June 13, 2023

Biogen nominates mother of director's child to replace him on its board

Biogen, a biotech giant plagued by years of boardroom strife, said Monday that the longtime and polarizing director Alex Denner would step down from its board, sending a signal to investors that the company's fractious recent history might be coming to a close.

What Biogen didn't disclose is that its nominee to replace Denner on the board, Susan Langer, is Denner's live-in romantic partner and the mother of his child, born in November, according to court records obtained by STAT. Denner is in the middle of a protracted divorce from his wife of nearly 25 years, with whom he has two teenage sons — a bitter legal fight in which his extra-marital relationship with Langer is a contentious issue, according to the records.

Markets

Novartis burned the shorts

It was going pretty well for Muddy Waters, a short-focused hedge fund run by famed investor Carson Block. On May 16, Muddy Waters published a 36-page argument for why Chinook Therapeutics' lead drug, a treatment for kidney disease, would never win FDA approval, sending the company's share price down about 20%. On June 6, the firm published a follow-up accusing Chinook of misleading accounting and driving its stock down further.

Then, yesterday, Novartis blew up the trade. The Swiss drugmaker's decision to acquire Chinook in a $3.2 billion deal means everyone who was shorting the company is sitting on paper losses of about $58 million, according to Bloomberg.

Block is standing by his company's take on Chinook's drug, which is that it simply doesn't work. Data from Chinook's pivotal trial aren't slated to read out until the fourth quarter, meaning Muddy Waters could still be vindicated. But the Novartis buyout means even a complete failure for Chinook would go down as a moral victory for Block.

Regulatory

A big day for new GSK

GSK, in the late stages of a years-long pivot away from its plodding old business, is up for an FDA approval this week that could help it compete in oncology.

On Friday, the agency is expected to make a final decision on momelotinib, a treatment for the blood cancer myelofibrosis. GSK paid about $2 billion last year for Sierra Oncology, owner of momelotinib's rights, after the treatment succeeded in a late-stage trial. The drug had passed through the pipelines of three companies before that.

In clinical studies, momelotinib significantly reduced symptoms of myelofibrosis while improving patients' anemia, a benefit that could differentiate it from competing medicines. Peak sales of momelotinib could reach about $630 million, according to an analyst forecast compiled by Bloomberg.

Obesity

Novo Nordisk could lose by winning

This summer's all-important clinical readout will come from Novo Nordisk, which will soon disclose data from a massive study testing whether its superlatively in-demand weight-loss treatment Wegovy can prevent cardiovascular problems after years of use. And while analysts widely expect the trial to succeed, the exact magnitude of victory could swing billions of dollars in future revenue.

The study, called SELECT, will meet its primary endpoint if Wegovy reduces the risk of heart trouble by at least 11% relative to placebo, according to an analysis from Jefferies published yesterday. But that nominative success might not be enough to convince public and private insurers, who have been slow to reimburse for the medicine, to change their policies.

In a TD Cowen survey of 25 prescribing physicians, 40% said SELECT would need to show at least a 15% relative reduction in risk for Wegovy to be considered clinically meaningful. And the same proportion said payers would want to see a benefit of about 17% before widening their coverage of Novo Nordisk's drug.

Chart of the Day

Deals make a difference

D3 vis exported to PNG (60)

The XBI biotech index has risen about 8% since last week, approaching its 2023 heights thanks in part to Novartis providing the latest reminder that major pharmaceutical firms still buy biotech companies sometimes.

The XBI reached its highest point since early February, rising more than 20% in the three months after bottoming out in March. The index has gained about 9% on the year, lagging the S&P 500's 13% growth but substantially outperforming 2022's nearly 30% decline.

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