SAN FRANCISCO — Pharmaceutical companies and their investors have grown accustomed to big news kicking off the year, specifically multibillion-dollar deals.
The last three J.P. Morgan Healthcare Conferences, considered a sort of Opening Day for the industry, were hallmarked by the acquisitions of Ariad Pharmaceuticals, Impact Biomedicines and Loxo Oncology. (And that's not including Bristol-Myers Squibb's $74 billion deal for Celgene the week before the meeting last year.)
In fact, Eli Lilly pressed Loxo for a quick buyout to have something flashy to announce at last year's conference. Such enthusiasm was noticeably absent this time around, though, resulting in a quieter first day than biotech shareholders had hoped for.
The Nasdaq Biotechnology Index fell almost 2%, with Sage Therapeutics, Clovis Oncology and other potential takeover targets trading down by market's close. Brad Loncar, a founder of biotech exchange-traded funds, noted on Twitter how even shares of MorphoSys fell despite the German drugmaker having the most positive news of the day.
While major M&A announcements seem unlikely for the rest of the week, industry experts still expect the challenges facing bigger companies will result in a healthy number of deals in 2020. In the meantime, biotechs will be busy trying to deliver on their development plans — some of which were provided in more detail during Monday's presentations.
Alexion bets on neuroscience
Connecticut-based Alexion Pharmaceuticals is best known for its high-priced rare disease drugs Soliris and Ultomiris. On Monday, the company gave an early look at full-year financials, reporting a top line revenue increase of more than 20% between 2018 and 2019. That growth correlates to, at the very least, roughly $4.96 billion in annual revenue, which would be slightly higher than the average analyst estimate.
For Stifel's Paul Matteis, more surprising than the revenue beat was Alexion's plan to treat four times as many U.S. neurology patients with Soliris and Ultomiris by 2025. If successful, the plan would create a "substantial upside" to revenue estimates, according to the analyst.
"This of course raises a number of natural questions," Matteis wrote in a note to investors, "such as where will this growth come from, and what does it assume (if anything) for additional neuro indications where Soliris/Ultomiris isn't derisked."
Shareholders, however, responded positively to the updates, sending Alexion shares up 4%.
Soliris is approved to treat several diseases, including a chronic neuromuscular illness known as gMG and a type of central nervous system inflammation abbreviated as NMOSD. Alexion says that, in less than two years time, these neurology indications have become its largest franchise by patient volume. By the end of 2019, almost 1,900 U.S. neurology patients were taking Soliris.
Ultomiris, a follow-on to Soliris, is under investigation as a treatment for gMG and NMOSD across a couple of late-stage studies. And on Tuesday, Alexion announced it will soon begin a Phase 3 study of the drug in ALS, with plans to enroll 350 adults in a 50-week trial.
Selling new paths to growth is particularly important for Alexion now, as the company has come under pressure from activist investor Elliott Advisors to seek a sale.
Gene therapy biotechs tout their production power
BioMarin could bring the first hemophilia gene therapy to market later this year. While waiting for regulators to confirm its approval application is under review, the California biotech announced Monday it has more than doubled capacity at a gene therapy plant. Altogether, the facility can make up to 10,000 doses each year of either the hemophilia treatment or a separate BioMarin gene therapy that's about to begin human testing.
That capacity level, according to executives, would allow the company to treat all U.S. hemophilia A patients in roughly two year's time. The update increases the competitive pressure on drugmakers with marketed products, such as Takeda and Novo Nordisk, as well as those working on rival hemophilia gene therapies. Swiss pharma giant Roche falls into both buckets, and could lose out on many patients because of BioMarin, according to a recent doctor survey from Citi Research.
Sarepta Therapeutics also had a manufacturing update, announcing that production for its experimental micro-dystrophin gene therapy is now large enough to be considered commercially viable.
RBC Capital Markets analyst Brian Abrahams called this a "critical manufacturing milestone" for Sarepta, one that shores up the timeline for a pivotal study scheduled to start sometime in the middle of the year.
Rubius' public struggle continues
Despite launching one of the industry's largest initial public offerings in 2018, Rubius Therapeutics has struggled out of the gate in getting its first clinical data. While its ambitions are large, the Flagship Pioneering-backed biotech failed to meet expectations it set for delivering early Phase 1 data from its lead asset, a PKU drug, by the end of 2019.
"We understand what we didn't do right in 2019, and we are doing it differently in 2020," CEO Pablo Cagnoni told a half-filled breakout room at the JPM conference. "We will deliver in 2020."
While Cagnoni and other executives emphasized cancer therapies set to enter clinical testing in 2020 and speedy progress on its own manufacturing plant, the biotech also admitted it still has not dosed a single PKU patient to date, calling into question the company's ability to execute.
Pressuring Rubius further is BioMarin's announcement that it will develop a PKU gene therapy, with plans to dose its first patient this quarter. BioMarin already sells two PKU drugs and could be a formidable competitor.
Shares in Rubius ticked down by about 5% Monday and have shed two-thirds of their value since the company went public.