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The Readout Damian Garde

Trump didn’t exactly come through for pharma

The pharmaceutical industry, despite its outsized lobbying budget and enviable power in Washington, just took a sizable loss when it comes to trade policy.

As STAT’s Nicholas Florko reports, the successor to NAFTA will not include a provision that delays biosimilar competition in Canada and Mexico, amounting to a direct rebuke of the drug lobby. An earlier version of the deal would have promised 10 years of biologics exclusivity. The final agreement makes no mention of it, meaning new biologics will get a five-year monopoly in Mexico and an eight-year one in Canada.

And from pharma’s perspective, that’s bad.

“Honestly, if you looked and said what would Bernie Sanders, what would Elizabeth Warren have negotiated, you probably would not have had a worse [provision] negotiated by them,” one lobbyist said.

Read more.

One stat that might explain biotech’s surge

This year — not to mention this week — has been big for biotech buyouts, with a roughly 30% jump in acquisitions compared with the last five years on average. But beyond the raw number of deals, the most encouraging stat for investors might be related to price.

According to an analysis from EvercoreISI, in 2019, the average acquirer paid a 114% premium over the target company’s stock price. Over the previous five years, that average was just 67%. That means, essentially, that the check-writers of major pharma think the market is undervaluing biotech, which is encouraging if you’re a person who invests in biotech.

Whether that trend will continue is a matter of debate. It’s possible that the recent spate of acquisitions — and the spike in average premiums — was a result of biotech’s mid-year slump in valuations. Acquirers saw a chance to buy and didn’t mind paying for the privilege. But going into 2020, biotech is at an 18-month high, meaning it might not look like such a bargain to would-be buyers.

Speaking of biotech being lucrative

People are still pouring money into biotech venture capital.

The latest evidence comes from Omega Funds, the Boston-based VC that just raised $438 million, as STAT’s Kate Sheridan reports. That makes for Omega’s biggest fund to date, and it follows a trend of biotech VCs raising more money, more often amid escalating demand from the pensions and family offices that front the cash.

Meanwhile, the pace of investment has followed suit. Biotech was the No. 1 sector in terms of VC deals last quarter, according to PwC, and three of the five biggest funding rounds went to companies developing drugs.

Read more.

The year’s other big depression data

About a week after Sage Therapeutics’ disappointing results in a major depression study, Axsome Therapeutics is on deck to disclose data of its own, and the market seems optimistic.

Axsome’s share price has nearly doubled since Nov. 1, driven largely by hopes that AXS-05, a combination treatment, can succeed in a pair of studies expected to read out before the year ends. It’s a high-stakes proposition. According to SVBLeerink, a complete failure would take Axsome’s stock back down to single digits, while two success would double its value. 

That all comes with the caveat that clinical trials in depression are notoriously difficult — and difficult to predict — which is to say nothing of the skepticism tied to AXS-05, which combines an ingredient found in cough suppressants with generic Wellbutrin.

More reads

  • ‘Dump it down the drain’: How contaminants from prescription-drug factories pollute waterways. (STAT)
  • Oral immunotherapy can be a game changer for many with food allergies. (CNBC)
  • Oral immunotherapy can be a game changer for many with food allergies. (STAT)
  • GAO finds ongoing problems with FDA inspections of foreign drug facilities. (STAT Plus)

Thanks for reading! Until tomorrow,

Wednesday, December 11, 2019

STAT

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