One year ago, the biotechnology sector was in the middle of a record run. The successful development of coronavirus vaccines and drugs had helped slow the pandemic and propelled investment into new companies going public at a historic rate. Biotech stock indexes traded at all-time highs.
But that momentum quickly vanished. Clinical and regulatory setbacks, as well as the prospect of drug price reform in the U.S., weighed on companies large and small, driving down stock prices and opening a gulf between the industry's performance and the broader market's. Newly public biotechs struggled to keep their footing, with nearly 80% of the 2021 IPO class trading below their offering prices, according to data from BioPharma Dive.
Positive clinical trial results — events that companies can use to sway investors, cut deals and raise cash — could help turn things around. And multiple opportunities lie ahead, with key studies in breast cancer, cystic fibrosis and ulcerative colitis set to read out in the first half of the year.
Here are 10 to watch:
Pfizer's $7 billion buyout of Arena, one of the sector's largest acquisitions of 2021, was largely based on the promise of a single drug known as etrasimod. After a disappointing past selling an obesity drug, Arena had rebuilt itself around the medicine, which showed early promise in several inflammatory diseases. Etrasimod works the same way as Zeposia, once the crown jewel of Celgene's acquisition of Receptos and now sold by Bristol Myers Squibb.
Pfizer gambled on Arena on the belief that its drug is better and did so — to the surprise of some Wall Street analysts — before key clinical trial results were available to potentially prove out that hypothesis. Those results will emerge this year, beginning with a pair of studies testing etrasimod in ulcerative colitis.
Pfizer executives revealed on a recent conference call that they had already looked at blinded data from two studies, known as Elevate 12 and Elevate 52, and made the deal assuming etrasimod will succeed. (Results for Elevate 12 could be ready first, according to a federal clinical trials database).
Pfizer is banking on such an outcome to boost its business treating inflammatory diseases, an area where its drugs Xeljanz and abrocitinib have been slowed by safety concerns.
The coronavirus pandemic has shifted since 2020, when Sanofi and GlaxoSmithKline partnered to develop a COVID-19 shot. The original coronavirus strain gave way to more elusive variants that are harder targets for the vaccines developed by Moderna, partners Pfizer and BioNTech and others. Boosters, meanwhile, have grown in importance, as they've proved the best defense against the fast-spreading omicron variant and the waning of vaccine protection.
Those factors have left Sanofi and GSK, now several times delayed in their vaccine research, with a potential role to play in 2022 and beyond. In December, the two reported their shot can significantly boost levels of virus-fighting antibodies in people who had previously received any of the four most widely used vaccines. But they can't file for authorization until proving their vaccine can prevent COVID-19 in a large clinical trial, a test that has become harder to complete as more people are vaccinated or infected.
Sanofi and GSK expect to report results from their study in early 2022. If positive, their vaccine, which relies on well-established technologies, could be helpful in places where other shots aren't widely available.
Does Aduhelm, the first new Alzheimer's drug in decades, actually slow the mental and physical deterioration caused by the disease? Doctors, experts and even the Food and Drug Administration's own reviewers haven't agreed, fueling a debate that's made the agency's decision to approve the drug among the most controversial in its history.
Faced with conflicting clinical trial data, the FDA chose to clear Aduhelm based on how it is thought to work, elevating a long-debated and unproven disease hypothesis in the process. Over the course of 2022, study results from Roche and Eisai could offer supporting evidence for Aduhelm, its developer Biogen and the FDA, or throw the drug's approval further into doubt.
Aduhelm, Roche's gantenerumab and Eisai's lecanemab all work by targeting clumps of a protein in the brain known as amyloid. A long list of predecessors — also aimed at amyloid, in one fashion or another — have failed in clinical trials over the past decade.
Hopes are higher, though, that gantenerumab and lecanemab could show a benefit, based on the type of amyloid clump they target and more carefully tailored study designs. (Gantenerumab fell short in a previous study, but is being reevaluated at a higher dose.)
Already, Eisai — Biogen's development partner on Aduhelm — has applied for accelerated approval of lecanemab based on mid-stage trial data showing treatment could eliminate amyloid in the brain. Roche, meanwhile, recently informed trial investigators it would not seek an expedited OK for its drug.
Phase 3 data from both companies aren't expected until the second half of the year, although one of Roche's trials — dubbed Graduate 1 — is earmarked to be completed by May on a federal database of clinical trials. Either way, the studies will be closely tracked throughout the year.
Eli Lilly, meanwhile, could quickly follow Roche and Eisai with Phase 3 data for its Alzheimer's drug donanemab by mid 2023. The pharma has also applied for accelerated approval based on amyloid-reduction data and expects an FDA decision toward the end of 2022.
One by one, Vertex Pharmaceuticals has held off would-be competitors to its four dominant cystic fibrosis drugs, which now generate almost $7 billion each year. But the biotech's stiffest test may be just around the corner.
Early this year, AbbVie is expected to disclose proof-of-concept results for a three-drug combination made of similar components as Trikafta, Vertex's own triplet for CF and its top-selling medicine. The program is part of a long-running effort by AbbVie to challenge Vertex's leadership in CF. The pharma giant worked with Galapagos NV for five years before deciding to acquire the Belgian biotech's cystic fibrosis portfolio in 2018, a move that surprised analysts at the time given the disappointing early results some of the drugs had produced.
But AbbVie has since worked to improve the drug combination, making changes to two of its three components. The company is hoping to see "an efficacy advantage," even a small one, over Trikafta, chief commercial officer Jeff Stewart said on a conference call earlier this year. Though AbbVie isn't expecting full results until the end of 2022, it'll publicly disclose some findings in the first quarter. Separate data from a two-drug regimen are expected as well.
The results have significant implications for Vertex, whose efforts to establish a business outside of cystic fibrosis have underwhelmed.
Gilead has spent more than a decade and billions of dollars trying to become a major player in oncology, with mixed results. The company has won approvals of three cancer drugs in the last four years, but sales are dwarfed by the HIV medicines for which it's long been known.
The cancer drug Trodelvy is meant to help change the narrative for Gilead, and is the key reason the biotech shelled out $21 billion for the medicine's developer, Immunomedics, in 2020.
Currently, Trodelvy is only approved for late-line use in triple-negative breast cancer and a form of bladder cancer. For the drug to become the blockbuster medicine Gilead envisions, Trodelvy has to succeed in an ongoing Phase 3 study known as TROPiCS-02.
The trial is testing Trodelvy against several chemotherapies in patients with HR-positive, HER2-negative breast cancer, a form of the disease accounting for 60% to 70% of all breast cancer cases. Patients in the study have seen their disease progress despite two to four prior treatments, among them a relatively new type of breast cancer drug known as a CDK 4/6 inhibitor.
A positive result in the first quarter of 2022 is crucial for Gilead. Success would open up a $2 billion revenue opportunity for Trodelvy, add 5% to 8% to Gilead's shares and validate the Immunomedics deal, wrote Brian Abrahams, an analyst at RBC Capital Markets.
Developing new drugs for psychiatric disorders is notoriously difficult, which is why any medicine that shows promise draws close attention. KarXT, a drug developed by Karuna Therapeutics, is a good example. Compelling results in a Phase 2 schizophrenia study added billions of dollars to the company's market value and made it one of the field's most closely watched medicines.
KarXT combines the powerful antipsychotic xanomeline and a chemical, trospium, that's meant to blunt its potentially problematic side effects like sedation and vomiting. Lilly developed and then shelved xanomeline in the 1990s because of those issues. But Karuna's drug showed few signs of them in mid-stage testing while producing a notable effect on schizophrenic symptoms.
That's supported a reevaluation of xanomeline and other drugs like it, which act on nervous system proteins known as muscarinic receptors. A similar medicine from Cerevel Therapeutics has also shown promise. And Karuna has since launched additional studies for KarXT, among them a Phase 2 study in Alzheimer's patients with psychosis.
Analysts at Stifel expect the muscarinic drug class to be worth about $4 billion in schizophrenia. A lot is therefore riding on Karuna's Phase 3 study, called EMERGENT-2 and expected to deliver results by the middle of the year. Many promising neurological drugs have fallen short in late-stage testing before, though, often because of higher-than-expected placebo effects.
Few biotechs have had a more dramatic rise and fall than Intercept Pharmaceuticals, shares of which have swung from more than $400 apiece to less than $16 during the tumultuous saga of obeticholic acid, its drug for a fatty liver disease known as NASH.
Intercept backed up encouraging early clinical results with apparent success in the Phase 3 REGENERATE study in 2019, positioning the company to bring the first treatment to market for NASH, a disease thought to affect millions of people in the U.S. The Food and Drug Administration, however, wasn't convinced the benefits outweighed the potential risks, among them cardiometabolic side effects. The agency asked Intercept for more data from the trial, leading to a lengthy delay, a corporate restructuring and several senior executive departures.
But Intercept still has a chance to rebound. Would-be rivals like Gilead, Genfit and NGM Biopharmaceuticals failed to capitalize on Intercept's stumbles as NASH proved a tougher target than previously expected. Others, such as Madrigal Pharmaceuticals, are still awaiting Phase 3 results.
Intercept, then, could still win the first NASH drug approval if updated results from REGENERATE are positive. The results, which are expected early this year, will include substantially more safety data than were in Intercept's original filing, as well as 18-month liver biopsy analyses from 500 more patients.
Late-stage results are also due from REVERSE, a study that enrolled NASH patients with cirrhosis but who haven't yet shown symptoms. The overall data set should provide "long-awaited clarity on the viability of [obeticholic acid] in NASH," Thomas Smith, an analyst at SVB Leerink, wrote recently.
This past year was challenging for the field of so-called off-the-shelf CAR-T therapy. Meant to be a more convenient alternative to the personalized cell treatments now used to fight several blood cancers, allogeneic treatments, as they're known, haven't yet proven as durable as their more complex counterparts. But the biggest surprise came in October, when the FDA suspended clinical studies run by Allogene Therapeutics, one of the field's leading companies.
The move was made after researchers discovered a "chromosomal abnormality" in one patient treated with ALLO-501a, a lymphoma treatment Allogene had selected for advancement. Though the clinical significance of that finding isn't yet known, the agency responded firmly, halting testing of not just ALLO-501a, but all of Allogene's other programs as well.
Since then, Allogene has been working with the FDA to understand whether the gene editing involved in preparing its treatment is to blame. For its part, the company has downplayed the event, with executives expressing surprise at the FDA's actions.
Even so, the clinical hold nearly halved Allogene's share price and added new questions about off-the-shelf treatments. The results of the investigation and restart of testing, which multiple analysts expect this year, could have far-reaching implications for Allogene and other developers of off-the-shelf cell therapies, many of which involve gene editing.
Vaccines for COVID-19 have dominated the world's attention over the past two years, becoming some of the most widely used and lucrative products in the pharmaceutical industry's history. Fewer headlines have covered a high-stakes race to develop shots for another common and potentially deadly infection caused by respiratory syncytial virus. Important clinical trial results are expected this year.
RSV, as it's more commonly known, causes an estimated 177,000 hospitalizations among older adults each year and 58,000 in children under five. The virus has proven a tough target for drugmakers: efforts dating back to the 1960s to develop a vaccine have been unsuccessful. The only way to combat infections is antiviral treatment; synthetic antibodies can also be used to prevent the disease they cause.
That could soon change. GlaxoSmithKline, Pfizer and Johnson & Johnson have each developed shots that train the body to recognize a viral protein RSV uses to infect human cells. All three vaccines are now in late-stage testing, with Pfizer and GSK anticipating initial Phase 3 data by the middle of the year and J&J shortly afterwards.
The financial implications for the studies are significant. Cowen analysts forecast the market for RSV vaccines will be worth nearly $10 billion by 2028.
One of 2021's more surprising trial failures came during its final week, when a drug for a form of the rare genetic disease transthyretin amyloidosis that affects the heart didn't outperform placebo in a Phase 3 study. The results were "baffling," Neil Kumar, the CEO of the drug's developer, BridgeBio, said in an announcement that sent shares falling by nearly 80%. And they've raised the stakes for an Alnylam Pharmaceuticals study that should deliver data in the middle of 2022.
Alnylam's Onpattro was the first RNA interference medicine to get to market when the FDA approved it in 2018 for the nerve damage associated with transthyretin amyloidosis, or ATTR. Alnylam has since won approvals of multiple other RNAi drugs, but Onpattro remains its top-seller. And one key to its growth is proving Onpattro can help ATTR patients with heart problems — a faster-moving, deadlier and more common form of the condition.
The APOLLO-B study is meant to do just that, and Alnylam has produced encouraging early results from the trial. This year Alnylam will report whether Onpattro can help patients perform better than a placebo on a test of how far they can walk in six minutes after one year of treatment. That's the same measure on which BridgeBio's drug failed, largely because placebo recipients fared significantly better than they have in previous ATTR studies.
BridgeBio says it doesn't yet know why its drug fell short. Nonetheless, Alnylam shares tumbled more than 15% on concerns that the bar for study success in ATTR may now be higher, according to Stifel analyst Paul Matteis. Alnylam, for its part, believes its drug should have a more potent effect because it works differently than BridgeBio's and a similar, approved medicine from Pfizer, Matteis wrote.
Ned Pagliarulo contributed reporting.
Correction: This story has been updated to mention Roche's latest plans related to gantenerumab and to correct mention of a trial name.