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The Readout Damian Garde

Is pharma walking into a disaster?

The drug industry knows its way around a congressional inquiry. When they ask about drug prices, mention the riskiness of science. When they ask about out-of-pocket costs, point to the confusing network of middlemen. And when they ask about profits, be sure to mention patients.

But this time might be different. Later this morning, seven pharma executives will testify before the Senate finance committee, and the zeitgeist is not going in their favor. On Sunday, a New York Times editorial declared that “It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment,” and, yesterday, the chairman of that committee issued an ominous warning on Twitter:

That same day, the lobbying group PhRMA debuted a new TV ad, one that might offer some clues to the counter-narrative. The minute-long commercial rattles off a few of the industry’s recent scientific successes before fading into a title card that reads “America is the leader in medical innovation. Let’s keep it that way.” The final words are “fight to protect breakthroughs,” implying that by skewering the drug industry, lawmakers are standing in the way of scientific progress.

Anyway the hearing starts at 10:15 a.m. ET, and you can watch it right here.

Everyone’s buying biotech again

Yesterday brought the news that Roche would pay nearly $5 billion for Spark Therapeutics and that Ipsen would exchange more than $1 billion for Clementia Pharmaceuticals. The news sent biotech stocks higher, likely because “pharma might buy this” is a pretty core investment thesis for those who bet on startups, and a pair of buyouts looks like validation.

But perhaps more encouraging than pharma’s interest in buying is its willingness to spend big. Roche’s deal for Spark represents a roughly 120 percent premium to the company’s most recent closing price, and Ipsen is paying a nearly 75 percent markup for Clementia. And, as The Wall Street Journal pointed out, there’s a trend: In January, GlaxoSmithKline paid a 110 percent premium for Tesaro, and Eli Lilly acquired Loxo Oncology at 68 percent above its prior close.

The downside to all this looks to fall entirely on the buyers. As the omniscient Twitter user AndyBiotech observed, recent high-dollar transactions on the part of Gilead Sciences and Celgene were great for investors but, at least in the early going, debatable worth the money.

It all comes out in the FDA wash

In 2017, the company Karyopharm halted a study of its blood cancer drug, saying in a press release that it had no hope of meeting its goals. What the company didn’t say, however, was that taking its drug actually hastened patients’ deaths compared to placebo, a revelation that didn’t come until Friday.

That’s because, as STAT’s Adam Feuerstein reports, Karyopharm’s drug is now under FDA review, which means the agency gets to publicly divulge its side of the development story. In that trial, overall survival for patients who got Karyopharm’s drug was 94 days compared to 170 days for patients treated with chemotherapy, a fact not mentioned in the 2017 press release.

The news adds Karyopharm’s name to a growing list of biotech companies caught downplaying bad news by the harsh light of FDA scrutiny.

Read more.

The pains of corporate adolescence

As the biggest wheels of pharma head to Washington and biotech’s mid-size upstarts stoke bidding wars, spare a thought for the middle children of the drug industry.

Large-cap biotech companies — like Biogen, Regeneron, and Gilead Sciences — fared the worst in Cowen’s latest survey of investors. In the poll, which analysts dubbed the Sentimometer, 66 percent of respondents said biotech’s biggest firms are already fairly valued, while 10 percent said they’re too expensive. By contrast, the lion’s share of respondents thought small- and mid-size biotech’s were undervalued.

The results underline a nagging concern for the Biogens of the world. Everyone loves a growth story, and everyone loves the potential of an acquisition. But once you get to a certain size, it’s hard to keep growing, and it’s often harder to imagine someone paying top dollar in a buyout.

More reads

  • Is Allergan too ‘sanguine’ over new competition for its best-selling Botox treatment? (STAT Plus)
  • Doctors plan to test a gene therapy that could prevent Alzheimer's disease. (MIT Tech Review)
  • GE inks $21 billion biopharma sale to Danaher. (Reuters)

Thanks for reading! Until tomorrow,


Tuesday, February 26, 2019


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