Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
The Year’s Highlights and Lowlights in Drugs, Diagnostics, and Dysfunction
2015 was a memorable year for biopharma, and not just because of Martin Shkreli.
While the “pharma bro” CEO made worldwide headlines for his December 17 arrest, three months after his now-former company hiked the price of Daraprim more than 5,000%, biopharma also had plenty of other news this past year. Some of them were uplifting stories generated by investors, philanthropists, researchers, and even regulators.
Other news was unpleasant, coming from companies and their executives facing commercial, clinical, and other failures, some of them self-inflicted. And still other developments were less unfortunate than unpleasant to see unfold, from litigation over a key technology, to the boardroom battles taking shape at underperforming companies, to the hot pursuit of tax breaks by multi-million-dollar heads of multi-billion-dollar companies. Not surprisingly, money figured into many of the year’s most memorable stories, from billion-dollar collaborations to multi-billion-dollar mergers and acquisitions that further concentrated the industry’s biggest players into a shrinking number of expanded companies.
Below are summaries of 12 highlights and lowlights of 2015, evenly divided among four “good” or positive developments, four “bad” or negative developments, and four unfortunate or “ugly” stories that significantly shaped biopharma—with links, where available, to GEN stories with additional details.
BIOSIMILARS: FDA finally approves first knockoffs
Europe is still a decade ahead of the U.S. in approving biosimilars, which hold promise as an antidote to sky-high drug prices, but the nation has finally moved off dead center. The FDA approved the nation’s first biosimilar drug on March 6—Zarxio™ (filgrastim-sndz), a variation of Amgen’s Neupogen (filgrastim), launched in September by Novartis’ Sandoz unit. The biosimilar is one of three for which Sandoz submitted filings in 2015 to the FDA. The agency accepted for review in October a biosimilar variation of etanercept, and last month agreed to review biosimilar pegfilgrastim. As of November 30, 59 programs were in the FDA’s Biosimilar Product Development Program, while the Center for Drug Evaluation and Research (CDER) has received meeting requests to discuss the development of biosimilar products for 18 different reference products, CDER spokesman Kristofer Baumgartner told GEN.
CHARITABLE GIVING: Bathing biopharma in big bucks
The rich may be getting richer, but at least a few of them shared their wealth with research institutions and other worthy disease-fighting efforts. Among examples: Memorial Sloan Kettering Cancer Center in May received the largest gift in its history, $150 million from longtime board member David H. Koch toward a new outpatient facility, The David H. Koch Center for Cancer Care. Conrad Prebys donated $100 million to the Sanford-Burnham Medical Research Institute, which honored the San Diego developer and philanthropist by renaming itself the Sanford Burnham Prebys Medical Discovery Institute. The Bill and Melinda Gates Foundation committed an initial $75 million in May to a network of disease surveillance sites in developing countries, the Child Health and Mortality Prevention Surveillance Network (CHAMPS). Four months later, the Gates foundation awarded Novavax a grant of up to $89 million toward a Phase III clinical trial for the respiratory syncytial virus (RSV) F Vaccine, set to begin in the new year.
FINANCING: Reaping the rewards
Until investors soured on biopharma during the fall, biopharma reaped the fruits of a Wall Street bull market and increased investor confidence. During the first three quarters of 2015, private biotechs raised a total $6 billion in 371 venture capital deal. That was 50% above the $4 billion raised during Q1-Q3 2014, but only 8% above the 344 deals recorded during that period. As GEN noted in a recent List, the top three private biopharmas raising capital in 2015 accounted for more than $1 billion combined: Intarcia Therapeutics ($300 million), Immunocore ($320 million), and top money-raiser Moderna Therapeutics ($450 million). Biotech also saw brisk activity among companies going public, with a total 64 IPOs launched or pending in 2015 (as of December 18); another 14 IPOs were withdrawn and five, postponed, by companies citing market conditions. The public furor over drug pricing since September has led to fears by investors that the federal government will limit what companies could charge for therapies, sparking a selloff of biotech shares. Since its July 20 high of $4,165.87, the NASDAQ Biotechnology Index has fallen 17%, to $3,449.01 on December 18.
IMMUNO-ONCOLOGY: Big deals, promising results
Cancer immunotherapies produced big-money collaborations during 2015, and more importantly, they showed promising results. Amgen and Kite Pharma set the tone for the year in immuno-oncology on January 5, when they agreed to develop “the next generation” of Chimeric Antigen Receptor (CAR) T cell immunotherapies through an alliance that could generate a combined billion-plus dollars for both companies. Another potentially 10-figure collaboration emerged in June when Celgene and Juno Therapeutics launched a 10-year partnership covering cancer and autoimmune disease immunotherapies; that deal could yield about $1 billion for Juno. More breathtaking than the deals, however, have been the results to date. In December, Novartis presented Phase II results showing its CAR T cell therapy CTL019 produced an overall response rate of 73% (8/11) in adults with follicular lymphoma, and 47% (7/15) in adults with relapsed or refractory diffuse large B-cell lymphoma; an encouraged Novartis expanded its Phase II CTL019 clinical trials to the European Union, Canada, and Australia.
DRUG PRICES: The sky’s the limit
2015 brought sky-high drug prices to the top of the news. Under Martin Shkreli, Turing Pharmaceuticals infamously raised the price of toxoplasmosis drug Daraprim from $13.50 to $750 a pill, then defended the 5,000% hike. Pelted by bad publicity, Shkreli said the price would be rolled back, then defiantly reversed course a few weeks later; Shkreli resigned a day after his arrest. Unsurprisingly, politicos embraced the issue: Hillary Clinton unveiled a plan designed to prevent steep hikes. House of Representatives Democrats formed an “Affordable Drug Pricing Task Force,” while U.S. Sens. Chuck Grassley (R-IA) and Ron Wyden (D-OR) denounced Gilead Sciences for the $84,000 price of a course of hepatitis C drug Sovaldi (sofosbuvir). Potential solutions—measurement tools assessing the value of cancer drugs—emerged from the American Society for Clinical Oncology (ASCO), the European Society for Medical Oncology (ESMO), and a team led by Peter B. Bach, M.D., MAPP, at Memorial Sloan Kettering Cancer Center.
THERANOS: Putting Edison to the test
Theranos’ business model and diagnostic tests came under withering scrutiny from The Wall Street Journal in October. One report found the company’s Edison lab testing instrument was used for only 15 of its 240 tests as of December 2014 according to four former employees. The other report said Theranos stopped collecting tiny vials of blood drawn from finger pricks for all but one of its tests, following an unannounced FDA inspection. The disclosures contrasted with Theranos’ since-withdrawn website claim that its “breakthrough advancements have made it possible to quickly process the full range of laboratory tests from a few drops of blood.” CEO Elizabeth Holmes responded by promising to increase her company’s transparency, telling Bloomberg Businessweek that Theranos invited independent medical experts to examine its technology and discuss their findings publicly. Theranos will also publish testing data submitted to the FDA in an undisclosed medical journal, she added.
LAYOFFS: Companies sharpen their axes
Several biopharmas sliced headcount throughout the year. Zoetis disclosed plans to axe between 2,000 and 2,500 workers, and close 10 manufacturing plants, by 2017 after activist investor William Ackman demanded the Pfizer animal-health spinoff cut costs. Allergan eliminated at least 1,542 jobs in four states and Iceland during the first half of 2015. Biogen chopped 11% of its workforce or about 880 jobs in October. GlaxoSmithKline (GSK) disclosed plans to axe 981 jobs at various locations while adding jobs at its two R&D hubs. Parexel began eliminating 850 jobs or 5% of its workforce in June, while Servier said it would axe 610 positions in November. That same month, Complete Genomics told California officials in November it would cut 179 jobs, following a restructuring by Chinese parent BGI that included a halt to development of its flagship product, the Revolocity genome sequencer.
TRIALS GONE AWRY: Results of the worst kind
Some clinical studies this year produced results worse than simply failing to meet endpoints. In December, Zafgen disclosed the death of a second patient in an ongoing Phase III study assessing its lead drug candidate beloranib in people with Prader-Willi syndrome. The FDA placed a partial clinical hold on the study after the first patient death, then made the hold permanent following the second. Kite Pharma in August revealed a patient death in an ongoing Phase I/II trial of KTE-C19 in patients with refractory aggressive non-Hodgkin's lymphoma but said the death was unrelated to the treatment; the FDA did not order a clinical hold. In May, Amgen ended co-development of brodalumab with AstraZeneca, citing what it called “events of suicidal ideation and behavior,” that it believed was likely to require restrictive labeling. But on September 1, AstraZeneca found a new partner for brodalumab in Valeant Pharmaceutical International, in a deal that could generate up to $445 million plus for the pharma.
CRISPR: Legal battle-royal clouds technology’s future
CRISPR may be the most significant genetic engineering advance in a generation, yet it’s stuck at the center of an old-fashioned legal battle-royal over patent ownership. Feng Zhang, Ph.D., his institution the Broad Institute, and MIT are fighting a challenge by two CRISPR co-developers to the technology’s first patent. Dr. Zhang was listed as inventor and awarded No. 8,697,359—assigned to both institutions—following fast-track review by the U.S. Patent and Trademark Office (USPTO). That patent was awarded ahead of an earlier application, still pending, listing as inventors Jennifer Doudna, Ph.D., of the University of California, Berkeley, and Emmanuelle Charpentier, Ph.D., of the Helmholtz Centre for Infection Research, who were among six co-authors of the first paper on CRISPR published in Science in 2012. The CRIPR wars are unlikely to be affected by the discovery of newer gene editing technologies; late last year, Dr. Zhang and colleagues published details of their CRISPR-Cpf1 editing technology.
EMBATTLED CEOs: Shareholders seek change at the top
The corner office was anything but safe for several biopharma CEOs. ARIAD Pharmaceuticals CEO Harvey J. Berger, M.D., who founded the cancer drug developer in 1991, announced his retirement at year’s end, under pressure from activist investor Alex Denner’s Sarissa Capital. Sarissa also stoked changes at Aegerion Pharmaceuticals, where CEO Marc Beer resigned in July, four months after the firm won an independent board seat, with a second independent seat agreed upon for 2016. Arena Pharmaceuticals parted ways with Jack Lief, a co-founder who had been president and CEO since 1997, amid disappointing sales for obesity drug BELVIQ that appeared to explain why the company in October laid off 35% of its U.S. workforce. Some embattled CEOs survived: Acucela’s Ryu Kubota, M.D., Ph.D., was reinstated as chairman, president, and CEO in May, five months after a board majority removed him, then lost a court fight to stop a shareholders’ meeting where the ouster was reversed. And in October, the Delaware Court of Chancery sided with Aladar A. Szalay, Ph.D., who was removed as chairman, CEO, president, and CSO last year in disputes among the company’s founders over the issuing of stock and his management.
INVERSIONS: Lure of lower taxes draws Pfizer and others
Who can resist big tax savings? Biopharmas are no exception: Pfizer’s $160 billion planned acquisition of Allergan, announced November 23, would cut the pharma giant’s corporate tax rate from 25% to 18%. Little wonder, then, that Pfizer led a parade of companies pursuing tax-slicing “inversion” mergers; Pfizer-Allergan was announced the very day U.S. Department of the Treasury Secretary Jack Lew warned that his agency will issue new rules designed to limit economic gains from the transactions. In April, Canadian-based Valeant Pharmaceuticals International completed its $14.5 billion acquisition of Salix Pharmaceuticals, after topping a lower bid that was eventually withdrawn by Endo International. Another inversion deal was completed in February, when Mylan acquired the outside-U.S. branded generic drug business of Abbott Laboratories, in a deal that formed a new public company that combined with Mylan to re-domicile in the tax-friendlier Netherlands. However, two huge inversion mergers never got off the ground, as Horizon Pharma withdrew its hostile $1.1 billion offer for Depomed, while Perrigo shareholders on November 13 rejected Mylan's $26 billion hostile acquisition offer
IN TROUBLE: Valeant, Northwest Bio, and yes, Shkreli
It wasn’t jacking up the price of Daraprim (see above) that had Martin Shkreli arrested at his New York City apartment, handcuffed and perp-walked on December 17. It was what federal prosecutors allege he did to his previous company, Retrophin, and two hedge funds before that: “(Shkreli) essentially ran his companies like a Ponzi scheme, where he used each subsequent company to pay off defrauded investors in the prior company,” Brooklyn U.S. Attorney Robert Capers declared. Shkreli has pleaded not guilty to the charges, which could land him up to 20 years in prison.
Landing in a different sort of trouble was Valeant Pharmaceuticals International, which in October severed ties with specialty pharmacy Philidor Rx Services after short seller Citron Research accused Valeant of using specialty pharmacies to store inventory and record the transactions as sales. Valeant denied wrongdoing but later revealed a $100 million option to acquire Philidor, and has seen its share price fall by more than half since its high of $262.52 on August 5. Also under fire was cancer vaccine developer Northwest Bio. Its stock plunged from $12.24 on July 23 to $4.39 on December 18, in part after allegations from short seller Phase Five Research accusing the company of paying more than $300 million to CEO Linda F. Powers and companies controlled by her; she told The Wall Street Journal the allegations are “baloney.” Earlier this month, Northwest overruled its largest shareholder, Neil Woodford, on who should investigate the allegations.