Biotech Showcase™ 2016 kicked off its first full program day today with a busy registration desk, partnering activity and full panel rooms.
The state of cell and gene therapy
The Alliance for Regenerative Medicine and Advanced Therapies filled the ballroom for their State of the Industry Briefing this morning. The takeaways? Clinical results will drive outcomes. The next big pillar is cell and gene therapy. The unrealistic magic is gone and it’s now down to the data. “The pendulum will swing, and what will make it swing is data,” said moderator Jason Kolbert of Maxim Group. Watch the session video here. You can also find the slide presentation here.
Alzheimer’s – the 1,000 foot overview
The panel “Alzheimer’s disease: Has the tide turned?” moderated by Charles Stacey of Accera and AASCC (Alzheimer’s Association Small Company Consortium) brought together experts from pharma, investment banking, the patient perspective and venture capital to discuss recent advances in understanding the disease and what lies ahead. Panelists were Neta Batscha of RA Capital Management; Andrew Fein of HC Wainwright; Jim Hendrix of Alzheimer’s Association; and Guy Seabrook of Johnson & Johnson Innovation.
Here’s the 1,000 foot overview. There has been an unprecedented failure rate in Alzheimer’s disease clinical studies over the last 10 years. “We were trying to treat a very complex disease with a single agent,” said Hendrix. Alzheimer’s is the most common cause of senile dementia, but not all dementia is caused by the plaques indicative of Alzheimer’s. Huge advances have come with biomarkers, and discoveries about the disease’s heterogeneity. “The importance of biomarkers is evident,” said Seabrook. The high attrition rate is the result of the high unmet medical need. The high cost is that it is an opportunity lost.
According to Batscha, skepticism by investors is changing as researchers are learning a lot from recent high-profile failures. There is a new optimism, and more attention and publicity surrounding the disease’s economic impact. Over five million Americans have Alzheimer’s, and that number stands to triple by mid-century if no cure is found. It is the second leading cause of death in the US. And it is extremely expensive to treat Alzheimer’s, and there is the potential that one-third of the Medicare budget will be spent on Alzheimer’s by midcentury. People are concerned about healthcare costs, even with the recent increase in the NIH budget by USD 350 million for Alzheimer’s research. To ramp up research toward a cure will require USD 2.5 billion over the next 10 years. “We need more funding for good ideas to open the playing field for investment,” said Hendrix. It’s still early, and from an investment point of view, there is still risk, but if you wait too long as an investor, you may miss the opportunity, said Hendrix.
Why optimism? Recent advances in the genetic understanding of the disease, new industry-government partnerships that are putting huge effort and resources toward harmonizing patient groups and data, and opportunities for investable assets. Biogen’s data that came last year was extremely helpful and lent a silver lining to the idea that this is actually achievable, said Seabrook. “Much of J&J’s focus now is about disease interception,” he said.
Investment decisions are approached from a risk-reward position, and the differentiator then becomes those irresistible assets that spark interest among the investment community. Corporate to corporate intersections pave the road ahead to target the disease from multiple pathways. Earlier stage patients, longer-term trials and multiple pathways are in the future, according to Fein. And rekindling assets with well-designed studies and well-executed trials, and repeating these processes to build a pipeline, said Fein. Working with a company that has a balance sheet with a long-term perspective is key to the uptick in investability, said Fein.
The debate still is, when does Alzheimer’s begin, with the pathology or with the symptoms? asked Hendrix. And can we delay the onset of symptoms to enable people to live full lives? This is why the combination idea is important, said Hendrix.
There are currently an estimated 480 companies in the Alzheimer’s disease space.
Public perception and the pricing debate: Who’s to blame?
The high point of the afternoon was the lunch plenary moderated by Mike Griffith of inVentiv Health entitled, “The great pricing debate: Navigating through an industry sea change,” with panelists Gregg H. Alton of Gilead Sciences, Inc.; Ron Cohen of Acorda Therapeutics and Biotechnology Industry Organization (BIO); Sara Radcliffe of California Life Sciences Association (CLSA); and Beth L. Roberts of Hogan Lovells.
With pharma public approval levels at their lowest, lower even than Congress, the debate on pricing is bigger than ever. There is an incredible amount of disconnect between the real story of pharma drug development and public perception. The panel attempted to answer, who is responsible for public perception of the industry? “Pharma’s story is complicated,” said Cohen. “It can’t be told in a sound byte.” FDA approvals are not easy, and add to that the challenges of regulation and patients, etc., and the nuanced message becomes a maze that is difficult to explain, said Cohen. How can pharma take a difficult message and synthesize it for the payers? In terms of reputation, a lot of it is the media playing on public perception, said Alton. “That’s where we can talk about value” to get into fairly rational conversations, said Alton.
Yet even as the public is seeing a 67% increase in their deductible, the issue is an old one. “There will always be concerns about drugs,” said Radcliffe. The insurance industry is putting more costs on individuals to push back on pricing, and the public is frustrated. Radcliffe identified key issues in the pricing debate, namely that drugs are important, with high risk and high reward, and there is a disconnect between the buyer and the rest of the healthcare system. Most people would love to have a system that focuses on the patient, said Radcliffe, but it is less a situation of the payer as victim than that the person at the center of the healthcare industry is unable to navigate it in order to be an informed decision maker.
Pharma has repeatedly told the public over the years that their story of development is “too complicated for you to understand,” said Griffith. Cohen responded that, “We as an industry have not learned to condense our arguments into meaningful sound bytes.” Instead, the story ends up more like “‘We have explanations if you’d like to sit down for 45 minutes to go through it…’” said Cohen.
Does pharma have a digestible message to convey? Yes, said Cohen. “Nobody should think that everything going on here is just random.” Cohen pointed blame at the insurance industry. They have “a white paper on how to shift blame to the pharma industry, which is a convenient way to deflect attention from their own culpability,” said Cohen. Tiers, copays, step edits… “We are not the problem,” said Cohen. Only 10 to 14% of the issue is the drugs; hospitals are 30%. The costs of drugs are two to three times higher in the US than elsewhere, and this is a critical part of the situation, said Cohen. “All societies pay more for healthcare as they get wealthier,” said Cohen. The questions is not, “is this pill too expensive,” said Cohen, but rather “Do we want to spend USD 2 to 3 billion per year on healthcare?”
“How do you live with yourself every day?” Griffith teased Alton, to which Alton replied, “We have to go out and defend the value and the investment in innovation to patients now and in the future. We all, as an industry, need to reach the patients,” said Alton.
There are an estimated 1,300 biotechs in the US, and 90% of them are not profitable, said Alton. If we want the next cures and therapies for disease, someone has to pay for it. When a drug hits, it has to get a significant return for a limited amount of time before it goes generic. Without an outsize return, no one is going to invest in it, said Cohen. Yet there is much speculation as to what is the “right” pricing? Patients are mad as hell. They want access to drugs and they don’t want to pay so much.
Investors ask us for the outlook all the time, said Roberts. “I think it’s good and it continues to be good,” she said. But the bottom line is, a lot of things are impeding pharma’s ability to move toward a solution. The debate continues. Any changes are likely going to take a new President and a lot of thought, she said.
And yet, pharma is their own worst enemy, said Griffith. If pharma and BIO are not cutting it, is there a need and an opportunity for a new organization? Radcliffe responded that pharma and biotech have been paying extremely close attention. “We need to do a better job, to identify the pithy messages and go deliver them,” said Radcliffe. “We truly have taken the moral high ground. There is, in insurers, a high level of hypocrisy. Insurance design has played a huge role in limiting access,” said Radcliffe. “They are not having an honest conversation with the public.” The best spokespeople are CEOs, CEOs who are physicians, and patients, said Radcliffe. But when pharma does go out there to speak about this topic, they have to think about the implications for their companies. “My priorities are value of innovation, value of innovation and value of innovation,” said Radcliffe.
Cohen added, the story that it costs X amount to make a drug over many years, but we make 10 times that amount in the first year, that is the wrong story. “The argument about the ecosystem and how innovation gets funded over time is the real issue,” he said.
According to Cohen, the press “cherry picks” the data. In terms of total costs for development, “they look at the winners and that’s it,” he said. Not the failures, not the whole picture. The truth is you need to keep investing for a Sovaldi to happen, he said.
Radcliffe said, “If someone asks why do drugs cost so much, I say because cancer and Alzheimer’s are not cured yet. That usually stops people in their tracks and then you can build on the conversation from there.”
Watch the full plenary on partnering360:Insight coming soon. Also check out the great coverage from the attending press:
Monday is still buzzing with one-to-one meeting activity, press coverage, partnering360® interviews, and company presentations. The city should be pumping tonight with a wide range of receptions. See you out on the town.