Shares of LabCorp moved lower after the company disclosed in its quarterly filing that its Covance Research Products unit was served with a Grand Jury Subpoena on April 1, issued by the Department of Justice in Miami, Florida, requiring the production of documents related to the importation into the United States of live non-human primate shipments originating from or transiting through China, Cambodia, and/or Vietnam from April 1, 2014 through March 28, 2019. The company said it is cooperating with the Department of Justice. Further, on April 4, Tri-Cities Laboratory, a joint venture LabCorp acquired as part of the Pathology Associates Medical Laboratories transaction in May 2017, was served with a subpoena issued by the Department of Justice in Newark, New Jersey, requiring the production of documents related to test orders and payments to various third party companies and individuals. The company said it is cooperating with the Department of Justice. Shares of LabCorp moved lower following the afternoon disclosure and are trading down $1.51 to $164.12. LabCorp competitor Quest Diagnostics (DGX) gave up some of its gains as well but the shares remain up 51c to $98.67 in afternoon trading.
Friday, May 3, 2019
Genentech’s Kadcyla approved by FDA in early breast cancer treatment
Genentech, a member of Roche, announced that the FDA has approved Kadcyla for adjuvant, or after surgery, treatment of people with HER2-positive early breast cancer who have residual invasive disease after neoadjuvant taxane and Herceptin-based treatment. The FDA reviewed and approved the application, leading to an approval 12 weeks after completing the submission. Kadcyla is the first Genentech medicine approved under the RTOR pilot program, which is exploring a more efficient review process to ensure safe and effective treatments are available to patients as early as possible. For this indication, Kadcyla was also granted Breakthrough Therapy Designation, which is designed to expedite the development and review of medicines intended to treat serious or life-threatening diseases. This approval is based on results of the Phase III KATHERINE study showing Kadcyla significantly reduced the risk of invasive breast cancer recurrence or death from any cause by 50% compared to Herceptin as an adjuvant treatment in people with HER2-positive EBC who have residual invasive disease after neoadjuvant taxane and Herceptin-based treatment. At three years, 88.3% of people treated with Kadcyla did not have their breast cancer return compared to 77.0% treated with Herceptin, an absolute improvement of 11.3%.
Indivior slashes sales projections almost in half after $3B federal indictment
With a $3 billion lawsuit from the U.S. government hanging overhead and Suboxone generics on the march, things are looking grim for Indivior. And executives warned Thursday that sales will take a big dive this year, partly because of its legal troubles.
Indivior forecast (PDF) 2019 revenue nearly 50% lighter than last year’s total as the company struggles through a federal indictment, leveled in April, accusing the company of deceiving doctors about the benefits of its opioid dependence drug, Suboxone Film.
In a first-quarter earnings presentation Thursday, Indivior projected sales of $525 million to $575 million on the year—a steep decline from its $1.05 billion top line last year—specifically tied to federal scrutiny of Suboxone and the drug’s loss of exclusivity earlier this year.
“The Group recognizes that its stakeholders now face additional uncertainty arising from the Department of Justice’s action,” the company said. “The Indivior Board of Directors has been extensively advised by external legal counsel that it has strong defenses to the Department of Justice’s allegations.”
In early April, federal prosecutors accused Indivior of presenting misleading claims about the benefits of Suboxone Film, a newer version of the company’s pill. After developing the film in 2007, prosecutors said, Indivior began lying to doctors about the drug’s safety in an attempt to move patients to the film formulation and boost sales.
But misstating the film’s benefits was only one tactic in the company’s fraudulent marketing scheme, prosecutors said, which also included pulling the Suboxone pill off the market in an attempt to deter generic competitors and launching a phone and internet network to connect patients to doctors prescribing Suboxone in a “careless and clinically unwarranted manner.”
In response to the indictment, Suboxone said it was disappointed by the decision and accused federal prosecutors of pursuing “self-serving headlines.”
The federal indictment came at a bad time for Indivior, which lost a key court battle in February. A U.S. Court of Appeals ruled in favor of Indian drugmaker Dr. Reddy’s Laboratories in an injunction battle with Indivior over the launch of its generic competitor to Suboxone, opening the floodgates for U.S. generics.
Immediately after the decision, analysts predicted the ruling could cut Indivior’s market share by 80% within weeks, sending the company’s share prices tumbling by 11% on a day and 70% on the year. As of Thursday, Indivior’s market cap had dropped nearly 74% year to date.
Indivior is one of a group of drugmakers recently stung by federal prosecutors for questionable marketing of opioid and opioid dependence meds.
The U.S. government has targeted Purdue Pharma and its opioid blockbuster Oxycontin in a suite of federal suits, and top executives from drugmaker Insys are currently on trial for claims they pumped sales of the company’s powerful opioid spray, Subsys.
Parkinson’s tremors vanish with incisionless surgery
FDA-approved focused ultrasound technology for tremor-predominant Parkinson’s often instantly eliminates symptoms.
KEY TAKEAWAYS
MRI-guided focused ultrasound offers an incisionless, less invasive alternative to deep brain stimulation.
Penn Medicine offers procedure to patients with tremor-dominant Parkinson’s and essential tremor.
Technology is already used by 13 U.S. medical centers for treatment of essential tremor.
Company is exploring its use for hundreds of purposes, including Alzheimer’s, epilepsy, and brain tumors.
Now you see tremors; now you don’t.
An incisionless surgical treatment that delivers focused ultrasound waves to destroy targeted brain tissue often results in immediate symptom reduction or relief for patients with tremor-predominant Parkinson’s disease. The procedure, which combines focused ultrasound technology with magnetic resonance imaging (MRI), recently received FDA approval and provides an option for patients who cannot take or do not respond to medication. It also offers an alternative to deep brain stimulation (DBS), a more invasive form of treatment, which implants hardware into the patient’s body.
Exablate Neuro technology is available at Penn Medicine in Philadelphia and is already used by 13 U.S. medical centers for treatment of a separate condition, essential tremor, which has similar characteristics and often demonstrates the same instantaneous results. The FDA approved the technology for treatment of essential tremor in 2016.
Nearly 2,000 patients have been treated for one of these two conditions in one of 50 medical facilities globally, and the waiting list at Penn Medicine is growing. More healthcare systems will soon offer the treatment for tremor-resistant Parkinson’s, although financial reimbursement through government or private payers is not yet available.
In addition to treating movement disorders, INSIGHTEC, the company that developed this technology, is working with leading research institutions on clinical studies for numerous other purposes, including treatment of Alzheimer’s, epilepsy, and brain tumors, as well as its possible ability to temporarily disrupt the blood-brain barrier to allow targeted drug delivery. Clinical trials are underway for all of these applications.
“We’re still in the early stages of this technology, and I think there’s going to be a lot of development in terms of what can be done with it,” says neurosurgeon Gordon H. Baltuch, MD, PhD, professor of neurosurgery at the University of Pennsylvania Perelman School of Medicine. Baltuch practices at Pennsylvania Hospital in Philadelphia, one of six hospitals in the Penn Medicine system, and uses the innovation to treat patients with tremor-predominant Parkinson’s, as well as essential tremor.
Baltuch and Maurice Ferré, MD, CEO and chairman of board of INSIGHTEC, provide a look into how this treatment works and the potential that exists for this novel form of technology.
HOW THE INNOVATION WORKS
One advantage of ultrasound is that it does not damage the tissue it passes through, yet focusing multiple waves on a targeted area produces heat, which can destroy, or ablate, the tiny area of the brain causing the tremors.
Finding a way to get ultrasound to penetrate the dense tissue of the skull and accommodate individual variability took years of development. INSIGHTEC, which was founded in 1999 and has dual headquarters in Haifa, Israel, and Miami, developed hardware that produced ultrasound powerful enough to penetrate the skull, and software that corrects for skull shape and thickness.
The technology often can use a facility’s existing MRI, Ferré says, which enables the neurosurgeon to guide the high-energy focused ultrasound waves. The procedure is known as MRgFUS and the treatment is an incisionless thalamotomy.
Patients are awake during the process and wear a special helmet that delivers the ultrasound treatment from inside the MRI machine. They typically start the session unable to drink water from a glass or write legibly because of tremors. Before the ablation occurs, the medical team does preliminary testing to ensure the proper brain location is pinpointed.
TREATMENT DELIVERS IMMEDIATE RESULTS
When the process is complete, tremors on the treated side of the body often completely disappear.
An online video demonstrates Baltuch performing the procedure on a patient with essential tremor. Before treatment the patient tries to bring a cup of water to his mouth, but his tremors prevent him from doing do. After the procedure, he is shown touching the tips of his two index fingers together, remarking, “I couldn’t do this an hour or so ago.” He later brings a water cup directly to his lips with no tremor.
“This has really been my second epiphany in medicine,” says Baltuch. “My first in this field was when we saw the early deep brain stimulation videos.” Watching patients’ symptoms instantly disappear “was like magic,” he says. Witnessing patients discover their Parkinson’s tremors have vanished following a procedure, “is the same thing. When you see it, it’s phenomenal.”
LIMITATIONS, SIDE EFFECTS, AND LONG-TERM OUTLOOK
Baltuch cautions, however, that focused ultrasound thalamotomy is not without risk or side effects, there are limitations, and there are not yet long-term studies.
- Side effects: Side effects include difficulty walking or unsteadiness following the procedure, along with tingling or numbness in the lips or fingers. Most issues resolve within months.
- Limitations: Currently, only one side of the body can be treated. Earlier forms of surgical ablation sometimes resulted in speech difficulties, so for now, the FDA has limited treatment to one side of the brain. The side that controls the patient’s dominant hand is usually targeted. INSIGHTEC is exploring bilateral treatment in medical centers outside the U.S. In addition, while treatment can reduce or eliminate tremors on one side of the body, it does not stop other symptoms of Parkinson’s or slow disease progression.
- Long-term studies: Because five- and 10-year studies have not yet been conducted, “We don’t yet [know the] long-term effectiveness” of focused ultrasound thalamotomy for tremor-dominant Parkinson’s and essential tremor, says Baltuch. “The published data show that this may not be as effective in tremor reduction as, potentially, deep brain stimulation can. And, although it’s non-invasive, you’re still making a thermal lesion [on the brain].”
DBS OR FOCUSED ULTRASOUND?
DBS also has risks, Baltuch says. The procedure involves implanting one or more electrodes in the brain, a neurostimulator in the neck, and a wire connecting the two devices.
“You’re drilling a hole [in the brain] and you’re putting hardware [in the brain and body],” he says. “It’s neurosurgery and, yes, it carries a risk of hemorrhaging, stroke, and infection. But the simulator itself is not making a lesion; you’re neuro-modulating the brain in some way to … get rid of the tremor. You can potentially dial it up or dial it down. With a thalamotomy, there really is no eraser.”
Medication is still the first line of defense for treatment of tremors for patients with either of these conditions. For patients who are medication refractory, Baltuch says there are pros and cons to both procedures.
Focused ultrasound guided thalamotomy “is a great technology to have in addition to a deep brain stimulation,” says Baltuch. “I see it more at the moment as it as complimentary. I present the pluses and minuses of each technique to patients and their families, I’ll give them my recommendation, and then I’ll let them make a choice.”
Ferré points to data that he says demonstrates the enormity of the problem and the potential for another treatment option.
“There are approximately 10 million Americans living with essential tremor,” he says. “Up to 50% of these patients are refractory to medication.” Altogether, essential tremor patients cost the U.S. healthcare system about $142 billion annually, according to a report commissioned by consulting firm Frost & Sullivan. In addition, Ferré adds, “Nearly one million people will be living with Parkinson’s disease in the U.S. by 2020, and in an estimated 26% of these patients, the primary symptom is tremor. Only a small percentage seek DBS intervention.”
“We think the majority of these patients have opted not to be treated because they don’t want the invasiveness of being treated with a deep brain stimulator or with this hardware,” Ferré says.
According to a study published in Movement Disorders on July 25, 2015, 24,000 estimated DBS surgeries were performed in the United States for Parkinson’s and essential tremor between 1998 and 2007, with Parkinson’s patients undergoing most of the surgeries.
TECHNOLOGY HOLDS POTENTIAL TO CHANGE SURGICAL TRENDS
Meanwhile, INSIGHTEC is exploring a much bigger canvas. The company has identified over a hundred different diseases that it could target with its Exablate Neuro technology, says Ferré.
“The trend is to try to treat diseases earlier in their cycle,” he says, adding that focused ultrasound treatment may become a tool in this regard. In addition, “This technology, as a platform, has the capabilities of transforming the way we look at surgery. If you look at the trends of surgeries, you’ve seen it go from open surgery, to laparoscopic surgery, to robotic surgery. We think we’re now the next generation—incisionless surgery— which is completely noninvasive.”
Magellan net income dropped by 96% in Q1
The Scottsdale, Arizona-based for-profit managed care company experienced a horrid Q1 across nearly all financial metrics.
KEY TAKEAWAYS
After net income dropped by $86 million in 2018, Magellan Health continued its slide into 2019.
Earnings per share dropped by 95.6% while adjusted earnings per share fell by 50.6%.
CEO Barry Smith said he’s still “pleased with the actions” Magellan completed in Q1.
Magellan Health put another brutal quarter in the books with net income totalling $4 million, down 96% year-over-year, according to its Q4 earnings report released Thursday morning.
The for-profit managed care company reported earnings per share (EPS) that dropped by 95.6% and adjusted EPS that fell by 50.6%.
While revenues were a lone bright spot for the Scottsdale, Arizona-based company in Q4 2018, the same could not be said in Q1.
Net revenues fell 3.6% year-over-year to $1.7 billion, segment profit fell by 18% to $45.6 million, and adjusted net income slid 54% to $9.6 million.
In the Q4 2018 earnings report, CFO Jonathan Rubin stated that some of the losses faced by Magellan Health were attributable to “out-of-period and non-recurring items,” adding that he does not expect these circumstances to have a material impact in 2019.
In Thursday’s earnings report, he reiterated his confidence in the company’s “long-term growth strategy,” adding that the fundamentals of the business “remain strong.”
C-SUITE PERSPECTIVE:
“Overall, our Healthcare results were solid, and our Pharmacy results for the quarter were impacted by some unfavorable out-of-period and timing items related to network costs,” Barry M. Smith, CEO of Magellan Health, said in a statement. “I’m pleased with the actions we completed during the first quarter in 2019 which represent significant progress towards achieving our margin improvement plan. We’re seeing the benefits of the strong leadership we’ve put in place over the last six months, particularly in our MCC segment. We have a clear path to achieve our full year earnings guidance, and I’m confident in the team and our ability to execute.”
Magellan Health’s cash flows from operations totalled $35.4 million down from $81 million in Q1 2018, due to what the company said were “unusually” high cash flows in 2018 as a result of the “favorable timing of working capital.”
Meanwhile, the company’s unrestricted cash and investments reached $194.9 million at the end of Q1, with $88.4 million related to excess capital and undistributed earnings.
The company stated that it would reaffirm its 2019 guidance but “modestly” lowered its net revenue guidance to a range between $7 billion to $7.2 billion, down from a range of $7.2 billion and $7.5 billion.
ADDITIONAL MAGELLAN Q1 EARNINGS REPORT HIGHLIGHTS:
- Restricted cash and investments decreased by $58.8 million to $468.8 million by the end of Q1.
- Magellan’s pharmacy management segment profit declined $7.2 million during the year, totalling $8.3 million.
- Healthcare segment profit was $45 million in Q1, down $900,000 year-over-year.
CMS stops Medicaid from paying home health union dues
The CMS finalized a rule on Thursday to no longer allow unions for home healthcare workers to get dues paid via state Medicaid payments.
The rule, which overturns a 2014 rule, no longer allows a state to divert payments from Medicaid to anyone but the provider with few exceptions. The agency charges that the 2014 rule that allowed unions to get dues from payments stretches the meaning of the federal statute and must be struck down.
“This final rule is intended to ensure that providers receive their complete payment, and that any circumstance where a state redirects part of a provider’s payment is clearly allowed under the law,” CMS Administrator Seema Verma said in a statement.
“The effect of this final rule is the elimination of one method of getting payment from A to B,” the final rule said. “It in no way prevents healthcare workers from purchasing health insurance, enrolling in trainings, or paying dues to a union or other association.”
The rule is the latest in a larger fight over union rights with the Trump administration. Some critics charge that the rule is a backdoor attempt to curb the power of unions because it creates an extra step for workers to pay union dues.
“Why can I and most workers have payroll deductions that can contribute to health insurance, my retirement savings, my union dues, but these workers can’t?” asked Caitlin Connolly, director of social insurance for the pro-union advocacy group National Employer Law Program. “We know that most union members and workers like teachers, firefighters and police officers are also making these contributions through payroll deductions.”
Advocates of right-to-work laws, which state that an employee in a unionized workplace doesn’t have to pay dues, say that the CMS rule protects taxpayer dollars.
“While the rule will still need to be robustly enforced, today’s announcement is an encouraging action toward stopping union bosses from unlawfully using public payment systems to intercept tax dollars intended for providers caring for those in need,” said Mark Mix, president of the National Right to Work Legal Defense Foundation, a nonprofit that pursues litigation in favor of right-to-work.
Pharmacy benefits profitability concerns send Cigna shares lower
Investor concerns that Cigna Corp’s pharmacy benefits business would not generate the profits expected from its $52 billion acquisition of Express Scripts sent the health insurer’s shares down more than 5 percent on Thursday.
On a conference call to discuss the company’s first-quarter results, Cigna Chief Executive David Cordani said performance at its health services unit, which includes the pharmacy benefits management (PBM) business, was in line with expectations.
But analysts wanted to know how PBM profits would hold up under the increased transparency that the Trump administration and U.S. legislators have been pushing for, including calls to pass along rebates from drugmakers to consumers.
Investors are likely worried that margins in the pharmacy benefits business could be affected by a more competitive environment, and that Cigna may have to cut prices in order to grow, Bernstein analyst Lance Wilkes said of Thursday’s stock decline.
“When you look at just the number of questions (Cigna was asked) on PBMs and PBM margins, that was probably an indication that it was catching the market by surprise,” Wilkes said.
“They beat earnings but this probably tarnished the beat a little bit,” he added.
PBM profits typically come from drug discounts and administrative fees, and are partly tied to drug prices. Any decline in discounts on prescription medicines would likely eat into profits.
Cigna said it continued to expect earnings of $20 to $21 per share in 2021, and that it was making “very good progress” integrating Express Scripts into its business.
The acquisition put Cigna in direct competition with CVS Health Corp, which acquired health insurer Aetna to go with its PBM and retail pharmacy businesses, as well as UnitedHealth Group Inc and its PBM unit, Optum.
Cigna said it expects to retain 96 percent to 98 percent of pharmacy services customers in 2020. CVS on Wednesday said it expected a retention rate in the mid-90’s.
Excluding items, Cigna earned $3.90 per share in the quarter, beating the average analyst estimate by 17 cents, according to IBES data from Refinitiv.
Cigna raised both ends of its 2019 adjusted revenue forecast range by $1 billion and now expects between $132.5 billion and $134.5 billion.
The health insurer also raised its full-year forecast for adjusted income from operations to between $16.25 and $16.65 per share from $16 to $16.50.
Sales at the company’s integrated medical unit that sells commercial and government health plans rose nearly 13 percent to $9.2 billion in the quarter.
Net income rose 49.5 percent to $1.37 billion, while adjusted revenue of $33.43 billion and topped Wall Street estimates of $33.11 billion.
Subscribe to:
Posts (Atom)