The Readout Damian Garde & Meghana Keshavan

Who’s paying $40 billion for Alexion?

Activist investors tend to look at companies the way hammers consider nails, but what’s often left out of their agitating for a sale is the simple fact that every transaction requires a buyer.

Yesterday, hedge fund giant Elliott Management published an open letter to the board of Alexion Pharmaceuticals, criticizing the company’s recent acquisitions and concluding that “the best approach for the company and its stakeholders is the immediate exploration of a sale.” Alexion has been on a steady decline since Elliott first bought into the company in 2017, and its attempts to diversify, including last week’s $1.4 billion deal for Portola Pharmaceuticals, have been little help.

The thing about Alexion is it’s not in that bad of shape, which means it wouldn’t sell for cheap. The company carries an enterprise value of more than $22 billion and expects revenue exceeding $5 billion for the year. Companies like Celgene and Allergan became acquisition targets in years past because they were deeply distressed. By contrast, Alexion has lost only about 20% of its value since 2017. Judging by past pharmaceutical mergers, an acquisition of Alexion could reach above $40 billion, and there might be fewer companies willing to spend that kind of money than Elliott imagines.

After decades of underfunding, sickle cell disease is a booming field

Despite being the most common inherited blood disorder, sickle-cell disease has long received less scientific attention and research funding than other genetic disorders. Now, with the rise of gene therapy and genome editing, doctors are facing the welcome problem of having to consider a multitude of approaches.

As STAT’s Sharon Begley reports, there are more than two dozen sickle-cell studies set for presentation at the virtual American Society of Gene and Cell Therapy meeting this week. Among them are preclinical data from Beam Therapeutics, which uses a next-generation form of CRISPR to edit out the defect behind sickle cell. There’s also an attempt to replicate helpful mutations and tinker with the genome to produce the hemoglobin that sickle-cell patients lack.

It’s early-stage stuff, and the likes of Beam will have to prove that it works better than the gene therapies already in late-stage development. But to the many researchers who lived through years of drought when it came to scientific advances, there’s plenty to be optimistic about.

Read more.

CAR-T may yet become a sustainable business

CAR-T has demonstrated staggering benefits for certain advanced cancers, but the futuristic medicine has never taken off commercially for two reasons: It costs a lot of money, and hospitals have a hell of a time getting reimbursed for it.

But that, as STAT’s Nicholas Florko reports, could be about to change. The Trump administration has put forward a plan to dramatically increase the amount of money the Centers for Medicare and Medicaid Services pays to hospitals that administer CAR-T. The change, if approved, would apply only to patients covered by Medicare, but private insurers typically look to federal policies for signs of how they should reimburse.

Such a change could shift the fortunes of Gilead Sciences and Novartis, the companies behind the only two FDA-approved CAR-T therapies. As it stands, hospitals that offer CAR-T do so at a roughly $50,000 net loss, according to an analysis from the conservative American Action Forum, forcing medical to centers to either absorb the cost or turn patients away.

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Gilead’s disconnect with Wall Street isn’t going away

Yesterday, Gilead Sciences said it signed a royalty-free deal with a bunch of generics companies, allowing them to manufacture the Covid-19 treatment remdesivir in 127 countries around the world. And then its market cap fell by $3 billion.

The move is just a blip in what has been a volatile year for Gilead's stock, but it underlines a strange dynamic between the company’s management and its shareholders. Time and again, Gilead has stressed that it doesn’t see the coronavirus pandemic as a business opportunity, only for analysts to respond with variations of the same question about how much money remdesivir might make.

Yesterday’s agreement mostly covers low-income nations where the margin on remdesivir, whatever its price, would likely be negligible for a company the size of Gilead. But every time Gilead has passed up an opportunity to frame the drug as a money-making opportunity, there’s been a corresponding hit to the stock price. If Gilead keeps its word once remdesivir wins approval in wealthy nations, Wall Street might be deeply disappointed.

More reads

  • 6 takeaways from the Senate’s surreal virtual hearing on the U.S. coronavirus response. (STAT)
  • Kintor Pharma sets Hong Kong IPO in motion. (Global Capital)
  • Moderna’s experimental coronavirus vaccine gets FDA’s ‘fast track’ status. (CNBC)
  • Vivek Ramaswamy’s brother, Shankar, spins out on his own, launching audacious gene therapy play. (Endpoints)

Thanks for reading! Until tomorrow,

Wednesday, May 13, 2020


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