heady early results back down to Earth.
Medically, this subset of patients would still benefit even with higher safety risk; the alternative to these therapies is probably death. The FDA has recognized this with its accelerated approval last month of a related treatment, blinatumumab (Blincyto) from Amgen (NADSAQ: [[ticker:AMGN]]), based on a 185-patient Phase 2 study.
But how will investors react? The enthusiasm in this biotech boom has come to some extent from generalist investors. Will that enthusiasm fade if the cancer immunotherapy story includes safety questions, and potentially longer development timelines?
3) The IPO Window. We keep wondering when it will close. We wondered last spring, when influential Congressman Henry Waxman took aim at Gilead’s pricing. We wondered last summer, when a Federal Reserve report under new chief Janet Yellen said that biotech valuations were “substantially stretched.” We wondered a few days before Christmas, when Express Scripts whacked 8 percent off the Nasdaq’s biotech index in two days. (By market close on Jan. 5, the index had recovered more than half those losses.)
The year ended with the most U.S. IPOs since 2000, thanks in large part to biotech, which accounted for 71 deals, or 25 percent of the total, according to Renaissance Capital’s year-end report. And the pipeline for 2015 is stuffed with hopefuls, with heavy biotech and healthcare activity the past few weeks. (Also filing for an IPO was the trendy fast-food chain Shake Shack, which should brighten the day for investors in obesity and heart disease treatments.)
Is it time to stop worrying and love the window? As always, it’s instructive to see how public markets react to the companies working on less proven science or with longer development roads to travel.
For example, let’s see how Spark Therapeutics’ planned IPO is greeted; the Philadelphia-based startup is developing gene therapies, including one that aims to cure a rare eye disease. It’s already in Phase 3, but in this case, late-stage is relative. There are still no gene therapy treatments approved in the U.S.
The deep IPO pipeline leads back to the question about the window. If it closes, clinical stage companies will need access to private capital to drive forward increasingly expensive trials. Aisling Capital founder Dennis Purcell, whose life-science venture firm focuses on later stage investments, calls it a possible “second Valley of Death.” The first one is the financial desert between academia and private funding where good ideas often die. The second would find biotechs with Phase 1 data, their dreams of going public thwarted, scrambling for private funds to pay for Phase 2. Biotech venture funding has had a renaissance of sorts, but a lot of the big numbers in recent quarters have come from nontraditional or crossover investors who fully anticipate a near-term exit or pole position at a company’s IPO. If the window closes, it remains to be seen how many of them will stay involved in the sector.
4) Two days before Christmas, it practically went unnoticed: the FDA approved a new pharmaceutical treatment for obesity. Well, not exactly new. It’s a higher dose version of a previously approved drug, liraglutide from the Danish firm Novo Nordisk, the world’s largest maker of diabetes treatments. For weight loss, Novo will sell it under the name Saxenda with a 500-person sales force in the U.S.
Can Novo succeed where other drugs for obesity have collectively failed in recent years? With its naltrexone/bupropion combo called Contrave, Orexigen Therapeutics (NASDAQ: [[ticker:OREX]]) has had a better uptake than rival pills from Arena Pharmaceuticals (NASDAQ: [[ticker:ARNA]]) and Vivus (NASDAQ: [[ticker:VVUS]]). But when faced with the gravity of the epidemic the U.S. faces (as does the rest of the world) the overall results are still disappointing.
Other biotechs are working on interventions and could bring news this year or next, and microbiome research aims to unravel the connections between our gut microbes and weight.
But a bigger question, perhaps, is whether the healthcare field starts to pivot from pharmaceutical approaches to more holistic approaches, using digital health apps that combine social media with exercises that have some clinical rigor behind them. Last summer, I wrote about the lack of evidence that digital health was making people healthier, but I noted a few exceptions. Omada Health, for example, wants to help prediabetic people change their habits and avoid turning diabetic, all based on long-practiced and well-vetted national guidelines.
Companion diagnostics are growing more prevalent to steer people toward the right cancer treatments; perhaps this is the year that the healthcare field starts to couple
