Friday Five - The JP Morgan debrief

Ref: Friday Five Desk

What set the tone at the healthcare industry’s biggest investment conference this week? You can read a more detailed analysis of key talking points here and here. Our preview of the event is here. And finally a prospective rundown of the inflection points that will drive industry sentiment during 1Q18 can be found here.

The wait for deals continues…

Investors were unable to celebrate any major M&A news this week, having hoped the conference would kick-start activity and provide clear direction that 2018 will improve on last years’ metrics (the smallest number of pharma deals with the lowest cumulative value since 2013).

There are signs, however, that the pace of consolidation is likely to increase. A consistent message from management at US large cap drug companies centred on the clear financial benefits, which will stem from recently enacted tax reform, while Celgene announced it will acquire Impact Biomedicines at an upfront cost of $1.1 billion; not the deal shareholders were expecting but arguably a bold one nonetheless.

While tax reform may facilitate bigger deals, or “mega-M&A,” suggests Brad Loncar, CEO of Loncar Investments, smaller product and platform-specific deals will be driven by something else - a  desperation among Big Pharma and biotech to revive their R&D pipelines. Having curtailed external investment last year, they will probably end up overpaying, says Loncar.

In Europe, Novo Nordisk launched a public pursuit of Ablynx having seen two prior offers - the second worth $3.1 billion - turned down.

Is neurology the next oncology?

It is according to Biogen CEO Michel Vounatsos, who forecast a positive outlook for the company’s current and future growth drivers in both the multiple sclerosis and spinal muscular atrophy markets.

In the latter, Biogen expects to move a gene therapy (which it suggests will be complementary to its Spinraza franchise) into clinical development by mid-year. In the former, a recent deal by Biogen to in-license Alkermes’ ALKS8700 is “very much designed,” to position this therapy (a prodrug of Tecfidera) as a successor to Tecfidera, Alkermes CEO Richard Pops told FirstWord.

Pfizer may have exited neuroscience drug development but Big Pharma continues to have a strong legacy in this space, Sage Therapeutics chief scientific officer Al Robichaud - himself a veteran of Wyeth and Merck & Co. - told FirstWord on the sidelines at JP Morgan.

That said, Robichaud believes that success for companies such as Sage, which is built around science developed by ex-Big Pharma scientists and clinicians, is already spurring the creation of start- up companies focused on central nervous system (CNS) disorders.

Developing effective therapies to treat neurological conditions has not got easier, however, and recent progress - see Sage’s development-stage therapies for postpartum depression and major depressive disorder - should not suggest otherwise, says Robichaud.

Pfizer’s exit is testament to this and drug development doesn’t get any harder than Alzheimer’s disease - just ask Axovant. Any last glimmer of hope that intepirdine could be effective at treating the effects of dementia were dashed this week. To add insult to injury Axovant’s initial press release erroneously referenced a higher p-value in a subset of patients, subsequently corrected.

Shire has also decided that it is too soon to exit the CNS market despite its overarching strategy to focus on rare diseases. It confirmed this week that it will retain its attention-deficit hyperactivity disorder (ADHD) business but operate it separately ahead of a potential spin out.

Bluebird, Juno drive CAR-T debate

As expected, there was a lot of investor focus on CAR-T and gene therapies at JP Morgan, albeit if new disclosures from leading players in this space were somewhat limited in impact. Bluebird bio hopes to secure FDA approval for three of its late-stage products by 2019, including its BCMA CAR-T bb2121.

Novartis and Gilead Sciences said little about early commercialisation of the CAR-T therapies Kymriah and Yescarta, while Juno - in presenting data for their potential rival product JCAR017 - talked up once again the ability to treat patients in the outpatient setting, facilitated by its impressive tolerability profile.

Walmsley professes agnosticism

GlaxoSmithKline CEO Emma Walmsley rode into San Francisco with her pharmaceutical “dream team,” including recent hires Hal Barron and Luke Miels. Walmsley faced questions nevertheless about potentially expanding the company’s consumer healthcare business and conceded GlaxoSmithKline was casting an eye over Pfizer’s non-prescription drug business. However, she stressed that it was short-sighted of investors to assume her background in consumer healthcare would be detrimental to future evolution of the pharma business. FirstWord spoke at length to senior vice president and head of Immuno-Inflammation R&D - keep an eye out next week for further details.

China deals - there were a few

Loncar suggested this was the “most notable trend,” at this year’s conference, and while there was a steady stream of deals coming out of the region this week, there wasn't quite anything as substantial as late December's glut of financings. BeiGene was particularly busy with partnerships, tieing up both Boehringer Ingelheim and Harbour BioMed for work related to PD-1 antibodies, and also connecting with Mirati Therapeutics to co-develop Mirati's sitravatinib. Having just adsorbed Celgene's China business, Beigene will have its work cut out for it to keep up with its in-licensing strategy.

TG Therapeutics and Merus also made some cross-border deals in China, signalling some loosening pressure for getting deals done in the region. TG picked up rights to BTK inhibitors from Jiangsu Hengrui, adding more teeth to the growing contention that China-sourced compounds might be valuable to Western pharmas. But like the rest of JPM, there was no stunning outpouring activity in China to spur ongoing speculation- but a slow and steady uptick may serve just as well.