March 26, 2024

The need-to-know this morning

Viking Therapeutics reported results from an early-stage study of its oral obesity drug, showing a 3.3% placebo-adjusted average weight loss after four weeks, with no safety issues. The company plans to advance the medicine into the next phase of development.

Cardiology

Merck's next big thing is (probably) on the way

At some point today, the FDA is expected to approve a cardiovascular therapy from Merck that analysts have tabbed as the company's most important drug launch in years.

It's called sotatercept, and it's an injectable treatment for pulmonary arterial hypertension, a rare condition in which scarring in the small blood vessels of the lungs inhibits blood flow to the right side of the heart. In a pivotal trial, Merck's drug improved patients' symptoms and reduced the risk of disease progression and death.

There's little doubt sotatercept will win FDA approval, but the drug's potential future as a blockbuster depends on the breadth of its indication, the safety warnings on its label, and Merck's decision on how much to charge for a medicine that presents a significant advance in care.

Biotech

More is more for Stoke Therapeutics

Shares of Stoke Therapeutics rose more than 70% in after-hours trading yesterday after the company said its investigational treatment for a rare seizure disorder charted dramatic benefits in a pair of small studies.

The news is that STK-001, Stoke's treatment for Dravet syndrome, led to reductions in convulsive seizure frequency of between 43% and 85% for 34 patients in the open-label trials. That follows an earlier update in which a lower dose of STK-001 led to reductions of just 18% at the median, a disappointing result that left Stoke to search for a better treatment regimen.

The company believes it has found just that, and it has the FDA's permission to give patients three loading doses of 70mg followed by regular doses of 45mg. Stoke plans to meet with regulators about a potential registrational study using that treatment schedule.

China

Congress is putting pharma in an awkward spot

As the House and Senate move forward with legislation that would effectively ban U.S. drugmakers from doing business with certain Chinese firms, major pharma firms are still deeply invested in the world's second largest economy.

Just this week, the CEOs of Pfizer and AstraZeneca extolled the virtues of Chinese science at a commerce event in Beijing, pointing out that each company has invested billions of dollars in research sites and biotech firms in the country.

Pharma's interest in China dates back to a more dovish period in U.S. policy, one in which stateside drugmakers were encouraged to look overseas for potential new medicines. Now that politics and policy are shifting, it's unclear whether the idea of bringing Chinese-invented drugs to the U.S. will make business sense in the future.

M&A

Not every buyout is a rainmaker

Yesterday, AbbVie agreed to buy the immunology-focused Landos Biopharma for about $20 a share, nearly triple the company's recent trading price. But if you zoom out and account for the company's reverse stock split last year, anyone who held on after buying into Landos' 2021 IPO is down about 88%.

Under the deal, AbbVie will pay roughly $140 million in cash for Landos and its Phase 2 treatment for inflammatory bowel disease. Landos' shareholders are entitled to as much as $75 million more if the company reaches certain clinical milestones.

Through one lens, Landos selling itself at a massive discount to its IPO price doesn't exactly speak well of the biotech market. But through another, the fact that Landos made it to this point — without liquidating or reverse-merging, as many of its contemporaries did — is a sign that there can be salvageable value in even the most beaten-down of biotech companies.

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