August 8, 2023

The need-to-know this morning

A hugely impactful obesity study result: Novo Nordisk's obesity drug Wegovy cut the risk of major heart complications by 20% in a closely watched trial. The results could streamline insurance coverage and spur even greater demand for the highly popular therapy. Read more of STAT's coverage here.
Eli Lilly reported $8.3 billion in revenue for the second quarter, a 28% increase over the prior-year period, beating Wall Street's consensus forecast. Sales of Mounjaro, its diabetes and weight loss drug, were $980 million. Lilly raised revenue guidance for the remainder of the year to the range of $33.4 billion to $33.9 billion, versus current consensus of $31.4 billion.

biotech

Would Biogen walk out on Sage?

Sage Therapeutics is considering cost-cuts after the FDA rejected its rapid-acting drug for major depressive disorder, and now the company might lose its deep-pocketed partner.

Biogen, which paid about $1.5 billion for 50% of the profits from Sage's depression treatment, did not participate in the company's conference call yesterday. Sage CEO Barry Greene, asked repeatedly whether Biogen was committed for the long-term, said only that the two companies had worked together on last week's press release and that they intend to commercialize the drug by the end of the year.

As Mizuho analyst Salim Syed pointed out in a note to clients, Biogen has the ability and, arguably, incentive to get out of the deal. Under its agreement with Sage, Biogen can terminate the collaboration by giving 150-day notice, meaning it could walk away as early as January. It could be a win-win, sparing Biogen from investing more into a drug that no longer looks like a future blockbuster and allowing Sage to keep 100% of whatever revenues its medicine eventually generates.

Venture

Why a little controlled burning is good for biotech VC

Biotech is still in the throes of a protracted downturn, one that has decimated the IPO market and put the squeeze on venture-backed startups. But if past crashes are any indication, the next few years could be momentous for the VCs that persevere.

Take for instance the Column Group, one of the firms profiled in the 2023 edition of STAT's annual report on VC performance. Founded in 2007, the firm had its plans derailed by the financial crisis, pausing new investments in 2011 and a plan to raise more money. After a few years on the sidelines, Column raised a second fund and started making bets on a biotech turnaround. That fund has since returned more than seven times on its investments, far outstripping competitors in the industry.

That's the lesson of down markets, said Don Nelson, managing director for Harken Capital Securities. "Now is when the returns are made," he said. "Like Warren Buffet said: You see who's swimming without their bathing suit when the tide goes out."

Read more.

Financials

Amylyx and the weight of expectation

Back in March, Amylyx Pharmaceuticals surprised analysts with the news that about 1,300 patients were already taking its recently approved treatment for ALS, leading to $22 million in fourth-quarter revenue. And that number was "probably going to double, closer to triple" in the first three months of 2023, according to the company's chief financial officer.

The number increased by 325%, in the end, making Amylyx a profitable company almost immediately after launching its first product. Now Amylyx, which will report its second-quarter revenue on Thursday, gets to follow that act.

No one expects those numbers to double forever, but Wall Street is keen to determine just what the trajectory of Amylyx's drug is going to be and how quickly the company might meet its goal of getting 10,000 ALS patients in the U.S. on its medicine. The company's stateside business is particularly important as European regulators are all but certain to reject its treatment, marketed as Relyvrio, until Amylyx has more clinical trial data.

Pharma

Eli Lilly accused of being bad at math

Nektar Therapeutics, which became a penny stock after a series of damaging clinical failures, hit its nadir earlier this year when longtime collaborator Eli Lilly handed back the rights to a once-promising treatment for eczema that generated disappointing results in Phase 2. But after checking Lilly's math, Nektar has since concluded that the drug was in fact a runaway success, leading the company to resuscitate development and file a lawsuit against its former partner.

The story is that back in 2022, Lilly reported results from two studies showing that Nektar's drug, then known as NKTR-358, had only marginal benefits for patients with eczema and psoriasis, results that compared unfavorably with top-selling medicines like Regeneron Pharmaceuticals' Dupixent. The news is that Nektar hired some experts to look at the raw data and concluded that Lilly made a bunch of errors in its analysis, meaning NKTR-358 was a potent medicine all along.

Despite its deeply depressed market value, Nektar still had nearly $500 million in cash as of the last quarter, and now the company is going to use that money to launch another it believes will vindicate NKTR-358 as a treatment for eczema. In the meantime, as STAT's Ed Silverman reports, Nektar is suing Lilly, claiming the company breached its contract and made negligent misrepresentations.

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