July 27, 2023

The need-to-know this morning

Eli Lilly reported results from two additional Phase 3 studies of its weight loss drug tirzepatide. The design and duration of treatment differed in each study, but across both, participants taking tirzepatide lost 26% of their body weight.
Bristol Myers Squibb reported lower-than-expected earnings and revenue for the second quarter, impacted by slowing sales of its cancer drug Revlimid, which now faces generic competition. As a result, Bristol lowered financial guidance for the remainder of the year.
Mersana Therapeutics said its drug for a genetically defined type of advanced ovarian cancer failed to achieve the main goal of a Phase 3 study. The company is discontinuing development of the drug, called UpRi, and restructuring to preserve cash, including layoffs of 50% of its workforce.
Abbvie said net sales of Humira fell 26% to $4 billion in the second quarter, due to market entry of generic copies. The drugmaker reported better-than-expected earnings and revenue for the quarter and revised 2023 guidance higher.

Venture

A major biotech VC digs in to synthetic biology

RA Capital, a name-brand biotech investor, is creating an incubator for startups in the world of synthetic biology, a burgeoning field that has already been through a few peaks and valleys of the biotech hype cycle.

As STAT's Allison DeAngelis reports, the incubator is called RASyn, and it will be led by Robert Nicol, an RA partner who spent more than 20 years at the Broad Institute. RA declined to provide much in the way of detail, but the basic idea is to seed startups over several years.

The bigger question is just which definition of "synthetic biology" is at work here. The term has been around for a few decades, and it can refer to basically any process by which biological tools like DNA and stem cells are used to make new materials, whether they be drugs, perfumes, or industrial supplies.

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Financials

Biotech's slump is dragging down suppliers

For years, life sciences companies like Thermo Fisher were selling picks and shovels in a gold rush, cashing in on a biotech boom by selling scientific instruments to an ever-expanding number of startups trying to develop new drugs. But in 2023, with biotech deep into a contraction, those businesses are suffering.

Thermo Fisher missed Wall Street's estimates on revenue and profit in the last quarter, the company said yesterday, leading the company to cut its growth projections in half. Thermo Fisher, which sells lab equipment and research services, saw revenue from its biotech-specific business fall 25% compared to the prior year.

The company's competitors are feeling the same squeeze. Earlier this week, Danaher cut its projections for biotech services for the third time in 2023, going from predicting 1% to growth to forecasting a 10% decline.

Pharma

GSK's turnaround is starting to take shape

The pharmaceutical giant formerly known as GlaxoSmithKline has been through activist challenges, investor skepticism, and more than a handful of commercial setbacks on its way to actualizing what management calls "New GSK," a slimmer, faster-moving evolution of its old business. And the last quarter, in which each of the company's segments beat analyst expectations, suggests the plan is beginning to work.

GSK raised its 2023 revenue guidance to between 8% and 10%, citing strong sales of its treatments for HIV, and increased its profit projections to about 12% for the year. The numbers bolster CEO Emma Walmsley's case that GSK can endure as a standalone pharmaceutical company after spinning off its consumer business last year.

Now the focus turns to Arexvy, GSK's recently approved vaccine for RSV, which is expected to launch in the U.S. before the end of the year. How GSK handles what could be a blockbuster product will be the next test of Walmsley's administration.

Math

Where's Moderna going to get more money?

Moderna became a world-historic success after developing a potent Covid-19 vaccine that brought in tens of billions of dollars in revenue. But now it's 2023, and with demand for doses waning, math is starting to turn against the once-profitable company.

Wall Street expects Moderna to report about $270 million in quarterly sales when it discloses earnings next week, reflecting the decimated market for Covid boosters. And while the company had about $3.5 billion in cash as of March 31, its operating expenses have generally come in at about $2 billion a quarter, leading analysts to question how Moderna might strengthen its balance sheet in the short term. Moderna's biggest pipeline projects, including a flu vaccine and Merck-partnered cancer treatment, remain a year or more away from potential approval.

Taken altogether, that creates "major challenges to Moderna's share performance," Leerink analyst Mani Foroohar wrote in a note to clients yesterday, "and we remain puzzled by the company's continued cash burn on its sizable share buyback and lack of productive business development."

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