It has been a relatively muted start to 2017 for biopharma, but this could change in the lead up to (and during) next week's 35th annual JP Morgan Healthcare Conference in San Francisco.
The industry's biggest investor event typically plays a pivotal role in shaping sentiment for the year ahead. Next week's conference could prove particularly important for a sector that performed below expectation in 2016 (as evidenced by a 19 percent decline for the NASDAQ Biotechnology Index) and faces additional uncertainty provided by Donald Trump's shock US Presidential election victory in November. FirstWord will be in attendance and bring you all the important news and analysis.
Will M&A provide much needed tailwind?
Celgene will play its role as the traditional bellwether at JPM when it announces its full-year financial guidance during the conference's first presentation on Monday morning; current consensus sits above guidance offered by management in the third quarter. Realistically, however, an increase in M&A will be needed to substantially boost investor confidence.
Whether any deals will be announced early next week remains unclear at this point, but Gilead Sciences' appointment of Alessandro Riva as its new head of oncology has heightened speculation the company will seek acquisitions in this therapeutic space.
Actelion remains 'in play' and has cancelled its appearance at JPM, where it has been scheduled to present on Monday. The Swiss company re-entered exclusive negotiations with Johnson & Johnson just prior to Christmas. At the very least, Actelion's no-show in San Francisco indicates a deal is still possible.
Will a decline in new drug approvals prompt a reaction?
Cited as cause for large-cap pharma and biotechs to make deals happen in 2017, and thus defining a slightly more optimistic mood heading into JPM, is the marked decline in novel drug approvals by the FDA in 2016. Twenty-two new products were approved by the agency last year, versus 45 in 2015 and an average of 29 approvals per year over the past decade. Last year represented the lowest number of approvals since 2010.
The FDA noted that it had approved a handful of drugs ahead of schedule in 2015 and also received fewer new drug applications in 2016 compared to previous years. Versus the past two years, the agency also rejected or delayed more applications and issued a notable increase in complete response letters (CRLs) relating to shortfalls in good manufacturing practice (GMP) adherence, noted John Jenkins, director at the FDA's Office of New Drugs. In his final annual review of new drug approvals ahead of retirement later this year, Jenkins noted that 73 percent of new drug applications in 2016 benefited from at least one of the FDA's programmes to expedite review. On a more sober note, Jenkins said that "most" of the 22 new drugs approved by the agency last year "have the potential to add significant clinical value."
Writing for Forbes, Bernard Munos noted that many underlying metrics were consistent in 2015 and 2016; for example, Big Pharma companies received 36 percent of approvals in 2016 versus 41 percent in 2015. In both years, the same percentage of drugs (41 percent) were first-in-class therapies targeting novel modes of action. Munos does argue, howevever, that a marked decline in the number of approvals last year illustrates "the difficulty to hyper-innovate on a consistent basis." This is a "serious concern," notes Munos, as "the traditional big pharma research model carries enormous structural costs, and needs hyper-innovation to pay for it."
Will these drugs shape 2017?
Sentiment around novel drug approvals should be boosted in the next few months if – as expected – Regeneron Pharmaceuticals and Sanofi's Dupixent (for moderate-to-severe atopic dermatitis) and Roche's Ocrevus (for relapsing/remitting and primary progressive multiple sclerosis) are approved by the FDA.
These two products are forecast to be the most commercially successful new drug approvals in 2017 and feature prominently in our list of drugs that will shape the year ahead.
Will JPM offer any new perspectives on the drug pricing debate?
One of the most prominent topics of debate in San Francisco next week is certain to be US drug pricing and ahead of Donald Trump's inauguration later this month, much conversation will likely focus on whether his populist approach to policy making could prove equally damaging to the threat that a Hilary Clinton presidency would have delivered. Allergan CEO Brent Saunders warned as much last month and has urged the drug industry to self-regulate. Some eyebrows may have been raised at the raft of price increases enacted by Allergan at the start of the month, albeit if they adhere to the social contract that Saunders announced in 2016.
Will Alexion face a grilling?
Alexion Pharmaceuticals will present at JPM next week having finally filed their third-quarter 10-Q with the SEC. An investigation into sales practices for flagship drug Soliris has now concluded; while the company will not be required to restate prior financial results, management conceded that it had found evidence that staff were pressured into certain sales practices.
Alexion's share price rose more than 8 percent on Thursday in response to the announcement, but analysts at RBC accused management of not taking the opportunity to be more transparent in a bid to regain the trust of investors following concession of wrongdoings and the recent departure of both CEO and chief financial officer.
Other announcements of note…
Shire has spun out its mRNA business, which has been sold to RaNA Therapeutics…Eli Lilly has appointed Christi Shaw to head up its bio-medicines business…Johnson & Johnson announced 15 new R&D collaborations including an option to acquire the Phase I nonalcoholic steatohepatitis therapy namacizumab from Bird Rock Bio. Its Janssen division also announced a collaboration to study Darzalex in combination with Bristol-Myers Squibb's Opdivo in haematological and solid tumours.
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