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Wednesday, July 24, 2019

Symonds confirmed as new GSK chairman amid CEO’s business rethink

GlaxoSmithKline has confirmed that it has hired Jonathan Symonds as chairman, confirming press speculation that the former Novartis and AstraZeneca finance chief was in the frame to replace the outgoing Sir Philip Hampton.
The company announced at the beginning of the year that Hampton would step down from the non-executive role after more than three and a half years.
Currently deputy group chairman of HSBC since April 2014, Symonds starts his new job on 1 September and has vast experience in the life sciences industry after holding roles as former chief financial officer at Novartis, and AstraZeneca.
He is also non-executive chairman of Proteus Digital Health, a non-executive director of Rubius Therapeutics and chairman of Genomics England Limited.
GSK’s board has approved the appointment following a thorough succession process undertaken by the company’s nominations committee led by Vindi Banga, the company’s senior independent director in which all non-executive directors participated.
While predecessor Hampton was instrumental in the appointment of Emma Walmsley as CEO in 2017, Symonds’ job will be to help oversee the changes the new leader is implementing.
Walmsley is trying to revamp the company’s R&D with leadership from chief scientific officer Hal Barron.
After selling most of its cancer drugs to Novartis a few years back, GSK is making a comeback in oncology following its $5.1 billion acquisition of Tesaro at the beginning of the year.
Over the weekend Barron gave a rare interview to the FT, outlining some of the changes he had already implemented.
He said he had already ended “consensus” decision-making in R&D, with a single person responsible for deciding whether to continue or drop each drug development programme.
According to Barron the former GSK culture had stifled innovation by focusing too much on safe bets rather than game-changing drugs that could lead to major commercial success.
Barron said: “We’re all human, so if what companies reward is the team that takes their molecule all the way, and penalises the teams that fail, then you can imagine that subtly influences people’s interpretation of data.”
Staff are also encouraged to take more risks in pursuit of blockbuster drugs, and aims to play catch-up in cancer immunotherapy, especially if three new oncology drugs produce positive data by the end of the year.
GSK has also struck up a consumer health joint venture that could eventually be spun off into a new company.
In second quarter results announced today group sales £7.8 billion, up +7%  on last year’s Q2 taking into account currency fluctuations, with pharmaceutical sales up 2% to £4.3 billion.
Vaccines sales were £1.6 billion, up 26% AER, and consumer healthcare revenues were £1.9 billion, up 5%.
Andy Smith, analyst at Edison Investment research said: “For at least the second quarter running, pharmaceutical sales were driven by the performance of the Shingrix vaccine in the US. Shingrix is indicated for the prevention of shingles in the growing population of seniors.”
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Anthem Shares Fall Following Earnings Results

Anthem Inc. reported higher earnings and raised its guidance for the year, but shares fell amid concern about the Medicaid business, which pushed a key spending metric higher than expected.
The company’s medical-loss ratio, which represents the share of premiums paid out in claims, was 86.7% in the quarter, higher than the 85.8% that a consensus of analysts had anticipated, according to their research notes.
Shares in the company closed down 4.5% Wednesday at $288.91.
The results for Anthem’s medical-loss ratio, or MLR, are the latest this quarter to draw attention from analysts concerned about medical costs, though insurers have said they aren’t seeing higher-than-expected increases in those trends.
MLR figures among insurers reporting earnings so far, including Anthem, rose compared with last year due to the suspension of a health-insurance tax, an increase that had been expected by analysts. The tax, a pass-through, had previously increased the revenue part of the ratio.
Indianapolis-based Anthem also pointed to issues in its Medicaid business, which it said drove the ratio slightly higher than it had expected.
Anthem executives said on a conference call with analysts that the Medicaid issues were limited to a handful of states. Some states have cracked down on verifying eligibility, and that has changed the mix of enrollees, while the rates the insurer receives haven’t always matched the new enrollment, the company said.
Meanwhile, Anthem said it has won rate increases in some states for the second half of the year, and the company expects its Medicaid results to improve.
The issue is “the lack of appropriate premium and reimbursement rates on the Medicaid businesses,” said financial chief John Gallina.
For Anthem’s second quarter, both operating revenue and adjusted earnings beat analysts’ estimates.
Net income rose 8.1% from the comparable quarter a year earlier to $1.14 billion. Earnings were $4.36 a share, up from $3.98 a share. Adjusted earnings were $4.64 a share, up from $4.25 a share. Analysts polled by FactSet were expecting $4.61 a share.
Operating revenue rose 11% to $25.18 billion. Analysts were expecting $24.96 billion.
Anthem said the launch process for its new pharmacy-benefits manager, IngenioRx, was moving ahead of expectations, and the company now expects IngenioRx’s results to hit the higher end of its previous projections.
The insurer also said it had enrolled a new IngenioRx client, Blue Cross of Idaho, for next year. Anthem has said that it sees fellow Blue Cross Blue Shield insurers as a potentially fertile source of business across various areas.
Anthem raised its outlook for multiple 2019 earnings metrics, but tightened its projected medical-loss ratio range to the higher end of its prior suggestion. The company expects an MLR of 86.2% to 86.5%. It had been expecting that ratio to be 86.2% plus or minus 30 basis points.
The company said it now expects earnings to be more than $18.34 a share, instead of more than $18.27 a share. It said anticipates net unfavorable items included in those earnings to be about 96 cents a share, instead of 93 cents a share.
Anthem projected adjusted earnings to be more than $19.30 a share, instead of more than $19.20 a share. Analysts polled by FactSet are expecting $19.29 a share.
It forecast operating revenue to be about $102 billion, up from a previous view of about $100 billion. Analysts are expecting operating revenue of $100.69 billion. The company also raised its premium revenue guidance to $93 billion to $94 billion, instead of $90.5 billion to $92.5 billion.
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CVS and Aetna to launch social care network

CVS Health is rolling out a network to provide its most vulnerable patients with access to local support for their social care needs.
The retail healthcare giant announced on Wednesday it will collaborate with social care coordinator platform provider Unite Us to launch a platform that will allow Medicaid and dual-eligible beneficiaries covered through its insurance arm Aetna to more easily find and access help from social care providers within their communities.
“I think social determinants of health is something that we, as enterprise, have been working on for some time across various lines of business,” said Dr. Garth Graham, vice president of community health and impact at CVS Health and president of the Aetna Foundation.
Graham said the programs and services will initially be made available to Aetna Medicaid members in Louisville, Ky., and to the health plan’s dual-eligible special needs members in Tampa, Fla., and southeastern Louisiana beginning later this year.
The program’s effectiveness will be evaluated next year by how well it connects members to services and addresses the help they need. The goal is to scale the service nationwide.
Graham said eligible members can be referred by a community healthcare provider or Aetna nurse case managers who will receive information through the platform. He said the network also will likely be folded into CVS Health retail sites.
The network is part of the company’s five-year, $100 million Building Healthier Communities initiative announced in January.
Graham said Aetna later this month also plans to release an analytics tool that helps employers quantify the impact of social determinants on their employee’s health. CVS Health will use the tool to identify the most effective interventions.
The company also will invest more than $50 million in affordable housing in some underserved and at-risk markets throughout the country.
Over the past seven months, the company has invested more than $40 million to construct or renovate over 1,600 affordable housing units in six states.
The importance of addressing socio-economic factors such as food insecurity, housing instability, unemployment and a lack of transportation has been getting greater attention from healthcare providers in recent years as a way to reduce costs and improve health.
Studies have estimated social factors account for as much as 80% toward health outcomes.
In May, Oakland, Calif.-based Kaiser Permanente launched a three-year initiative that involves the creation of its own social care network; when fully deployed, the network will allow the health system’s 12 million members nationally to connect to community supports for their social needs.
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Tenet plans to spin off revenue-cycle subsidiary Conifer

After nearly two years of fielding underwhelming offers for its revenue-cycle subsidiary, Tenet Healthcare Corp. has settled on a decidedly different maneuver: It will spin it off as a separate, publicly-traded company.
Leaders with Dallas-based Tenet have spent the past 18 months finalizing a deal on Conifer Health Solutions. While CEO Ron Rittenmeyer conceded on an investor call Wednesday that an outright sale would have been the company’s first choice, there are several benefits to a tax-free spin off.
Shareholders win in that they’ll get shares in the new company in addition to their Tenet stock, but Rittenmeyer couldn’t say say yet how many they will receive.
“From a shareholder standpoint, I believe it’s a no-brainer,” he said.
The stock market responded positively to Wednesday’s news. Tenet’s shares were up about 14.5% at market close.
Rittenmeyer said the deal, which isn’t scheduled to close for another two years, is also the best path forward for Tenet in that it will have a “reasonable” impact on the company’s debt. Tenet’s long-term debt stood at $14.8 billion as of March 31. He characterized the deal as a “debt-for-debt exchange” that will be tax free. Tenet also would have had to pay taxes on a sale.
The aim of Tenet’s asset sales, including—hypothetically—Conifer, have been to lower the company’s debt. But analysts questioned how much spinning off Conifer will truly achieve that purpose, and some said they believe it could actually increase the company’s debt ratio.
Rittenmeyer said in an interview Tenet has long maintained it will bring down debt through a combination of performance and asset sales, which are ongoing.
“The spin-off will be a debt-to-debt exchange that will put debt on the new company and pay off debt at Tenet,” he said. “So our debt will come down by that process.”
Tenet won’t disclose how much of its debt will shift to Conifer until 6 months before the deal closes, Rittenmeyer told investors on Wednesday morning’s call. He wouldn’t say whether Conifer will have more, less or similar leverage to Tenet. One thing’s for sure, he said Tenet does not plan to overleverage the new company.
“There’s no way we plan to load up Conifer and cause that to have a capital structure problem on the way out,” Rittenmeyer said. “We want it to be successful, so it’s a balancing act.”
Others aren’t convinced that will be the case. Brian Tanquilut, a healthcare equity analyst with Jefferies, thinks the deal will actually increase Tenet’s debt ratio because Conifer’s departure from Tenet will pull more from its earnings than it will from its debt, he said.
“There will be more debt sitting on Tenet’s books than what you’re moving off earnings proportionally to the Conifer spin,” he said.
John Ransom, a managing director in healthcare equity research with Raymond James & Associates, agreed that the deal could nudge Tenet’s debt ratio higher depending on how it plays out, although Conifer will likely pay a dividend to Tenet.
It makes sense that Tenet doesn’t want to load up the new company with debt, Ransom said.
“I think they want to try to dress this up as more of a growth company,” he said.
The deal won’t close until the end of the second quarter of 2021. To get there, Tenet will have to meet regulatory approvals from the Internal Revenue Service and Securities and Exchange Commission, Rittenmeyer said.
Tenet also announced Wednesday the departure of Conifer’s CEO, Stephen Mooney. He will be replaced on an interim basis by Tenet’s Chief Operating Officer, Kyle Burtnett, while the company searches for a permanent replacement. Rittenmeyer said that wasn’t connected to the Conifer announcement, but that Mooney simply wanted to pursue other endeavors.
“It’s very positive; no negative,” Rittenmeyer said. “We’re not pushing him out the door.”
In February, Tenet was in exclusive talks over what would have been a very different Conifer deal. Rittenmeyer revealed Wednesday Tenet had considered a merger with another company that would have ultimately been spun out. He said Tenet decided against that because it wasn’t clear that plan would have yielded enough of a financial return.
Tenet received nine preliminary bids to purchase Conifer, including three that were high enough to consider, Rittenmeyer said. Tenet spoke with 74 potential buyers overall, including 16 strategic buyers and 58 financial buyers. However, the company encountered a number of setbacks when it came to those deals.
Some of the would-be buyers were offering company stock in addition to cash, but Tenet wanted an all-cash sale, Rittenmeyer said. Additionally, he said the bids were not high enough to reflect the performance improvements Tenet has added to Conifer.
A number of the bids included stipulations Tenet could not agree to, such as not being accountable for collecting 100% of Tenet’s cash, “which is critically important to us,” Rittenmeyer said. In the end, none of the proposals would have assured Tenet would have effective recourse if cash collection fell short, Rittenmeyer said.
Some would-be buyers expected Tenet to guarantee that if it sold a hospital, the buyer would continue to use Conifer or, if it didn’t, Tenet would pay Conifer’s new owner for the sold asset’s revenue-cycle management, Rittenmeyer said.
This deal was complicated by the fact that Tenet continues to divest hospitals to pay down its debt, Tanquilut said. Since Tenet is Conifer’s largest customer, buyers would be taking on a shrinking company, he said.
“How do you value an asset that we know at least for its largest client will see shrinking revenue?” Tanquilut said.
On Wednesday’s call, Rittenmeyer said early in the process, shareholders said they believed buyers would pay high multiples for Conifer, possibly in the mid- to high-teens.
Ransom said Tenet likely received an unreasonably high valuation from an investment bank, which may have contributed to the extended time it spent seeking a buyer.
“Whoever told them they were going to get a high-teens valuation, that’s insane,” Ransom said. “They probably shouldn’t have bought that.”
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Extra Pounds May Accelerate Brain Aging

A greater body mass index (BMI) in midlife or early old age was tied to less global gray matter in later life, a cross-sectional study in northern Manhattan found.
People with higher BMI had thinner cortices as they aged than people with lower BMI, reported Tatjana Rundek, MD, PhD, of the University of Miami Miller School of Medicine in Florida, and co-authors in Neurology. Associations were especially strong for those under age 65.
The findings imply “that obesity is associated with reduced gray matter of the brain,” Rundek said in a statement. “In normal aging adults, the overall thinning rate of the cortical mantle is from 0.01 to 0.10 mm per decade, and our results would indicate that being overweight or obese may accelerate aging in the brain by at least a decade.”
The results reinforce a report published earlier this year that tied obesity to a greater risk of gray matter atrophy in Great Britain and echo other recently published data. Some studies, however, have linked midlife obesity to lower dementia risk. Weight loss is common in the preclinical phase of dementia, which can be a decade or more before diagnosis, and which may explain some of the seemingly paradoxical findings.
In this analysis, Rundek and colleagues looked at markers of obesity and brain aging in an MRI substudy of the Northern Manhattan Study (NOMAS), an ongoing longitudinal cohort study of diverse, clinically stroke-free adults ages 50 and older. This sample “is important because racial and ethnic minorities are at greater risk for dementia compared to non-Hispanic whites, and our results are more generalizable to these groups,” co-author Michelle Caunca, PhD, also of the University of Miami, told MedPage Today.
The research team looked at data from 1,289 participants who had an average age of 64 and 10 years of education. Most (60%) were women and 66% were Hispanic/Latino. Baseline assessments included BMI, waist circumference, waist-to-hip ratio, and plasma adiponectin levels.
In total, 346 people had a BMI of less than 25 (normal weight), 571 had a BMI of 25 to 30 (overweight), and 372 had a BMI of 30 or higher (obese). Brain MRIs were obtained a mean of 6 years after baseline measurements were assessed.
Greater BMI (β -0.089, 95% CI -0.153 to -0.025) and a larger waist circumference (β -0.103, 95% CI -0.169 to -0.037) both were significantly tied to thinner cortices, after factoring in vascular risk and other variables. Compared with people of normal weight, every unit increase in BMI was associated with a 0.098 mm thinner cortex in overweight people and a 0.207 mm thinner cortex in obese people.
Relationships were stronger in people under age 65. Similar but weaker links emerged for total cerebral volume, but ties between BMI and white matter hyperintensity volume or subclinical brain infarcts did not reach statistical significance. Links between cortical thickness and other obesity markers were not significant either.
These data suggest the detrimental effects of obesity may be more important for gray matter than for white matter, the researchers observed. They also “raise the possibility that by losing weight, people may be able to stave off aging of their brains and potentially the memory and thinking problems that can come along with brain aging,” Rundek said.
Rising global obesity rates also make these findings “a concern for public health in the future as these people age,” she added.
The analysis had several limitations, the authors noted. Associations may be underestimated due to several factors; survival bias, for example, may have influenced results. The study reports associations only, not causality, and unmeasured confounding may be present.
Last Updated July 24, 2019
The study was supported by the National Institute of Neurological Disorders and Stroke and the Evelyn F. Mcknight brain institute.
Researchers reported relationships with Novartis Pharmaceuticals, BioTelemetry/CardioNet, Bristol-Myers Squibb-Pfizer Partnership, Boehringer Ingelheim, Daiichi-Sankyo, Janssen Pharmaceuticals, Sanofi-Regeneron Partnership, diaDexus, Inc., Organon, Hi-Tech, American Heart Association/American Stroke Association, and UpToDate.
Primary Source
Neurology
Source Reference: Caunca M, et al “Measures of obesity are associated with MRI markers of brain aging: The Northern Manhattan Study” Neurology 2019; DOI: 10.1212/WNL.0000000000007966.
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Dermatology Grows in Popularity… With Investors

Private equity investors hold an ever-growing financial stake in dermatology practices across the U.S., researchers found, a trend that may have implications for patients and the care they receive.
Seventeen dermatology management groups acquired 184 dermatology practices nationwide from May 2012 to May 2018, including 34 practices bought in just the last 5 months of the study period, reported Arash Mostaghimi, MD, MPA, MPH, of Brigham and Women’s Hospital in Boston, and colleagues in JAMA Dermatology.
As of mid-2018, the researchers counted 381 individual dermatology clinics coming under management-group ownership during the 6-year period. One such group — Advanced Dermatology & Cosmetic Surgery, Inc. — acquired 47 practices with 92 individual clinics from 2012 onward, Mostaghimi and colleagues found, and now runs a total of 193 clinics in 14 states around the country.
Notably, the rate of acquisitions increased nearly 12-fold from only five in 2012 to 59 in 2017, the authors wrote.
Private equity involvement in the number of acquired practices and amount of financial deals has increased over the last several years, and this requires being vigilant and doing further research, noted Mostaghimi.
“I think the jury’s out. I think the reason we have to be vigilant is because anytime you introduce a potential profit motive in dermatology or in medicine, you have to be very thoughtful to make sure it doesn’t lead to negative impacts for patients,” Mostaghimi told MedPage Today.
There is limited empirical information concerning the effect of private equity on dermatology, but further oversight and research could be valuable, agreed Joshua Sharfstein, MD, and Jamar Slocum, MD, both of Johns Hopkins Bloomberg School of Public Health in Baltimore, Maryland, in an accompanying editorial. The House of Delegates of the American Medical Association last year requested research into the use of unsupervised non-physicians in these practices, the speed of these private equity takeovers, and the effect on patient access and physician independence, they added.
With the rapid expansion of these acquisitions and the time needed to carry out this research, it might be too late, so “efforts to protect the field of dermatology and the American public from the potential adverse consequences should begin now,” the editorialists emphasized.
All dermatology practices should be transparent by providing the American Academy of Dermatology with basic information about their ownership, along with core measures related to access to emergency and essential care, revenue growth, their use of non-physicians, and the provision of uncompensated care, the editorialists continued. The academy should then make that information public, they urged.
“Until meaningful data are available on what happens to the quality of care and affordability for patients and payers, dermatologists should stop selling their practices to private equity firms, and legislators should prohibit such transactions,” wrote Sharfstein and Slocum.
Mostaghimi and colleagues used five financial databases to gather investment and acquisition information regarding dermatology practices. Transaction information was supplemented with publicly accessible data from dermatology management groups’ press releases, other financial databases, and financial news outlets. Acquisitions were confirmed to be dermatology practices offering cosmetic, surgical, and medical clinical care. Using spatial analytics software, the locations of clinics linked with acquired practices were mapped out.
Limitations of the study included that publicly available information on private-equity transactions is inherently limited, making it challenging to determine the extent of missing information. Mostaghimi and colleagues wrote that one venture capital database listed 15 dermatology management groups not identified in the researchers’ own search, supporting their suspicion that the study underestimated the extent of clinic acquisitions. In particular, they likely missed small physician-owned practices directly acquired by small private equity firms.
Mostaghimi and colleagues also noted that their estimates of the number of clinic locations were approximate because the clinic addresses linked with each practice acquisition came from internet searches.
“Further research is needed to assess whether and how private equity-backed ownership influences clinical decision-making, health care expenditures, and patient outcomes,” the investigators concluded.
Last Updated July 24, 2019
The study was funded by Brigham and Women’s Hospital.
Mostaghimi disclosed relationships with Eli Lilly and Company, Concert, Aclaris, Incyte, and Pfizer.
Sharfstein and Slocum reported no disclosures.
Primary Source
JAMA Dermatology
Source Reference: Tan S, et al “Trends in private equity acquisition of dermatology practices in the United States”JAMA Dermatol 2019; DOI: 10.1001/jamadermatol.2019.1634.
Secondary Source
JAMA Dermatology
Source Reference: Sharfstein JM, Slocum J “Private equity and dermatology — first, do no harm” JAMA Dermatol 2019; DOI: 10.1001/jamadermatol.2019.1322.
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QIAGEN Updates 2019 Outlook Due to China NGS Partnership Restructuring

QIAGEN N.V. (NYSE: QGEN; Frankfurt Prime Standard: QIA) today announced results of operations for the second quarter of 2019, achieving the outlook set for net sales growth and adjusted earnings per share at constant exchange rates (CER).
QIAGEN also announced that it intends to restructure the current format of its next-generation sequencing (NGS) partnership in China due to the slower-than-expected uptake of in-vitro diagnostic clinical sequencing in this country. Sales from this partnership were planned to be approximately $30 million CER for full-year 2019, and weighted primarily to the second half of this year.
As a result, QIAGEN now expects full-year 2019 net sales growth of approximately 5-6% CER (previously about 7-8% CER) and adjusted diluted EPS of approximately $1.42-1.44 CER per share (previously about $1.45-1.47 CER). For the third quarter of 2019, QIAGEN expects net sales to grow approximately 4-5% CER. Adjusted diluted EPS is expected to be about $0.35-0.36 CER per share.
As previously announced, QIAGEN intends to release its full results for the second quarter and first half of 2019 on Tuesday, July 30, at approximately 22:05 Central European Time (CET) / 21:05 GMT / 16:05, and to hold an investor call as planned on Wednesday, July 31, at (EDT) at 15:00 Central European Time (CET) / 14:00 GMT / 9:00 Eastern Daylight Time (EDT). A live webcast will be made available at this website, and a replay will also be made available after the event.
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