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Thursday, November 10, 2016

The Readout by Damian Garde & Meghana Keshavan

Welcome to The Readout, where we keep you on top of all the biotech news. Follow us on Twitter: @damiangarde@megkesh, and @statnews.

Biotech, made great again

While various indicators financial, emotional, and otherwise have reacted badly to the impending reality of a President Trump, biotech is having a grand old time.

The industry soared on Wall Street, with two of the biggest the Nasdaq biotech indexes notching their largest one-day spikes since 2008, according to Bloomberg.

“Today was my portfolio's best day in a long time — maybe ever,” tweeted one trader.  “Sorry for the language,” wrote another, before using some unrepeatable terms to say just about the same thing.

The main reasons are obvious. One, markets hate uncertainty, and the end of a brutal campaign, no matter the winner, removed some risk from the whole system. More important, biotech investors seem to believe Trump (and the Republican Congress around him) will be softer on the industry's pricing practices than Hillary Clinton would have been.

The other major factor is a bit more nuanced. As it stands, multinational companies have to pay a 35 percent repatriation tax if they want to bring money from overseas into the US. Trump has promised to cut that figure down to 10 percent, and biotech investors think that might herald a wave of dealmaking.

Companies like Gilead, Amgen, and Pfizer have billions of dollars parked overseas. Freeing up transcontinental money movement could lead to an explosion of buyouts, which investors, naturally, quite like.

Otherwise, no one really knows what a Trump presidency means

The president-elect has long promised to repeal and replace the Affordable Care Act. But how? And with what? And is that even what people want? STAT's Dylan Scott digs into some key questions about the future of Obamacare.

Elsewhere, there are a whole bunch of unanswered questions about how Trump will deal with the world of science, including funding basic research, continuing Obama-era projects, and appointing new heads of key federal departments.

And scientists themselves are more than a little concerned about the field's future under Trump. “I hope we’re going to be able to accommodate the new reality," former NIH Director Dr. Harold Varmus said. "But someone needs to give the transition team a tutorial.”

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The Kadmon experiment isn’t exactly thriving

Kadmon, the debt-laden biotech founded by a pair of brothers well-acquainted with the penal system, is going through a rough patch.

Months after settling for a $75 million IPO, the company has been forced to lay off 15 percent of its workforce, cut back on expenses, and rejigger its credit agreement, all in an effort to save about $9.1 million over the next 12 months. The plan is to move forward with a pipeline of repossessed treatments, the most advanced of which are in Phase 2.

Meanwhile, the company lost another $117 million last quarter and had just $55 million of cash going forward. But Kadmon is still treating its execs well, noting that its 22 percent increase in expenses was “primarily related to an increase in share-based compensation of $33.4 million.”

Kadmon's share price has fallen about 55 percent since the July IPO, but it remains good to be a Waksal.

About that 'something' that 'came up' at Alexion

Remember last week when Alexion was weirdly late to file a quarterly report and, when asked about it, said “something came up?”

Turns out it’s not a great big buyout deal that will help shareholders retire early but rather an internal investigation that will probably make them a little uneasy.

The company is looking into claims made by a former employee around the sales of Soliris, its banner product. (Soliris, which treats a rare blood disease, also happens to be the world’s most expensive drug, listed at about $500,000 a year.) So far, the company’s outside investigators haven’t found any evidence of fraudulent Soliris orders, Alexion said, “but at this time it is uncertain when this investigation will be complete and what the results of such investigation will be.”

All of which serves as a reminder that not all biotech mysteries end with good news.

More reads

  • Merrimack Pharmaceuticals is reportedly looking to either sell or out-license some of its pipeline drugs. (Reuters)
  • Pharma may have defeated Prop 61, but state battles over pricing will continue. (STAT)
  • Following through on a promise, Martin Shkreli played his exclusive, $2 million Wu-Tang Clan album over Periscope to celebrate Donald Trump's presidential victory. (AP)

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Thanks for reading! Until tomorrow,

Damian & Meghana

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