What if biotech peaked in 2018?

Venture deals, IPOs, buyouts, follow-on offerings — they’ve all been on the decline since 2018 in biotech, which could be cause for concern in the sector.

As STAT’s Kate Sheridan reports, a new analysis from BIO illustrates just how volatile biotech has been in recent years. One closely watched biotech index surged 550% from 2009 to 2015 but oscillated so much in the intervening years that it started 2020 back where it was five years ago.

But there are signs that 2018 was something of a zenith. IPOs and venture capital dollars fell in 2019, and, thanks in part to a global pandemic, 2020 might be similarly sluggish. The biggest contrast comes in acquisitions. Where 2018 saw a bevy of high-dollar deals, and 2019 brought a large number of mid-size buyouts, 2020 is “likely to be a down year for acquisitions,” said BIO’s David Thomas, the organization’s vice president of industry analysis.

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J&J’s coronavirus vaccine is ahead of schedule

Johnson & Johnson is moving up the timeline for its in-development coronavirus vaccine, edging closer to competitors in what will amount to an NIH-sponsored bake-off.

The company said yesterday that it will begin Phase 1 trials in July, two months ahead of its earlier projection. Meanwhile, the NIH told the Wall Street Journal that it has laid out a plan to fund and conduct Phase 3 trials for vaccines from Moderna, AstraZeneca, and J&J. Moderna’s study will begin in July, followed by AstraZeneca in August and J&J in September.

The trio of trials will be a massive undertaking, enrolling nearly 100,000 people at more than 100 sites in total. And the results will provide plenty to talk about.

Scientists warn against cross-trial comparisons, but it’ll be impossible not to consider the datasets against one another. And, if one or more of the vaccines ends up working, the pricing conversation will take on a novel dimension. When the federal government funds the entire Phase 3 process, how much can companies justify charging for the finished product?

Why forgoing Covid-19 profits could undermine the whole drug industry

Speaking of pricing, an interesting facet of the coronavirus crisis has been watching critics and proponents of biopharma make the exact same point to support completely opposing ideas: Why should responding to Covid-19 be different from any other disease?

The latest example comes from Geoffrey Porges, the well-regarded SVB Leerink analyst, in a note about why Gilead Sciences deserves to profit from the Covid-19 drug remdesivir. In his argument, Porges notes major drug companies, including Johnson & Johnson and AstraZeneca, have promised to price their future coronavirus products on a non-profit basis, a decision he calls “monopolistic and irresponsible.”

“If Covid medicines are provided at no cost, then why shouldn’t treatments for other severe diseases, for example Alzheimer’s disease or MRSA, also be provided at no profit or cost?” Porges wrote. “If the largest companies in the industry are willing to indicate that they can afford to give away their medicines and vaccines in developed markets, then that could easily affect the public perception of the industry overall — why can’t they give away medicines for other diseases, too?”

Essentially, refusing profits on Covid-19 would amount to giving the mouse a cookie that ends up unwinding a trillion-dollar industry. Porges’s words could easily have been written by biopharma’s staunches critics, whose only quibble would be the idea that that’s a bad thing.

Biotech’s unicorn era may be over

Yesterday, the data firm CB Insights put out a list of 50 future unicorns, and among the many software firms with inscrutable names like Gong, Goat, and Tink, there was not a single biotech company.

CB Insights picks companies using an algorithm “that combines a company’s financial health, the amount of traction it has, and the strength of its market.” (There’s a whitepaper on it, if you’re into that.) Among the 50, only 8% were involved in health care at all, and they’re focused on data and delivery, not inventing drugs.

Biotech’s exclusion is a reminder of just how much things have changed in recent years when it comes to unicorn sentiment. Circa 2017, Moderna, Intarcia, and Samumed were biotech’s biggest private firms. Moderna pulled off an IPO in 2018 but, prior to the coronavirus pandemic, struggled to maintain its private valuation on the public markets. Intarcia's plans were thwarted by an FDA rejection, leaving it with an uncertain future. And Samumed’s reported $12 billion valuation is almost certainly unsustainable.

Now that public investors are consistently willing to buy into early-stage biotech companies, the idea of staying private long enough to reach a $1 billion valuation seems less and less practical.

More reads

• A patient’s microbiome could have a major impact on how drugs affect them, new research confirms. (STAT Plus)
• 23andMe says it’s ‘part of the problem’ on racial inequity. We asked geneticists what the company can do about it. (STAT)
• Scientists don’t know what immunity to the coronavirus looks like. Figuring it out could speed vaccine development. (STAT)
• States file a third lawsuit accusing dozens of generic drug makers of price fixing. (STAT Plus)