Life Science Today 077 – Johnson & Johnson, Organon, Medicare, PharmaEssentia, Arbor Biotechnologies, Glen de Vries
Originally Published as The Niche Podcast
Introduction
Welcome to The Niche Podcast – Your weekly rundown of the biotech, pharma, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, a giant breaks in two, acquisitions in Women’s Health, Medicare cost, rare approvals, more CRISPR, and a legacy
Disclaimer
The views expressed on The Niche Podcast are those of the host and guests. They do not necessarily reflect the opinions of any organizations or companies with which they are affiliated.
J&J to Break Up
After years of consolidation and consistent growth through the pandemic we are beginning to note a sea change in big pharma. There have always been waves of organizations growing and then breaking apart into smaller pieces. For last decade it’s been mostly consolidation.
Johnson and Johnson has been the subject of speculation about a split for some time, but the rumors were never heavily substantiated until this week. The company has now announced the spinoff a consumer health division that will be separated from their pharmaceuticals division. After years of growth the, 134,000+ employee company has a market cap of $430B. A big portion of the value proposition in the split is to move the consumer division along with it’s operational pipelines, margins, and liabilities, to a separate funnel from the pharmaceutical companies primary interest in drug and device development. This segmentation should improve focus and efficiency, while getting liabilities like a multi-billion dollar baby powder lawsuit away from the pharma profits.
It’s important to remember this move is not coming in isolation. Roche and Novartis are disentangling, as we noted last week. Merck spun out Organon over the last year. Since many of these movements follow patterns, it won’t be surprising to see more break ups of giants in the coming months. The hope is that these moves reposition bloated corporations into more focused, if still insanely large institutions.
Organon Makes Acquisition
Speaking of spinoffs, the Merck spinoff Organon has made another acquisition. The plan was always to take a leading role in women’s health, so it’s no big surprise to see more moves in that direction. Organon has announced they will be purchasing Finland based Forendo Pharma for $75M upfront with up to $954M in developmental and commercial milestones. Forendo’s lead product is preclinical therapy for endometriosis. The often painful and potentially dangerous condition occurs when uterine tissue grows outside the uterus, commonly in the fallopian tubes, ovaries, or even the intestines. Forendo’s therapy transforms estradone into estradiol. Evidence suggests this biochemical transformation with their therapy could primarily occur at the site of endometrial lesions, potentially decreasing the negative side effects associated with systemic estradiol therapies. While in early stages, this, along with Organon’s other bets seem to be long term investments in a concerted direction. Their net profits are down in the meantime, but that’s no surprise – part of the planned spinoff was to cut some of the anticipated losses around current women’s health products. I’d expect a continued string of thoughtful investments in the same direction by Organon over the next couple of years as they fill out their mid to longer term pipeline.
Medicare Gets a Price Hike… Biogen to Blame?
Medicare Part B saw a significant increase of over 14% this year. While the numbers may be small, the impact on seniors with a fixed income can be serious. Officials argue that the increases are offset by a larger increase in social security benefits for cost of living. The real question is why the increase? Some have speculated that the potential dramatic cost increase with the role out of Biogen’s $56,000/year Alzheimer’s therapy Aduhelm is to blame. Hard to imagine that’s the case when Biogen reported just $300,000 in sales last quarter. There are other Alzheimer’s potentials in the pipeline and perhaps Medicare is taking a guess that it’s better to start moving up the numbers now then face a big deficit next year. If a major Alzheimer’s therapy does take off, even if it were a fraction of the cost of Aduhelm, it would likely have a significant impact on Medicare budgets. On the other hand, I doubt $35/month will really change the math here.
Rare Disease Approvals
The FDA has approved PharmaEssentia Corporations new therapy, sold as Besremi, as an every other week injection to treat adults with polycythemia vera. With less than 7000 adults diagnosed with the condition each year in the united states, polycythemia vera definitely counts as a rare disease. The condition causes an overproduction of red blood cells resulting in thick blood that can clot and lead to death. Besremi is an interferon therapy that appears to work by downregulating red blood cell production and helping patients stabilize. Obviously any time you are re-regulating red blood cell productions there are risk factors stopping production too much resulting in thin blood. While Besremi passes most checks, the data suggests it’s certainly a therapy that requires monitoring patient to patient to maintain safety. But, it means one more rare disease now has a meaningful treatment option.
Arbor Biotechnologies Brings More CRISPR Money
Ever heard of a little technology called CRISPR? Basically every investor has. This week Arbor Biotechnologies came out of stealth mode with an oversubscribed $215M series B to drive CRISPR technology targeting liver and CNS diseases into the clinical. Now Arbor has a lot going for them in shrinking CRISPR technologies to improve mechanisms of delivery. Most notably they made a deal to sell one tiny CRISPR Cas13d over to Vertex. So maybe it’s just one big Happy family, but Arbor is now pushing off to advance their own clinical pipeline. With lead candidates a good distance from clinical studies $215M may seem like a hefty raise, but with lots of industrywide CRISPR opportunities companies like Arbor may make a name just creating and licensing new molecular technologies.
In Memory of Glen de Vries
This week the clinical research industry lost an important leader in a small plane crash Thursday. Glen de Vries was the 49 year old co-founder of Medidata and a pioneer in modernizing clinical research. Glen envisioned using technology to make clinical trials safer, more efficient, and more inclusive. Back in 1999 he co-founded Medidata and helped lead the company from venture, to public, and eventually to sell to Dassault Systemes in 2018 for $5.8B. And while his career made him a name across the industry, he obtained global fame last month when he took off into space on a Blue Origin rocket beside William Shatner.
I did not know Glen personally. But I’m struck by something. Never in my life have I seen such an outpouring on LinkedIn when someone passes. Glen had an impact on people. His vision, infectious smile, and life-to-the-fullest intensity seem to infuse every photograph, tribute, and quote I see. I am so thankful for his pioneering work to drive innovation and technology in this industry. Moving the needle on clinical research is hard. There are so many stakeholders. So many systems to navigate. So many barriers to overcome. But my job and my career in many ways exist because of the work of Glen and others whose vision said “we can do clinical research better.” And we have made clinical research better. And we will keep doing so together.
I end todays show in silence. In honor of his great contribution to our field and to the lives of so many that he touched.
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Story References
Johnson & Johnson
Organon
Medicare
PharmaEssentia
Arbor Biotechnologies
Glen de Vries
Music by Luke Goodson
https://www.soundcloud.com/lukegoodson
About the Show
The Niche Podcast brings you interviews with industry experts and top stories from last week in biotech, pharma, clinical research, and the life science industries. You can expect highlights about new technologies, biotech and pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to IPOs. The Niche also tries to highlight trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed, move through clinical trials, and become approved by regulatory agencies. It’s news, with a dash of perspective, focused on these Niche industries.