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The Readout Damian Garde & Meghana Keshavan

Later today, STAT is hosting a pair of exclusive conversations with Merck's Julie Gerberding and Seema Verma, administrator at the Centers for Medicare and Medicaid Services. The event starts at 12:15 ET. Sign up here to participate.

A drug company that doesn’t develop drugs is raising $2 billion

After more than two decades of operating as the drug industry’s payday lender, Royalty Pharma is going public, plotting what would be the sector’s largest-ever IPO.

The company, founded in 1996, is angling to sell 70 million shares at up to $28 each. The offering, expected to price next week, would raise about $2 billion value Royalty Pharma at roughly $16 billion. The current IPO record-holder in biopharma is Moderna, which debuted at a valuation of about $7.5 billion.

As its name would suggest, Royalty Pharma is a business built on buying royalties in other people’s drugs, whether by paying academic institutions, mid-sized biotechs, or multinational pharma companies. That means buying into Royalty Pharma’s IPO is less like backing a drug developer than it is like choosing a portfolio manager. 

Read more.

Why data on three patients were worth $1 billion for Sarepta

Yesterday, Sarepta Therapeutics said that three patients with a form of muscular dystrophy showed greater production of a key muscle protein after getting the company’s in-development gene therapy. The news sent Sarepta up about 8%, adding $1 billion to its market value.

That might seem like an incongruous reaction, but, as STAT’s Adam Feuerstein reports, the early data have broad implications for Sarepta’s future. 

The gene therapy in question, SRP-9003, treats a subset of patients with the already rare limb-girdle muscular dystrophy. But it shares the same viral backbone as SRP-9001, a gene therapy for the more common Duchenne muscular dystrophy. In the eyes of Wall Street, early signs that the Sarepta’s limb-girdle gene therapy is safe and effective bode well for the future of SRP-9001, which will have key data of its own early next year.

Read more.

Covid-19 has reignited a contentious FDA debate

The fear of coronavirus-related drug shortages led the FDA to relax the rules that govern compounding pharmacies. But public health experts, mindful compounders’ checkered past, are warning the agency of the risks of making those changes permanent.

As STAT’s Nicholas Florko reports, compounders argue that the Covid-19 crisis has only underlined the importance of their industry — and the unnecessary nature of some of the strict rules that govern it. Maintaining some of the emergency measures would improve patients’ access to vital drugs at a lower cost, according to industry groups.

On the other side, public health activists are urging the FDA to keep in mind why it cracked down on compounders in the first place, pointing to serious contamination problems that proved fatal for some patients.

Read more.

Analysts aren’t buying a Gilead-AstraZeneca merger

The weekend’s news that AstraZeneca might be considering a takeover of Gilead Sciences didn’t exactly make waves on Wall Street, as analysts found little in the way of incentive for either party to join forces.

As STAT’s Ed Silverman reports, the two companies appear to be on different trajectories that don’t quite complement one another. AstraZeneca has a resurgent oncology business and a warmly regarded pipeline that should pay off in the years to come, whereas Gilead has a positive short-term outlook with major questions about the future. And from Gilead’s perspective, the company’s current valuation doesn’t account for management’s sweeping ambitions, meaning selling now would amount to admitting defeat.

To Wolfe Research analyst Tim Anderson, there’s no compelling reason for AstraZeneca to spend the more than $100 billion it would cost to buy Gilead, and there’s not much to suggest the other party is looking to sell. As Anderson wrote in a note to investors, “this is why our first response to the news was ‘huh?!’”

Read more.

More reads

  • How a family’s frantic search for remdesivir — and a 330-mile road trip — reshaped Tennessee’s Covid-19 response. (STAT)
  • Pandemic boosts Chinese biotech cred. (Reuters)
  • Could Trump turn a vaccine into a campaign stunt? (New York Times)
  • To allocate remdesivir fairly, give it to communities that bear a disproportionate burden of Covid-19. (STAT)

Thanks for reading! Until tomorrow,

Tuesday, June 9, 2020

STAT

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