August 31, 2023

The need-to-know this morning

Sage Therapeutics said it would lay off about 40% of its workforce weeks after the FDA declined to approve its drug for major depressive disorder.

Policy

Wall Street isn't panicking about the IRA

If you take pharma's word for it, the dawn of Medicare drug pricing negotiation presents a massive impediment to the industry, one that will slow down the development of new medicines and create misguided incentives that will harm society. But to investors, the publication of the first 10 drugs up for negotiation seemed to mark just another Tuesday.

The stock prices of all 10 publicly traded companies affected by the policy have hardly budged. And the same goes for the firms whose drugs, despite costing Medicare billions, didn't end up on the initial list of 10.

That stark contrast between industry rhetoric and Wall Street reaction is arguably damaging to pharma's case against the policy. But it also calls into question the White House's declarations of victory: If investors aren't worried about drugmakers' bottom lines, how much money is Medicare really saving?

Chart of the day

Biotech is hard

D3 vis exported to PNG (69)

The latest illustration comes from FibroGen, whose share price fell below $1 yesterday after it disclosed its fourth late-stage clinical failure in as many months.

The news is that pamrevlumab, an antibody treatment, had no significant benefits for patients with Duchenne muscular dystrophy who have not lost the ability to walk. That follows pamrevlumab's previous failures in more advanced Duchenne and the lung disease idiopathic pulmonary fibrosis. In May, FibroGen's anemia drug roxadustat failed in a study enrolling patients with a blood disorder.

The company has now lost 96% of its value in the last four months. FibroGen has about $350 million in cash and a market capitalization of about $90 million, making it one of the many biotech companies whose shares are worth less than the money in the bank.

M&A

Novo Nordisk isn't exactly breaking the bank

Novo Nordisk's weight-loss medicine is so successful it's rewriting Danish monetary policy. But the company, whose record revenue is expected only to increase, is putting its money into small deals rather than transformational acquisitions.

The latest is Embark Biotech, a privately held Danish firm developing drugs that would at once suppress appetite and increase insulin sensitivity. Novo is paying just €15 million up front to buy the company, promising another €456 million in milestone payments in a deal whose total value is about $500 million.

The agreement comes a few weeks after Novo agreed to pay up to $1 billion for Inversago Pharma, a Canadian firm at work on a cannabinoid drug also meant to curb hunger. The company is in something of an arms race with other companies in the obesity field, which have turned their attention to novel ideas that might bolster or even supplant the likes of Wegovy and Mounjaro. In July, Eli Lilly agreed to pay as much as $1.9 billion for Versanis Bio, a private company developing an obesity drug that specifically targets fat mass.

Policy

Why are doctors silent on pharma facing price negotiation?

Hospitals, doctors, and providers have long been enthusiastic critics of how the pharmaceutical industry prices its products. And yet the news that Medicare will soon negotiate the prices of certain drugs didn't lead to cheering, schadenfreude, or even much in the way of acknowledgement from the other corners of health care.

As STAT's Bob Herman reports, there's a simple explanation for that: Medicare already sets prices for providers around the country, and thus supporting price caps for one part of the industry, like pharmaceuticals, would be a tacit endorsement for price caps everywhere.

A former president of the American Medical Association put it plainly at a 2017 meeting. Asked whether the group should throw its weight behind the idea of drug price negotiation, she responded: "If we advocated for the price-fixing of pharmaceuticals, we'd have no leg to stand on if we say we don't like price-fixing for physicians."

Read more.

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