5 Biopharma Trends to Watch in 2019

Posted by on Jan 2, 2019

“If you can look into the seeds of time, and say which grain will grow and which will not, speak then unto me,” Banquo beseeches the witches in Shakespeare’s “Macbeth,” seeking insight into the future for himself and his closest friend Macbeth.

Biopharma industry watchers, executives, and especially investors often display that same desire as a year comes to a close, which explains why there’s typically a wave of news articles and commentaries attempting to divine events of the coming year based on the 12 months that are coming to a close.

2018 saw several first-in-class approvals, including Alnylam’s Onpattro™ (patisiran), the first-ever RNA interference (RNAi) treatment to win FDA authorization, as well as red-hot levels of venture capital financings and robust initial public offering (IPO) activity, including the biggest-ever IPOs launched by a biotech drug developer and by a global contract research organization.

But with signs of slower economic activity in the U.S. and China, continuing uncertainty over the U.K.’s future in the European Union, and unresolved issues surrounding the delivery of healthcare and especially the price of treatments, it remains to be seen whether 2019 will be as good a year for biopharma as 2018 has been in many ways.

Below is a list of five biopharma-related trends as articulated by experts and others with a stake in the industry, as articulated in interviews with GEN, or in reports and other public statements in recent weeks.

 

Brad Loncar, CEO of Loncar Investments, which tracks developments in cancer immunotherapy and the broader biopharma industry, told GEN he expects cancer immunotherapy development to move in 2019 beyond the chimeric antigen receptor (CAR) T-cells that have reached the market over the past year or so, toward next-generation cell therapy products, mostly allogeneic products.

“The ultimate sign of where this field is headed is Allogene Therapeutics,” Loncar said, referring to the startup developer of allogeneic CAR-T therapies that launched with $300 million in financing in April 2018, then raised another $120 million in September by completing a private financing of convertible notes.

Allogene’s development pipeline features seven candidates led by UCART19, a Phase I allogenic CAR-T candidate that Pfizer had partnered with Servier to develop for treatment of CD19-expressing hematological malignancies, with an initial focus on relapsed/refractory acute lymphoblastic leukemia (ALL). Pfizer handed off UCART19 and 16 preclinical CAR-T candidates licensed from Servier and Cellectis to Allogene—which says it plans to partner with ex-U.S. rights holder Servier to launch potential registration trials of UCART19 in ALL in the second half of 2019.

On December 3, Allogene and Servier trumpeted positive pooled clinical data from two ongoing Phase I studies of UCART19, showing that 67% of patients (14 of 21) achieved a complete remission (CR) or complete remission with incomplete blood recovery (CRi). “We are very encouraged by the data reported in this analysis which mandates further development of UCART19,” Patrick Therasse, M.D., Ph.D., head of oncology at Servier, said in a statement.

Loncar said 2019 also shapes up to be an important year for development of bispecific antibodies (bsAbs). He cited Regeneron Pharmaceuticals’ bsAb candidate REGN1979, which generated positive Phase I proof-of-concept data that the company presented at the 2018 American Society of Hematology (ASH) Annual Meeting, held December 1–4 in San Diego.

According to Regeneron, heavily pretreated patients with relapsed or refractory follicular lymphoma grades 1 to 3a who received REGN1979 doses of 5 mg to 40 mg experienced a 100% overall response rate (ORR) consisting of eight complete responses [CR] and 2 partial responses [PR], while 90% of responders maintained a response during treatment.

Based on these data, Regeneron said, it plans to initiate in 2019 a potentially registrational Phase II trial investigating REGN1979 in relapsed or refractory follicular lymphoma.

2. Mergers and Acquisitions (M&As)

The recent stock market slump has yet to chill several factors that have propelled mergers and acquisitions (M&As) by biopharmas or companies impacting biopharma in recent months.

Steven Muntner, vice president and head of deals at Informa Pharma Intelligence, told GENthat about $265 billion in M&A activity had taken place in biopharma during 2018 as of December 11—a 26% jump from the $210 billion seen in all of 2017.

“It doesn’t seem like the market is really slowing down form an M&A standpoint. The types of deals may be shifting, but it doesn’t really seem like the market itself is slowing down,” Muntner said.

One factor driving M&A deals, Muntner said, has been a desire by a growing number of companies to narrow their therapeutic focus by spinning off non-core or outlying assets.

In recent weeks, Mallinckrodt disclosed plans to spin-out its specialty generic drug business and active pharmaceutical ingredients business—as well as its Amitiza®(lubiprostone), marketed for constipation and irritable bowel syndrome (IBS) indications—to shareholders, a deal projected to be completed in the second half of 2019 or sooner. And Bayer said it was weighing options for exiting its Animal Health business among spinoff options being explored in a restructuring that will eliminate about 12,000 jobs worldwideby the end of 2021.

“A lot of companies are going through reprioritization of their portfolios. They’re really deciding ‘we should specialize in certain areas,’” Muntner said. “What we are seeing, and I think what we’re probably going to see more of, are divestitures and spinoffs of large companies as they continue to specialize more. And then in return, they will do more M&A, and they acquire something that fits with their specialty better, rather than trying to focus on everything.”

Another driver in biopharma M&A expected to continue into 2019, Muntner said, is the rise of nontraditional “disruptive” deals. During 2018, these included the Amazon-Berkshire Hathaway-JPMorgan Chase & Co. employee healthcare venture launched January 30 and Cigna’s $67 billion acquisition of Express Scripts, completed December 20.

Another potentially disruptive deal is the pending $69 billion merger of CVS and Aetna, which ran into resistance in early December when Richard J. Leon, Senior Judge with the U.S. District Court for the District of Columbia, said he was considering delaying approval of the deal despite it being approved by the U.S. Justice Department. On December 21, Judge Leon accepted a CVS motion to let Aetna to retain say-so for key personnel, pricing, and product decisions while he continues to review the proposed merger.

 

3. Digital Therapeutics

Therapeutics and electronics are expected to forge more and closer connections, based on progress seen in recent years, and especially in 2018.

The FDA rang out 2018 by approving Teva Pharmaceutical Industries’ ProAir® Digihaler™  (albuterol sulfate 117 mcg) inhalation powder. According to Teva, the respiratory digital therapeutic is the first and only digital inhaler with built-in sensors and a companion mobile app designed to provide inhaler use information to people with asthma and COPD. ProAir Digihaler is indicated for the treatment or prevention of bronchospasm in patients aged four years and older with reversible obstructive airway disease, as well as for prevention of exercise-induced bronchospasm (EIB) in patients aged four years and older.

In March, the FDA granted 510(k) clearance for over-the-counter (OTC) sales of digital health company Adherium’s SmartinhalerTM sensor for AstraZeneca’s Symbicort® aerosol asthma inhaler.

In between, the Digital Therapeutics Alliance industry consortium in October defineddigital therapeutics in part as including treatments that “deliver evidence-based therapeutic interventions to patients that are driven by high-quality software programs to prevent, manage, or treat a medical disorder or disease. They are used independently or in concert with medications, devices, or other therapies to optimize patient care and health outcomes.”

Members of the Alliance include five biopharma giants: Bayer, Boehringer Ingelheim, Merck & Co., Novartis, and Sanofi.

At Novartis, Jeremy Sohn, vice president and global head of digital business development and licensing, said at a panel discussion during the Biotechnology Innovation Organization (BIO) 2018 International Convention, held June 4–7 in Boston, that medicine is moving beyond the proverbial pill: “The thing that is always constant, as the FDA will tell us, is it is about data-driven processes that allow us to demonstrate efficacy and truth,” Sohn said, according to MobiHealthNews.

According to “Digital Therapeutics Report 2018–2025,” a report whose release was announced Friday by ResearchandMarkets, investments in digital therapeutics stood at $179.6 billion at the end of 2016, and are projected to grow to $536.6 billion by the end of 2025.

PwC has projected a total $12 billion in venture capital investment in digital health ventures will have been made in 2017–2018, based on Rock Health figures showing $5.6 billion invested in 2017 and $3.4 billion in the first half of 2018.

“In 2019, new entrants and biopharmaceutical and medical device companies will bring to market new digital therapies and connected health services that can help patients make behavioral changes, give providers real-time therapeutic insights, and give insurers and employers new tools to more effectively manage beneficiaries’ health,” according to PwC.

 

4. Cell and Gene Therapy

Deal activity involving regenerative medicine developers—including companies focused on cell and gene therapy and tissue engineering—heated up during 2018. During the first three quarters of this past year, according to Informa Pharma Intelligence, $18.9 billion in upfront payments in M&A transactions involving these companies had taken place—compared with $13.5 billion in all of 2017, and just $1 billion in 2016.

“A billion to $19 billion in two years? That’s clearly a driver, I would have to say,” remarked Steven Muntner of Informa Pharma Intelligence.

The year’s biggest gene therapy deal was Novartis’ $8.7 billion acquisition of AveXis, completed May 15. The transaction expanded both Novartis’ neuroscience portfolio and its presence in gene therapy with a promising candidate for type 1 spinal muscular atrophy (SMA), AVXS-101. On the cell therapy side, Celgene acquired Juno Therapeutics  and its pipeline of chimeric antigen receptor (CAR) T-cell and TCR (T-cell receptor) treatments for $9 billion, in a deal announced January 22 and completed March 6.

Another large cell therapy acquisition is in the works: GlaxoSmithKline (GSK) on December 3 said it plans to shell out approximately $5.1 billion for Tesaro, which markets the once-daily oral poly ADP ribose polymerase (PARP) inhibitor Zejula™ (niraparib). While Tesaro CEO Lonnie Moulder acknowledged earlier this year that the entire PARP inhibitor class had seen slower physician acceptance than expected, he expressed confidence that the cancer-fighting category would eventually bounce back—a confidence shared by GSK.

“Huge optimism prevails around cell therapy and related techniques, however, and it is in this realm that valuations remain in testing,” EvaluatePharma noted, and cautioned, in its Vantage 2019 Preview report. “The extent to which companies with unproven technologies can maintain their billion-dollar-plus valuations next year will signal the depths of any downturn.”

Companies whose valuations are in that ballpark include Allogene and CRISPR Therapeutics, which in November expanded its rights to MaxCyte’s cell engineering technology to develop CRISPR-Cas9–based cell therapies in immuno-oncology, through an expansion of the companies’ partnership stretching back to March 2017. The value of the expanded partnership was not disclosed.

According to quarterly data compiled by Informa and released in November by the Alliance for Regenerative Medicine, total global financings involving regenerative medicine companies stood at $10.7 billion for the first three quarters of 2018, up 40% from Q1–Q3 2017. The total includes $2.8 billion raised in Q3, a 59% jump from July–September 2017.

 

5. Biopharma Investment

How badly has the Wall Street swoon deflated the price of biopharma stock? Three key exchange-traded funds (ETFs) consisting of biopharma equities fell during 2018.

As of December 26, the iShares Nasdaq Biotechnology ETF (IBB) stood at $94.81, down 12% from $107.44 on the same date a year ago. The Invesco Dynamic Pharmaceuticals ETF (PJP) finished at $61.33, down 6% over the past year from $64.96, while the First Trust NYSE Arca Biotech ETF (FBT) fell 3% to $121.24 from $125.22 on December 21, 2017.

In spite of these declines, nearly 60% of investors, executives, and others responding to the Biotech Showcase™ survey, released December 7, said they expected the stock market volatility of recent months to affect overall biotech investment in 2019 by touching off a new wave of buying by investors.

Survey respondents also confirmed a pair of global investment perceptions, with a plurality (45%) predicting that China will see the biggest percentage increase of biotech investment dollars in 2019 compared to global biotech hot spots that included the U.K., Germany, Belgium-The Netherlands-Luxembourg (“Benelux”), Japan, France, Scandinavia, South Korea, Israel, and Singapore.

One key reason for optimism about China—despite its economy slowing down due to growing debt and its trade war with the U.S.—is the adoption of regulations by the Hong Kong Exchange allowing pre-revenue biopharma companies to go public.

According to Brad Loncar of Loncar Investments, 17 biotechs filed for IPOs in Hong Kong this year (though not all were pre-revenue), six of which were carried out. One of the six was the revenue-generating WuXi AppTec, which earlier this month raised about $1 billion on the Hong Kong Exchange, on top of the $354.3 million raised in the company’s first IPO on the Shanghai Stock Exchange in May.

While the U.K. finished second with 10% of investors and executives predicting optimism, a much larger percentage of investors (75%) said they expected to see a decrease in investments in the U.K. if as expected it carries out “Brexit” by leaving the EU in March.

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