Biotech Stars
Who can cure cancer and earn billions
Matthew Herper, Forbes, 24.01.2018
Translated by Anton Bundin
Researchers and investors gathered at JPMorgan's annual pharmaceutical healthcare conference. At the main event of the year for this field, participants solved a lot of issues. It is likely that they will not receive answers to them soon.
Buying small biotech firms means growth for the entire industry – but will the US tax reform succeed in forcing large pharmaceutical companies to invest more actively in such enterprises? Will the healthcare system cope with the high prices of new drugs, such as a drug for gene therapy against cancer or any rare diseases, because the price tag for them usually ranges from $ 300,000 to $900,000? Will insurance companies and the state be able to curb the rise in drug prices in general and the annual increase in the cost of pharmaceutical giants' products in particular?
Perhaps.
Boring meeting of biotech startups
The most promising players at the meeting were small companies that had barely recovered from past failures. After some investors saw Novavax's long-suffering vaccine as a new hope for business, its shares rose in price by 50% and are now trading at $2. Thanks to the settlement of a patent dispute with Teva, the share price of Alder Therapeutics, which develops a migraine drug, jumped by 30%, but compared to last year, their value is still 25% lower. The securities of Nektar Therapeutics, which now boasts a market capitalization of $ 10 billion, have increased in price by 16%: investors do not lose hope that the company's cancer medicine will perform well in combination with immunotherapy from Merck and Bristol-Myers Squibb.
There were also deafening failures. After Axovant published data that an ineffective drug against Alzheimer's disease proved its uselessness again, and then mistakenly announced the effectiveness of its other drug (for Parkinson's disease), Axovant's stock prices collapsed by 50%. Chairman Vivek Ramaswamy and CEO David Hang must have felt like they were on the scaffold. Nevertheless, they still have huge sums that Roivant Sciences, the parent company of Axovant, managed to attract, and with these funds you can come up with something new and more impressive.
The prospects
And what about the big deals? Investors themselves would be happy, but if you ask potential buyers, they will say that nothing will change because of the new tax laws that will help companies gain access to overseas sales markets and profits, as well as return capital to the United States. There is no doubt about it yet. Adam Schechter, president of healthcare development at Merck, welcomes the tax reform and believes that it will also "equalize opportunities" for enterprises doing business only in the United States. But is anything else important for making deals? The expert believes: "It is not only this that indicates the growth in the number of mergers and acquisitions. A lot depends on the type and value of specific assets."
Paul Biondi, head of business development at Bristol-Myers Squibb, argues that tax reform can be a powerful "incentive" for several large transactions. Subsequently, in his opinion, the number of transactions will increase, because now the volume of mergers or acquisitions is relatively small, and the market always tends to average values: "I believe that more deals will be concluded soon, the long-term trend is to strive for a certain average value."
New Industry Leader
One of the largest deals at JPMorgan was the purchase by Celgene Corporation of Impact Biomedicines for a total planned amount of $7 billion ($1.1 billion as an initial payment) – and this deal almost fell through. According to John Hood, executive director of Impact, no one had thought about the sale of the company and the terms of the deal even in December. He claims that there were "serious disputes" within the company about whether the company should be sold at all. The final decision was made after the main conclusion: the launch of the drug for sale (medicines for patients with myelofibrosis, who were not helped by Incyte's "Dzhakafi") will take place sooner and without significant risks under the leadership of Celgene Corporation.
"There is only one company with the most extensive infrastructure for research in the field of cancer and blood diseases. This company will not be an obstacle for us. And if suddenly they are unable to provide medicine to patients, I will personally talk about it with Celgene's business development manager Robert Hershberg." Impact Executive Director Charlie McDermott explains: "We get letters from patients all the time saying that they are dying and they just need this drug."
John Hood managed to become a real star for the world of biotechnology, because those who are engaged in drug development usually do not run companies. Within just a few years, he raised $100 million in investments for his company and sold the company to Celgene.
Is it a price or a phone number?
Anyway, JPMorgan is no longer discussing Impact, but Celgene. Many believe that the corporation has overpaid too much, and an even wider circle of observers is wondering whether the pharmaceutical giant will have to conclude an even more expensive deal, especially given the expiring patent for Revlimid, one of the key drugs for Celgene. Many investors advised the corporation to acquire Bluebird Bio, a leading company in the field of gene therapy.
Even with all the Celgene acquisitions, one thing becomes clear: people employed in the pharmaceutical industry react to the prices of private biotech companies in the same way that ordinary people not connected with pharmaceuticals react to drug prices. Can it really cost that much? I asked this question to Kristina Barou, a partner at the investment firm ARCH Venture Partners and a recognized virtuoso in finding investments for startups. She notes that Denali, one of the companies in which her firm invests, entered the securities market this year – partly in order to ensure access to mass markets in the future. She calculates everything far in advance: "I really don't want a healthcare company with a capitalization of $10 billion to remain a private and closed organization."
In addition to acquisitions and mergers, there is great interest in how new scientific breakthroughs (for example, the first gene therapy from Spark Therapeutics or cancer-destroying T-lymphocytes developed by Novartis and Gilead) will behave in an open market. And what all this will turn out to be in the end, we will be able to see only after a while.
Portal "Eternal youth" http://vechnayamolodost.ru