JPM16 & BTS16: A dour start to biopharma's big week as stocks feel the pain
BioPharma Dive is here in San Francisco attending the Biotech Showcase 2016 and the 34th Annual JPMorgan Healthcare Conference. The city is swamped with biopharma companies, healthcare firms, investors & VCs, and analysts of all stripes for what has grown to be the biggest week for the life sciences.
But unlike last year, when the industry's bullishness about 2015 was palpable, the conferences this year got off to a decidedly more downbeat start on Monday. Here are the topline takeaways you need to know from yesterday's events and presentations.
Biopharma stocks continue to feel the New Year pain
2016 has already been pretty topsy-turvy for the biopharma sector, and that dynamic persisted on Monday. The Nasdaq Biotechnology Index closed near a 52-week low, major biotech companies such as Celgene, Vertex, and Bluebird Bio saw their shares fall significantly, and the S&P Biotech ETF index fell 6% to a more than two year low.
Some of this is understandable given the relative lack of big-name deals or data announcements from Monday. For instance, Bluebird tumbled nearly 18% after the firm announced that it wouldn't be releasing data on its closely-watched gene therapy LentiGlobin until the American Society of Hematology meeting in December. Investors had been expecting more data in Q2 of the year and were evidently unpleased with the forecasted delay. Bluebird will be giving its official company presentation today.
The one truly marquee deal of Monday, Shire's announcement that the firm had finally succeeded in nabbing a buyout of Baxalta, actually sent Shire shares down about 5%. Celgene shares also closed around 5% down after the firm issued no updates on its 2016 guidance.
It appears that trading has picked back up in early Tuesday morning trading. The SPDR S&P Biotech ETF is up more than 4% as of press time and the Nasdaq Biotech index is up about 3%. Bluebird shares are shooting back up more than 11% and Celgene is up more than 3%. The question is whether or not this is a sustainable rally that will carry on throughout the week, or whether some investors are simply taking advantage of yesterday's low closing prices.
An assortment of oncology deals
Despite the general lull in activity and the promise of exciting new data, there were several important partnerships announced on Monday, particularly in the immuno-oncology arena.
French pharma giant Sanofi struck a $750 million deal with Warp Drive Bio (which it helped launch back in 2012), a three-year-old biotech that wants to identify disease pathway-targeting compounds by poring through microbial genomes.
The collaboration will allow Warp Drive to take the lead in developing new cancer compounds and Sanofi to focus on identifying new antibioteics. And in another cancer-based deal, the big pharma is partnering with Innate Pharma in a bispecific antibody development arrangment worth up to $436 million. (Relatedly, stay tuned for an interview with Sanofi EVP Suresh Kumar, a relatively new addition to the Sanofi exec team who is a former Assistant Commerce Secretary under the Obama administration).
Other significant collaborations announced on Monday included Juno's $125 million purchase of Harvard spinoff AbVitro and its T-cell technology and a pair of deals struck by mRNA firm Moderna with pharma giants AstraZeneca and Merck. AZ is hoping to cash in on a pair of in-development immuno-oncology therapies from Moderna, while Merck will be working with the biotech on a vaccine (although what that vaccine will target has yet to be disclosed).
The industry is getting defensive about its pricing & reputation crisis
It's no secret that biopharma's pricing practices have been under the gun since the second half of last year. Major controversies including the Turing Pharma/Daraprim/Martin Shkreli debacle, the Valeant distribution and pricing controversy, and a general backlash towards and focus on post hoc drug price hikes (all during a presidential election cycle) have left the industry with a black eye.
But if JPM and BTS attendees were hoping to discover the key to pharma's redemption in the eyes on the public on Monday, they were likely disappointed. During a lunch plenary at the Biotech Showcase moderated by inVentiv Health EVP and inVentiv Commercial Division President Mike Griffith, panel members sounded defensive and mostly bemoaned the role of hospitals, payers, the media, and politicians (and some bad actors) in biopharma's current woes.
The panel members—including Gregg Alton, EVP at Gilead Sciences, and Acorda Therapeutics CEO Ron Cohen (who also serves as chairman of the BIO trade group)—slammed the insurance industry in particular. "AHIP [America's Health Insurance Plans] has a strategic plan to shift blame onto pharma," said Cohen. He also dismissed pharma's biggest critics on pricing in government and the media as people who have the advantage of sound bites but "aren't interested in a serious conversation," and pointed out that biopharma accounts for just 10% of U.S. healthcare spending.
While the plenary emphasized that there's nothing wrong with ensuring a return on innovative, life-saving drugs considering the number of investigational compounds that fail on the way to a breakthrough, it had a much more difficult time articulating a succinct and persuasive way of expressing that argument to a wary and increasingly angry public. As Griffith noted, one survey showed that Americans currently have an even lower opinion of pharma than they do of Congress.
This reputation problem is likely to continue dogging biopharma in the coming year. And if a failure to communicate the value argument in succinct and convincing terms persists, investors may continue to fret and pull back money from the sector.
In fact, in an interview with BioPharma Dive after Monday's panel discussion, Griffith said he believes that a pullback is already underway and could conceivably get even worse for the industry. Stay tuned for a broader feature on our conversation with him on pricing, value, and the outlook for pharma-friendly (and not-so-friendly) reform in Congress and state legislatures.