Each year, the J.P. Morgan Healthcare Conference is flush with pharmaceutical and biotechnology companies touting how much cash they have or how much revenue they expect to make in the coming months. But on the conference's second day, a different kind of forecast took focus, as frigid rain, hail and flood waters pummeled San Francisco Tuesday morning. Skies had cleared by early afternoon.
To some, the weather may be symbolic of the biopharma industry, the health of which came into question over the past year as companies large and small struggled to stay on course. Analysts and other experts are now cautiously optimistic the worst of the challenges have passed.
Inside the Westin St. Francis Hotel, executives were eager to prove that's the case. GSK CEO Emma Walmsley, who has been under pressure to hasten growth, told investors her team expects the company's experimental shot for respiratory syncytial virus to eventually generate billions of dollars should it reach market. Meanwhile, AbbVie CEO Rick Gonzalez said his company's newer anti-inflammatory drugs, Skyrizi and Rinvoq, should bring in more than $17.5 billion in annual combined sales in 2025 and more than $21 billion in 2027, helping to offset the upcoming loss of patent protection for its megablockbuster Humira.
Smaller biotechs also highlighted the market potential of their drugs. Executives from Cerevel Therapeutics and Karuna Therapeutics, which are developing new kinds of medicines for schizophrenia, expect that a large number of patients could benefit from their respective treatments, for instance.
And now, a word from the FDA …
Robert Califf, commissioner of the Food and Drug Administration, helped kick off JPM’s second day with a wide-ranging interview wherein he discussed accelerated drug approvals, online misinformation and how to run clinical trials more effectively.
Califf also gave a sort of peek behind the FDA curtain, offering details about how agency staff evaluate requests from drug companies. Whether those requests are about securing marketing approval or pushing an earlier medicine into human testing, the outcome is mostly determined by the strength of the supporting data, according to Califf.
And he included a warning to executives — particularly those of smaller drugmakers — against any practices that could put the integrity of their data into question.
“With startups, a really bad thing to do is to hide something,” Califf said. “I’ve worked in the field. There’s a lot of pressure when you’ve got that one tranche of investment and you’re worried that [the company is] going to go out of business if things don't go well. But hiding things from the FDA — not a good idea.” — Jacob Bell
… on accelerated approvals and Aduhelm criticism
Califf spent more time addressing accelerated approvals, acknowledging criticism of drugmakers’ long delays in obtaining confirmatory evidence that the FDA requests.
“I felt for a long time that we haven't held on to the second part of the bargain, which is if you've got accelerated approval … you should be committed to getting the answer as to whether it actually really works,” Califf said in a panel discussion later.
“Now, Congress gave us some teeth to really enforce that,” he added, referring to reforms passed as part of a year-end spending bill.
Recent scrutiny of the FDA accelerated approvals has overlapped with criticism of how the agency conditionally cleared Biogen’s Alzheimer’s drug Aduhelm — a decision that congressional investigators described in a report last month as “rife with irregularities.”
According to Califf, however, there were “no surprises” in their findings. “Have you ever seen a congressional investigation that said, ‘These folks are doing a great job?’” he said. “There were some things that the FDA can do better, and we fully acknowledge that.”
“It doesn't change anything about the basic concept that the American public has been really clear: It wants accelerated approval, especially [for] people and their families who have serious diseases,” Califf added. — Jacob Bell and Ned Pagliarulo
The looming Series A ‘cliff’
Drugmakers often talk of “patent cliffs.” But for early-stage startups, the coming year might present a different kind of drop-off.
Biotechs that raised their first major round of financing in the second half of 2020 or 2021 are likely to need additional funds, putting them under pressure to show something for their work. Though biotech analysts expected a “corresponding increase” in Series B rounds in 2022, that hasn’t happened yet, according to a report from Silicon Valley Bank.
Obtaining positive results is critical to maintaining shareholder value, said Chris Bardon, co-managing partner at BioImpact Capital and portfolio manager at MPM Capital.
“The industry has come sliding down, and if you're not going to generate data, you're just going to be stuck sliding indefinitely,” Bardon said.
Startups that don’t hit their milestones will either see reset valuations, or have difficulty convincing venture capital firms to pour more money into their research, said Jon Norris, a managing director at SVB.
2021’s record funding and IPO activity was an “aberration,” Norris said. Now, companies can’t expect to hold onto lofty valuations in a tougher market.
Should they need to extend their runway, they might have to rely on existing investors to get them to clinical testing.
“If you start to peel back the onion, a lot of these Series A companies are preclinical platform plays that are a couple years or [farther] away from the clinic,” Norris said. “In 2021, those companies could continue to get really strong funding and even a crossover if they were on the pre-IPO route, just with additional preclinical data.”
“Now it feels like new investors want to see some clinical data,” he added. — Gwendolyn Wu
Explaining Editas’ research revamp
For several years now, through three CEOs and as many chief medical officers, Editas Medicine has been testing an experimental gene therapy for a genetic form of blindness. The treatment, known as EDIT-101, was the company's lead program and a key test of its CRISPR-based gene editing technology.
Yet, after lackluster trial results late last year, the company announced it would stop enrolling study participants and seek a partner to advance the therapy. A broader restructuring announced Monday revealed the retrenchment goes further, and involves halting investment in other, follow-up therapies for different inherited retinal diseases, or IRDs.
According to CEO Gilmore O'Neill, who joined in June, the decision was the result of a new approach to selecting disease targets that he and Chief Medical Officer Baisong Mei are taking.
"When we look at IRDs through that lens, there are a couple of elements of our strategy where they don't quite actually line up," O'Neill said in an interview. "[EDIT-]101 clearly was one where, while we actually were able to show proof of concept and clinical benefit, it was in a very small patient population. The other IRDs, essentially, wrestled with the issue of translatability, that is our ability to quickly measure a biological outcome and get a dose response."
Editas' research revamp, and its associated layoffs, come as many biotechs are forced to make similar tough decisions in response to a shaky market. But O'Neill claimed Editas’ moves were "not a reaction to the markets" but rather "intentional around the size of the company."
The expected savings extend Editas' cash runway to 2025, by which time O'Neill expects the company to have advanced its now lead sickle cell treatment toward filing. — Ned Pagliarulo