Thursday, December 13, 2018
AstraZeneca initiated at SunTrust
SunTrust sees oncology fueling growth for AstraZeneca through 2022. SunTrust analyst John Boris initiated AstraZeneca with a Buy rating and $48 price target, saying oncology should fuel growth through 2022 — supported by label expansion of its in-line products and new launches — as well as growth accelerated by 2019 pipeline catalysts.
https://thefly.com/landingPageNews.php?id=2837051
OrthoPediatrics announces U.S. launch of RESPONSE 4.5/5.0mm System
OrthoPediatrics announced the full-scale U.S. launch of its 26th surgical system, the RESPONSE 4.5/5.0mm System following FDA 510 clearance in October. The company’s newest system represents a product expansion for physicians to treat complex scoliosis in smaller stature patients at a younger age. The RESPONSE 4.5/5.0mm System, designed in collaboration with pediatric orthopedic surgeons, builds upon the implant and instrument technology of the RESPONSE 5.5/6.0mm System to expand the platform offering. The new small stature scoliosis system offers a hybrid implant technology allowing the option of either a 4.5mm rod in cobalt-chromium or 5.0mm rod in titanium or cobalt-chromium, multiple implant connector options, and new instrumentation.
https://thefly.com/landingPageNews.php?id=2836965
BioMarin initiated at Oppenheimer
BioMarin initiated with a Perform at Oppenheimer. Oppenheimer analyst Leland Gershell started BioMarin Pharmaceutical with a Perform rating and $92 price target. The analyst sees the shares as range-bound given lack of clarity on the company’s future growth prospects. Further, Gershell notes BioMarin’s “high peer-relative” enterprise value to revenue multiple.
https://thefly.com/landingPageNews.php?id=2836989
Too many drugs will be vying for market share in 15 diseases
Biopharma knows this industry plague all too well: One company finds a new way to tackle a disease and a whole bunch of rivals pile in. And that overcrowding raises the risks for all players—and raises doubts about the optimistic valuations investors are placing on these companies.
In fact, 15 disease areas will become dangerously overcrowded over the next five years, Leerink analysts figure, putting a dozen companies at risk, from big names like Amgen and Biogen to smaller players such as Assembly Biosciences and Dova Pharmaceuticals.
Leerink’s list spans a range of diseases both rare and common. There are the well-covered diseases like wet age-related macular degeneration (AMD) and multiple sclerosis, as well as rare illnesses like the blistering skin condition pemphigus and the blood disorder paroxysmal nocturnal hemoglobinuria (PNH). The analysts ignored drugs that only treat symptoms and focused instead on medicines that change the course of disease.
Even when Leerink assumed a modest 35% success rate of all the drugs in the pipeline addressing these diseases, the analysts concluded competition will intensify more than twofold across the categories over the next five years. But some diseases, such as atopic dermatitis and PNH, will see competitive intensity rise by more than 200%, the analysts predicted.
The companies facing the biggest risks from stepped-up competition aren’t those vying for large patient populations. Instead, it’s those in smaller specialty markets, Leerink contends. Investors have plowed plenty of capital into rare diseases, and that’s caused a pile-up.
All of that investment has allowed companies to invest in “highly directed, relatively cost-efficient research and development,” the analysts wrote, given the small trials required to win approval for rare disease drugs. “Multiple companies are now pouring resources into research for these small indications with relatively undifferentiated medicines or by applying modular or off-the-shelf technologies to develop new medicines for such indications.”
What if current pipelines produce a 100% success rate? That would multiply treatment options for two rare diseases—spinal muscular atrophy (SMA) and pemphigus—by a factor of five. Bad news for Biogen, a contender in the SMA market with its fast-launching Spinraza, and for pemphigus drug developer Principia, Leerink said—and their investors. Biogen’s market cap now stands at $65.4 billion, partly in thanks to Spinraza’s success, and it’s trading at a price-earnings ratio of 21. Principia, which went public in September, is trading at nearly double its IPO price of $17 a share.
Even if there are failures in the pipeline, history shows just how competitive markets can become in just a few short years, the analysts point out, citing wet AMD and multiple myeloma as examples. Both markets were already well established in 2013, but competitive intensity still increased over the following five years.
In wet AMD, competitive intensity was up 230% over the past five years. Leerink expects that intensity to grow even more over the next five years, by 330%.
The competitive landscape is even more crowded in multiple myeloma. Competitive intensity grew 340% in the last five years and Leerink expects it to skyrocket 440% through 2023. That will present risks to Celgene and Amgen, both of which are active in that market.
In fact, it was all of the multiple myeloma data presented at the recent American Society of Hematology (ASH) meeting that inspired the Leerink team to issue its warning about overcrowded markets. At the confab, “we were presented with no less than a dozen different multiple myeloma therapeutic programs targeting B-cell maturation antigen (BCMA), at least a year in advance of the first conceivable approval of any treatment addressing this target,” the analysts wrote.
“This crowding seems to now be typical of promising new indications, targets and pathways,” Leerink added.
Hospital beds from Hill-Rom get sensor tech
- Chicago-based medical products manufacturer Hill-Rom Holdings is launching a new generation of hospital beds equipped with heart and respiratory rate sensors.
- Using EarlySense technology, Centrella Smart+ Beds continuously monitor patients’ vital signs and alerts nurses if a change is detected.
- EarlySense has been shown to help lower “code blue”-related mortality by 83% and cardiac arrests by 86%, according to Hill-Rom’s Monday announcement. Users have also reported reductions in hospital stays, ICU days and early detection of sepsis.
Despite interest in smart room technologies, U.S. hospitals have been slow to adopt them, largely due to lack of capital or infrastructure. Interoperability challenges also remain, as well as security and other concerns around health IT and connected devices.
A few providers have given the tech a try, however. When 131-bed Martin Luther King Jr. Community Hospital opened in Los Angeles in 2015, it offered smart beds that track patients’ movements and interactive systems for patients.
Thomas Jefferson University Hospitals in Philadelphia partnered with IBM Watson Internet of Things to create “cognitive hospital rooms” that give patients more control of their surroundings and prompt actions such as getting up and walking periodically.
In June, NYU Langone Health announced new inpatient facilities with digital enhancements including MyWall, which lets patients manage daily needs, and an intelligent call system to keep nurses connected with patients, cutting down on response times and errors.
Hill-Rom’s new beds aim to improve outcomes by catching warning signs that a patient’s health may be deteriorating.
“EarlySense has been used to effectively monitor close to a million patients, positively affecting outcomes,” Hill-Rom CEO John Groetelaars said in a statement. “By integrating the EarlySense technology into our Centrella beds, we are ushering in a new era in quality of care, whereby all patients can be continuously monitored throughout their entire hospital stay.”
EarlySense’s FDA-cleared technology leverages artificial intelligence and data analytics to help guide decisions about patient care and improve outcomes. The company is based in Ramat Gan, Israel, and Woburn, Massachusetts.
Ardent Health Services files for IPO
- Hospital operator Ardent Health Services has plans for an initial public offering, according to a registration filing submitted to the Securities and Exchange Commission.
- The Nashville-based company expects to raise $100 million from the offering and will use those funds to repay outstanding debt. The remainder of the proceeds might be used to acquire other healthcare facilities or related business, according to the filing submitted last week.
- Following the IPO, the company will trade under the symbol ARDT.
Globally, the healthcare sector has produced 128 IPOs, outdone only by the technology and industrials sectors in 2018, according to a recent report by Ernst & Young.
“Technology, industrials and health care sectors have been the most prolific producers of IPOs globally in [year to date] 2018, suggesting that investors are striking a balance between new innovation and sticking with the basics,” according to the report.
Ardent, which operates 31 acute care hospitals, is nearly $1.3 billion in debt as of Sept. 30, according to the SEC filing.
The company is majority owned by private equity firm, Equity Group Investments, founded by Sam Zell.
The hospital operator generated revenue of $3 billion through the first nine months of the year, ended Sept. 30, and posted a $70 million loss during that same time period.
Ardent’s hospitals are mainly scattered throughout the Midwest and the South. Ardent claims the majority of its health systems are either the No. 1 or No. 2 provider in the markets they serve.
Overall, the firm manages more than 4,700 licensed beds and about 36% of its net patient revenue is tied to Medicare.
Going forward, Ardent said its growth strategy is to expand services within its urban markets, pursue strategic acquisitions and joint ventures, improve margins on recent buys and achieve efficiency through scale.
Berkadia, Freddie Mac finance 2,200 rental units for seniors
Berkadia announced today the closing of $327 million in fixed and variable rate financing for Brookdale Senior Living, Inc. Berkadia’s Senior Managing Directors Heidi Brunet and Lisa Lautner of the Seniors Housing & Healthcare team originated the transaction through Freddie Mac’s new Structured Pool Transaction program. The deal closed on November 16 and will be used to refinance 28 senior housing facilities representing approximately 2,200 units. The ten-year, non-recourse Structured Pool Transaction features fixed and variable rate loan components and a 30-year amortization schedule. The fixed rate component was $213 million and the variable rate component was $114 million.
The property was financed through Freddie Mac’s Green Advantage program, which provides competitive pricing to finance upgrades that reduce energy or water consumption.
“We were excited to work closely with Freddie to utilize their new Structured Pool Transaction program in order to meet Brookdale’s needs for this unique portfolio of facilities,” said Brunet. “As we look ahead to 2019, we anticipate that more owners and operators will be looking for greater flexibility in financing solutions in order to create more value across their property holdings.”
Brookdale’s Treasurer George Hicks commented that “Brookdale places significant value in the ability to build flexibility into its capital structure, and we were very pleased to have been able to work with Berkadia and Freddie Mac to accomplish that on this transaction. The Seniors Housing Structured Pool Transaction allows us to achieve interest rate risk diversification by placing most of the debt into a fixed rate while allowing for the ability to obtain partial releases that can be repaid out of the variable rate portion.”
Freddie Mac’s Structured Pool Transaction targets large transactions and provides enhanced structuring to meet the borrower’s specific needs. The program provides various options, including combinations of fixed and floating rate debt components, no property assignments for the debt type, flexible releases and prepayments, faster Joint Underwriting path, and other customizable features.
“Freddie Mac has refined its Structured Pool Transaction program to achieve optimal flexibility for Senior Housing Borrowers who are financing crossed loan pools,” said Steve Schmidt, National Director of Senior Housing at Freddie Mac Multifamily. “We have already closed three large Senior Housing transactions under the program and our Borrowers are very receptive to the program’s various features. We are grateful to Brookdale and Berkadia for their close collaboration on this significant financing, which helped us further refine this program for the Senior Housing market.”
Berkadia’s Seniors Housing & Healthcare group leads the industry in innovative and comprehensive solutions for even the most complex independent living, assisted living, memory care and skilled nursing projects across the country. In addition to deep market knowledge, the group offers a full set of advisory, underwriting, loan origination services and products including FHA, Fannie Mae, Freddie Mac, Life Company, Proprietary Bridge Lending and Capital Markets Advisory Services. Last year, the team expanded its capabilities by adding an investment sales presence, rounding out its full-suite of services.
In 2017, Berkadia’s Seniors Housing team completed more than $1.7 billion in loan volume, including closing over $1 billion in financings in a single day.
Berkadia, a joint venture of Berkshire Hathaway and Jefferies Financial Group, is a leader in the commercial real estate industry, offering a robust suite of services to our multifamily and commercial property clients. Through our integrated mortgage banking, investment sales and servicing platform, Berkadia delivers comprehensive real estate solutions for the entire life cycle of our clients’ assets.
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