May 11, 2023

The need-to-know this morning

The FDA rejected a marketing application for a bladder cancer drug developed by ImmunityBio, the biotech company founded and majority owned by billionaire physician Patrick Soon-Shiong.
The rally in the XBI continues, with the closely watched biotech index up just over 19% from its March 22 low. Year to date, the XBI has gained 5% compared to an 8% gain for the S&P 500.

Washington

Familiar fingers pointing in the usual directions

CAROLYN KASTER/AP

A Senate hearing billed as a weighty showdown between pharma giants and the middlemen who antagonize them turned out to be a circular recitation of familiar talking points.

As STAT's Sarah Owermohle reports, the three-hour hearing brought the world's leading makers of insulin together with the U.S.'s biggest pharmacy benefit managers with the promise of getting to the bottom of why people with diabetes often face escalating prices for vital medicines. Instead, the drugmakers pointed to the PBMs' opaque business models; PBMs pointed to the historic rise of list prices; and senators were largely frustrated.

But the next iteration of this familiar debate could be more interesting. Earlier this year, all three major insulin manufacturers significantly reduced the prices of their older products, putting the ball in PBMs' court and essentially daring them to forgo larger fees in the name of prizing cheaper medicines.

Read more.

Chart of the day

The latest bump on the Sarepta rollercoaster

D3 vis exported to PNG (54)

Sarepta Therapeutics has gained and lost nearly $10 billion in value over the past two months as investors tried to pin down the odds of whether the company's gene therapy for Duchenne muscular dystrophy will win an accelerated FDA approval.

The stock hit its high for the year in early March on the news that the FDA decided not to convene a public hearing on the potential approval, only to fall about 20% two weeks later when the agency reversed course. Sarepta recovered by as much as 15%, and then, in mid-April, STAT reported that FDA reviewers were leaning toward rejecting the application until a top official stepped in and insisted on the aforementioned hearing, sending the stock back down.

That all leads to yesterday, when Sarepta's share price fell about 3% after the FDA's customary release of briefing documents ahead of the hearing, scheduled for Friday. The tone, as STAT's Jason Mast and Adam Feuerstein report, was unsurprisingly critical given agency staff's dim view of Sarepta's supporting data.

Next, 13 independent experts will spend Friday discussing the application and, at the end of the day, voting on whether to recommend the approval of Sarepta's gene therapy. Stay tuned to STAT for hour-by-hour be coverage of the hearing and its result.

Activism

A big Wall Street whisperer backs Icahn over Illumina

Glass Lewis, an influential shareholder advisory firm, sided with Carl Icahn in his impending proxy fight with Illumina, advising its clients to withhold support for the company's CEO.

The firm, which issues recommendations for its mutual fund clients, said in a report yesterday that shareholders should vote for two of Icahn's three nominees to Illumina's board. At issue is Illumina's decision to acquire the cancer testing firm Grail despite the concerns of global antitrust regulators. The board has been "decidedly and disconcertingly disinclined to accept any clear responsibility," Glass Lewis wrote in its report, echoing Icahn's calls for change.

Securing the advisory firm's support is a significant victory for Icahn ahead of Illumina's shareholder meeting May 25. Glass Lewis and a similar firm called ISS claim 97% of the market for such services, and their recommendations on shareholder votes carry particular weight for the mutual funds that hold stakes in thousands of companies. Back in 2018, Icahn abandoned his attempt to block the $67 billion merger between Cigna and Express Scripts after the two firms gave the deal their blessing, scuttling his chances of prevailing in a shareholder vote.

Shkreli

The former Turing Pharma files for bankruptcy

Eight years after the price hike that made it internationally famous, the company once known as Turing Pharmaceuticals filed for bankruptcy, claiming its ties to Martin Shkreli have made it impossible to stay in business.

In documents filed in Delaware court on Tuesday, the company, now called Vyera Pharmaceuticals, is seeking Chapter 11 protections and planning to sell off its roughly $18 million in reported assets. In 2021, the FTC ordered the company to pay a $40 million fine for its actions in the Daraprim saga, and Shkreli had his shares seized by the court to cover a $65 million judgment against him personally.

Vyera nearly had a second act in 2021, when a health care investor attempted to wrest control of the company from Shkreli, aided by one of the entrepreneur's former friends. That effort failed.

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