4 key industry trends that will impact biopharma in 2015
BioPharma Dive was in San Francisco last week covering the 33rd annual JP Morgan Healthcare Conference and the 7th annual Biotech Showcase. JPM15 concluded on Thursday, and one thing is clear: Less than a full month into the new year, biopharma professional and executives are already having trouble stifling their enthusiasm about the industry's prospects over the coming years. You can catch up on our complete coverage from JPM15 and BTS15 here.
There was also plenty of news and insight to come out of the events, panels, and discussions, including updates on clinical trials, drug launches, partnerships, and big-time announcements from payers that promise to heat up the already-scorching pharma marketing wars. Here are the most important things you need to know from this year's JP Morgan and the Biotech Showcase conferences:
1. Express Scripts and biosimilars: The pricing wars will reach Biblical proportions
It's been a distinct possibility ever since Express Scripts made its stunning decision to strike an exclusive deal for AbbVie's hep C combo Viekira Pak over Gilead's Sovaldi and Harvoni (in exchange for a significant discount)—but Scripts CEO George Paz left no room for doubt early on during JPM15 that hepatitis C therapies were just the first major battle in the new pricing wars.
Speaking to attendees from his perch as the head of the largest benefits manager in the U.S., Paz told JPM15 last Tuesday that Express Scripts will continue to pursue a cost-centered strategy, and that PCSK9s and cancer drugs will be among the next major therapeutic classes on the price-chopping block. "The big one, of course, is these cholesterol-lowering drugs that are coming to market," he said.
As BioPharma Dive noted earlier this week, this means that the biggest new and anticipated launches of this year, including PD-1 inhibitors like Keytruda and Opdivo and PCSK9 therapies from Regeneron/Sanofi, Amgen, and Pfizer, will have to duke it out in the payer marketplace. Since Express Scripts' original decision, payers have splintered their support for pricey therapies, with benefits manager CVS and insurance companies such as Anthem and Aetna striking deals with Gilead while AbbVie picked up a partnership with AIDS insurance programs.
Several companies explicitly mentioned this pricing dynamic during their presentations and it was the focus of many panel sessions. For instance, Regeneron CEO Leonard Schleifer told investors that Sanofi/Regeneron's LDL-lowering PCSK9 candidate alirocumab would have an advantage over Amgen's evolocumab because the latter product will not have as many dosing options. In an exclusive interview with BioPharma Dive, Sanofi EVP Pascale Witz said that the company has incorporated pricing and access into its marketing strategy for alirocumab from the beginning, and that Sanofi has already been in talks with payers and aims to launch an education campaign for doctors and patients.
And other companies that are prepping for the price wars? For one, Kite Pharma CEO Arie Belldegrun told Reuters during an interview at JPM15 that the company is already planning for discussions with payers over the cost an investigational cancer immunotherapy that may cost as much as $300,000 per treatment, even though Kite has yet to launch its biggest clinical trials.
This is all a manifestation of a new era in which payers wield an increasing amount of power, as Avalere Health CEO Dan Mendelson said during a lunch plenary session last week. With the continued implementation of the Affordable Care Act and the fiscal imperative of controlling national health care spending, drug companies must increasingly weigh bottom lines and margins against patient access and payers' ability to simply strike a deal with a competing company—potentially even if it's for an inferior product.
Biosimilars could also add to the cost-cutting equation. But the question is: By how much? Novartis/Sandoz is likely to win final FDA approval for its biosimilar of Amgen's Neupogen soon, setting the stage for more generic biologics' approval under the new 351(k) pathway. Initial estimates have pegged drug cost savings at 20-30% in other countries that already have approved biosimilars, and one RAND study estimated that the U.S. could save $44 billion over the next decade thanks to the products.
What remains to be seen is who, exactly, will garner most of those savings. In other words, will biosimilars save patients money, or just payers? We'll know soon enough.
2. The lines between biotechs and pharmas will continue to blur
The worlds of biotech and big pharma have been on a collision course, and many conference attendees predicted that trend to continue, with last year's massive valuations and blockbuster deals likely to continue into 2015 and beyond.
There was plenty of evidence of that during the conferences themselves. For instance, red-hot mRNA biotech firm Moderna won another $50 million in funding from pharma giant Merck early last week, adding to its gargantuan haul from big-name companies like AstraZeneca and Alexion.
Continued consolidation and collaboration between the industries even led some investors to question if a truly out-of-left-field merger or acquisition could be on the horizon. During one JPM breakfast session, Aisling Capital's Dennis Purcell pondered whether a big biotech like Gilead might make a move for a big pharma like Bristol-Myers Squibb or Eli Lilly sometime soon.
3. Big players will enhance their most promising platforms and franchises in surprising ways
Drug development watchers have plenty to look forward to in the coming years as several major pharma companies announced they would be enhancing existing platforms—some in rather surprising ways.
One major announcement came from AbbVie, which said that it still wasn't quite done with its flagship Humira, the current best-selling drug in the world. The company is pursuing new indications for the therapy in phase III studies and could announce data later this year. And having forcefully entered the hep C fray, AbbVie announced that the firm would potentially unveil data from phase IIb trials of the investigational HCV compound ABT-493 at the AASLD meeting later this year, with the ambitious goal of developing a once-daily, pangenotypic HCV regimen.
Gilead and Pfizer also told attendees that they would be exploring franchise expansions for some of their most anticipated and well-regarded products. The former company is testing out cocktails of Sovaldi with other investigational compounds (GS-5816 and GS-9857) in phase III and II studies, respectively (the former for all virus genotypes). And as if there weren't already enough PCSK9 drama out of the conferences, Pfizer told Reuters it is pursuing a "franchise" approach to its own PCSK9 line, including plans to begin human trials this year on a new oral drug that directly targets PCSK9 and is being dubbed a "PCSK9 vaccine."
4. Is biotech a kinder, gentler bubble?
This was one of the most important questions being debated between investors and pharma execs at JPM: Is biotech a bubble? And if it is, just how worried should the industry be about the inevitable pop?
Experts seemed to widely agree that the sector is, in fact, over-valued. During a breakfast panel hosted by FierceBiotech last Tuesday, Abingworth partner Kurt von Emster said that he was "reminded a little bit of '99" when it came to biotech stocks and valuations.
But what was striking about the bubble-related conversations is that no one seemed particularly worried despite a fairly widespread consensus that there's been quite a bit of speculation underway in the industry. von Emster himself said later on during the panel that there is more cash, more knowledge, and more collaboration in biopharma these days, and that many of the products coming out of the sector actually deserve the hype considering patient outcomes. "So I don't see a huge crash," said von Emster. "We're going to see companies we never thought of in spaces we've never heard of."
Experts at several other panels, such as Merck EVP Iain Dukes and Canaan Partners' Stephen Bloch, echoed those sentiments, pointing out that biotechs present a much higher value proposition than a lot of other technology-related companies with sky-high valuations (particularly Internet companies). At the final lunch plenary session of the Biotech Showcase last Wednesday, Atlas Venture's Bruce Booth put a finer (and more quantitative) point on the argument, asserting that venture capital in biotech has a lower loss ratio than almost any other sector and still represents a safe investment.
In short: Nothing stops this train.
Stay in the loop: Read all of our coverage of JPM15 and BTS15, including recaps of Days 1, 2, 3, and 4 and an exclusive interview with Sanofi EVP Pascale Witz. And stay tuned for even more features from BioPharma Dive, including an exclusive interview with inVentive Health EVP Michael Griffith and conversations with smaller biotech and pharma firms attempting novel therapeutic designs.