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The Readout Damian Garde & Meghana Keshavan

Is AstraZeneca putting its vaccine in front of the FDA?

Can Illumina make some friends at the FTC? And is this Ken Frazier’s farewell? We’ll hear answers — or hear analysts valiantly try to squeeze out answers — to those and many other questions during what will be a crowded earnings week for the drug industry. Here are three highlights to look out for.

  • Illumina, presenting today at 5 p.m. ET, will face Wall Street for the first time after the FTC sued to block its proposed merger with the cancer testing firm Grail. That suit marks the second time in about 18 months that federal regulators have balked at Illumina’s efforts to expand by acquisition. And while Illumina’s revenue has rebounded from a pandemic slump, you can bet there’ll be questions about just how the company intends to grow under such federal scrutiny.
  • Merck’s Thursday morning presentation will be its last earnings call before longtime CEO Ken Frazier retires on June 30. Much of the focus will likely be Merck’s mixed success in combating Covid-19, with two halted vaccines and one abandoned therapy. But the past year has also seen Frazier rise to the global stage as a CEO willing to speak out about injustice and push for the business world to take a bigger role in society.
  • Finally, on Friday morning, AstraZeneca will get umpteen chances to answer a simple question: When are you submitting your Covid-19 vaccine for FDA review? Back in March, when AstraZeneca put out that fateful Phase 3 press release, the company said it would file for authorization in early April. Now it’s nearly May, and the U.S. appears to have enough vaccine supply to meet domestic demand. What’s the plan?

The FDA is still open for business

Amid all the sturm und drang about a suddenly conservative FDA, what would have been minor box-ticking news was worth $200 million in market value to a small biotech company.

Yesterday, Axsome Therapeutics said the FDA accepted the approval application for its depression treatment and agreed to a priority review, which shortens the process from 10 months to six months. In process terms, that’s not surprising. Axsome’s therapy met its goals in a Phase 3 study, and the bar for accepting an application is naturally lower than the one for approving a drug. 

And yet Axsome’s share price rose more than 10% on the news. That’s likely a reflection of the widespread, if loosely founded, perception that the FDA has been cracking down on drug companies seeking new approvals. A series of surprising decisions have spooked investors and raised the perceived risk facing any company making its case before the agency. Whether those are isolated cases or signs of a trend is impossible to say, but Axsome’s comparatively predictable FDA experience suggests there hasn’t been a sea change.

Drug pricing might have fallen out of Biden’s agenda

Tomorrow, President Biden will give his first address to a joint session of Congress, laying out his sweeping policy proposals for infrastructure and economic recovery. And Democrats have no idea whether he’ll talk about drug pricing.

As STAT’s Rachel Cohrs reports, the 11th-hour confusion is reminiscent of the intra-party infighting that doomed drug-pricing measures under President Trump, who vocally supported them. This time, it’s the Democrats who can’t seem to get on the same page, with powerful lawmakers unsure whether the president’s stated commitment to lowering drug prices will make it into his early-term policy priorities.

That’s alarming to those advocating policies to lower prescription drug costs, who worry that putting drug prices on the back burner will waste a precious political moment in which Democrats have a chance to attach meaningful legislation to a large, fast-moving bill.

Read more.

Enzyvant tries again with its rare disease therapy

To most of us, the thymus is one of our obscurer bits, belonging with the pineal gland and the gall bladder on the list of lumps you may have heard of but couldn’t pinpoint on a bodily map. But being born without one is bad news: No thymus means no T cells, which means no functional immune system. The condition is usually fatal by 2.

There is a potential treatment, which involves taking bits of thymus removed during pediatric heart operations, slicing them up, washing out their T cells, and then planting them into little surgical troughs in a child’s thigh. And it works: By the end of 2019, 101 children had gotten these transplants at Duke University Hospital since 1993, and 73 of them had survived. But when Enzyvant, the company developing the treatment, applied for FDA approval, the agency said no. Now, some 16 months later, Enzyvant is ready to re-apply.

“There were no concerns around the safety or efficacy, meaning we didn’t have to rerun any clinical trials,” CEO Rachelle Jacques told STAT yesterday. But her team did answer some manufacturing questions by renovating some of their facilities, which meant that no one could get the operation for about a year. They hope Duke can resume treating patients on an experimental basis by May, though an open clinical trial, and are expecting an answer from the FDA on Oct. 8.

Perhaps this is how the SPAC trend comes unraveled

For the individual investor, the allure of buying into a blank-check company is that some blue-chip firm does all the hard work of finding a merger target, and then you participate in all the upside once the whole thing reaches the public markets. But as many SPAC investors are now learning, if the market doesn’t like that merger, the individual participates in all the downside while the blue-chip firm does quite well.

The Wall Street Journal zoomed in on MultiPlan Corp., a health care services company that went public in an $11 billion SPAC merger last year. In the months since, MultiPlan’s share price has fallen about 30%, meaning those individual SPAC investors are in the red. But thanks to the architecture of SPAC agreements, in which sponsors get 20% of the company in exchange for a nominal investment, the firm that picked MultiPlan as a merger target is sitting on a seven-fold return, despite the lagging stock price.

That’s probably irksome for the individual investors who put their faith in the SPAC sponsor, former Citigroup banker Michael Klein. And it threatens to undermine a core tenet of the recent SPAC trend: that buying into a blank-check firm democratizes the IPO process by letting individual investors in on the ground floor. If more and more SPACs go the way of MultiPlan, creating haves and have-nots among purported equals, the blank-check boom could become financial history.

More reads

  • CEO of vaccine maker Emergent sold $10 million in stock before company ruined Johnson & Johnson doses. (Washington Post)
  • More pharma companies should make the move toward B Corps sustainability. (STAT)
  • X-Bi­otix sus­pends R&D ef­forts amid dearth of fi­nanc­ing for an­tibi­otics re­search. (Endpoints)
  • Millions sign petitions urging the U.S. to back a WTO proposal for greater Covid-19 vaccine access. (STAT)

Thanks for reading! Until tomorrow,

Tuesday, April 27, 2021


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