become infectious after exposure, and then how long it takes to show symptoms and making a few other assumptions, they estimate R0, the number of people a person with the virus infects, and then extrapolate into the future on the basis of this number. An effective R0 below one means the epidemic is shrinking rather than growing. A key goal of public health is to bring the R0 below this threshold number.
In Seattle, where I live, an SEIR compartmental model was developed by the Institute for Disease Modeling. The IDM is a research institute within the Bill & Melinda Gates Foundation, but is distinct from the Institute for Health Metrics and Evaluation at the University of Washington.
The Institute for Disease Modeling showed that the effective R0 had been reduced from around 3 in February — an alarming sign of a fast-spreading epidemic — to a much more manageable R0 of around 0.6 on April 15.
At that point in mid-April, with states under various stay-at-home orders, the talk was all about re-opening. We were banding together to flatten the curve, and we were making progress. People wanted to know: When would it be safe to emerge from lockdown, and go back to something more normal?
Here, models became useful too. With their compartmental model, the IDM modelers could project how the infection’s trajectory would change if activity and contact resumed at different levels and dates. One projection might assume reopening beginning on May 15, another might assume Memorial Day weekend, and so on. Different levels of activity could be captured by setting the effective R0 to the value estimated at different times in the past.
The IDM models from that decisive moment in mid-April made it clear that re-opening before May 15 would not be advisable. Re-opening at a later date might be OK so long as activities of daily life and the number of human contacts people have each day or week did not increase to pre-pandemic normal levels.
What increases in activity were sustainable and what could we do to keep a lid on R0? Could we re-open restaurants and bars? What size gatherings could be allowed? How about schools?
More complicated questions such as these call for a different type of model.
Agent-based models are more realistic models that simulate individuals within entire populations, interacting in home, work, and community settings. These models are driven by huge databases that describe population mobility and contact patterns, often gathered from GPS-enabled smartphone devices. With this information, modelers can tweak activity and contact in ways that are much more detailed than the SEIR models.
In principle, agent-based models can overcome a key deficiency of compartmental models – what we refer to as their mass action nature. Mass action means exactly that – compartmental models generally do not capture the heterogeneity in population contact and behavior – the superspreading events like choir practices, meat packing plants, long-term care facilities and large parties. They most often smooth everything out to one average rate of transmission. In principle, agent-based models can do better by zeroing in more clearly on the links between our behaviors and viral spread.
Agent-based models are rare because they are so data- and labor intensive to build. The IDM’s COVASIM is an agent-based model that has been deployed to explore questions about how much contact tracing might be needed to keep the lid on things in King County, home of Seattle and about 2.2 million people in Western Washington. COVASIM is now being harnessed to address school reopenings.
One thing is already clear: school reopenings must be considered in the context of the ambient level of infection in the community. If the virus is not firmly under control in the surrounding community — with R0 confidently driven down to a safe level — we can’t even begin to think about reopening schools.
But there are many things that agent-based models can’t do. They don’t have a detailed map of the land; they don’t capture all the meat-packing plants, long-term care facilities or fraternity houses that are potential hotspots. They don’t tell us whether we should open restaurants at 25% or 50% capacity or at all. They don’t tell us about behavior in bars change as the night goes on. They don’t provide some of this fine-grained detail down at the local level, complete with straight lines between cause and effect, that many officials would like to have at their fingertips when making policy decisions.
This is where I pause and ask myself: Do we really need models?
At an individual level, my take is – no, not like we did in the early days of the outbreak. We don’t need models to make the decisions that will help to keep us safe and keep infections in our community under control. There are basically two words here for those who can, supported by tons of virology data, epidemiologic data, and stories from around the world: NO GATHERING.
That means no getting together with others outside of your household for any length of time without facemasks and without distance. Every online search for “COVID outbreak at _,” – fill in the blank – church service, choir practice, extended family gathering, wedding, funeral, restaurant or bars, will turn up tons of stories. Try it.
We know what causes the virus to spread – being indoors in close contact with people over a sustained period of time. We need to avoid these opportunities to get sick or make others sick. And we need to find ways to protect those who can’t avoid them: our essential employees, our food processing workers, our supermarket clerks, our healthcare teams including their non-medical support staff, our undertakers, our dentists and dental hygienists, and our bus drivers. It’s a no-brainer. We don’t need models. The global experience is our guide at this point, more than four months after we became aware of the COVID-19 in the US.
But at a policy level, models are still important despite their limitations.
Without models, we end up with policies that move too fast and are guaranteed to increase the effective R0 way beyond sustainable levels. Reopening policies that permit gathering in restaurants, bars and religious services also send a signal that we are out of the woods, and can give people a false sense of security to organize their own large private events and get togethers that would only add to the danger.
With models, we can hope to develop evidence to support policies that may be unpopular, such as mandating face masks indoors, closing bars, or disallowing religious services. We can project how many lives a statewide mask mandate might save. We can quantify the size of gatherings that can be sustained, rather than get by on guesswork. We can zero in on the ambient effective R0 that will allow schools to reopen and work towards achieving it and sustaining it.
In the end, we do need models. But we also have enough data in hand to know what to do. We must stop looking for an authority and take responsibility. If we don’t, en masse, then we don’t need models to tell us it’s going to get a whole lot worse in the coming weeks and months.
Please subscribe and tell your friends why it’s worthwhile. Quality journalism costs money. When you subscribe to Timmerman Report at $169 per year, you reward quality independent biotech reporting, and encourage more.
Please subscribe and tell your friends why it’s worthwhile. Quality journalism costs money. When you subscribe to Timmerman Report at $169 per year, you reward quality independent biotech reporting, and encourage more.
Ankit Mahadevia, CEO, Spero Therapeutics
This week’s unveiling of the AMR Action Fund, a $1 billion public/private consortium anchored by 23 pharmaceutical companies to support the development and commercialization of antibiotics, is a welcome development in the fight against antimicrobial resistant infections.
The money is important, but it was very encouraging to see the leadership of major pharmaceutical companies — Pfizer, Merck, and Eli Lilly, as examples among them — personally devoting their time and attention at an event shining the spotlight on infectious disease research. Increasing long-term commitment to the antibiotic business in a meaningful way starts with a renewed, full-throated endorsement from the corporate top.
This effort, if executed well, has the potential to accelerate the scope and scale of research and development that is critical to a long-term strategy against bacterial threats. A $1B investment is meaningful. Big Pharma and biotech can further this mission by supporting academic labs and early stage companies with creative ideas to cast a wider net, and support these projects for the long-term time horizons that are required.
We can also advocate together for a sustainable reimbursement solution so that antibiotic developers know they have a chance at being adequately rewarded for the risks they take for a wider range of applications than is currently feasible.
Taking a long-term view, here are a few humble thoughts on how best to apply this new momentum in service of a robust ecosystem:
The focus for antibacterial drug developers has to be on sustainable pipeline investments. While $1B is a lot of money, the late stage programs that this fund may support will need to stand on their own feet for us to get to where we want to be as an ecosystem.
Further, a scattered collection of small-scale bets that support work for a year or two will not be enough. We have to build viable businesses — i.e. companies that a range of investors see a reason to invest in for many years — as a starting point. It’s not enough to wait for Congress or private insurers or healthcare provider networks to create new rules for the road, so we can have a viable antibiotic R&D business model.
I wrote at length here on Timmerman Report in April about the hallmarks of sustainable pipelines for this strategically important area of the biotech industry:
For the time being with the system we have, it’s our responsibility as antibiotic developers to do the following:
Further, we should focus on developing our treatments with real urgency, and not allow ourselves to get bogged down in too much regulatory or operational complexity. In this case, speed enhances sustainability.
Sustainability can’t be emphasized enough. Bacteria continue to develop resistance. We need to have a steady, productive R&D engine to keep turning out potent new antibacterials if we want to keep up in the fight.
The focus of the AMR Fund is an area of great need – ensuring that medications with clinical merit have the resources to make their way to patients as they approach approval. There is an opportunity to take this commitment one step further and use the resources available to further accelerate the early stage research that makes future weapons against bacteria possible.
Our colleagues at the CARB-X and REPAIR funds (Full Disclosure: Spero has received investment from both groups) are doing wonderful work advancing dozens of early stage technologies towards translation and early clinical development; there are still more good ideas than there are resources.
The scale and longer time horizon of Big Pharma would be an excellent complement to ensure we are advancing a diversity of good ideas to combat the broad and unpredictable threat of infection. We applaud our colleagues at Roche, Pfizer, and Merck that continue to make investments in this field whether in collaboration or in-house. There is an opportunity to build further on these efforts.
Along with a commitment to the AMR Fund, these same pharma companies emphasized their commitment to advocating for the structural reform necessary to tackle a broader set of infectious threats.
Now that a broader subset of our industry has more skin in the infectious disease game, there is a tremendous opportunity for a unified voice to catalyze a pragmatic solution to the (primarily US) reimbursement system that stifles antibacterial innovation.
In years past, this has been seen a niche issue – someone else’s problem. Within our ecosystem to date, at times we have fragmented in our support of different initiatives in part depending on how they affected each of us individually. This new momentum, and the newly unified approach among Big Pharma players, is an opportunity to band together around a solution that has the best chance to make it to the finish line.
Our view at Spero is that the best type of incentive is the one that passes; it is highly unlikely that every drug developer will be an equal beneficiary of any solution. Our hope is that this new, broader coalition can play the long game with a stronger, unified voice in Washington to make one of the several workable solutions under discussion into a reality.
This era of COVID-19 and the AMR Fund have demonstrated the best that Pharma and biotech can offer society. This industry is willing and able to move quickly against the biggest challenges facing humanity. This AMR Action Fund is an extension of this; while COVID-19 was largely unforeseen, we can see the AMR issue coming. We should use this time wisely to get ahead of the curve.
The AMR Fund has given our collective mission new momentum; it is now up to us as drug developers to make the right pipeline choices, to execute, and continue to work together.
My thanks to the Spero team, Tim Hunt, Aleks Engel from the Novo REPAIR Fund, and Kevin Outterson from CARB-X for their thoughtful critiques, policy understanding, and commentary
