Biotech week ahead, July 29

Biotech stocks moved mostly sideways during the week, although there was a flurry of activity in the space. Earnings from the sector began to trickle in, with Bristol-Myers Squibb Co (NYSE: BMY) reporting forecast-beating earnings.

Intec Pharma Ltd (NASDAQ: NTEC) and Marinus Pharmaceuticals Inc (NASDAQ: MRNS) lost much of their market value this week on clinical trial setbacks.

The following are some of the key biotech catalysts in the upcoming week:

Conferences

• 2nd Annual Biotechnology Congress: July 29-30 in Chicago.
• 8th International Conference on Stroke and Cerebrovascular Diseases: July 29-30 in Stockholm, Sweden.
• 27th International Congress on Cardiology and Medical Interventions: July 31-Aug. 1 in Chicago.

Clinical Trial Readouts (mid-2019 releases)

• Immunic Inc (NASDAQ: IMUX): interim Phase 2 dosing analysis for IMU-838 in ulcerative colitis.
• Conatus Pharmaceuticals Inc (NASDAQ: CNAT): 48-week liver function data from a Phase 2 study dubbed ENCORE-PH for emricasan in non-alcoholic steatohepatitis cirrhosis.
• Alkermes Plc (NASDAQ: ALKS): Phase 3 top-line data for diroximel fumarate in relapsing remitting multiple sclerosis.
• IMMUTEP LTD/S ADR (NASDAQ: IMMP): initial Phase 2 data for eftilagimod alpha and Keytruda in non-small cell lung cancer and head and neck cancer.
• Aevi Genomic Medicine Inc (NASDAQ: GNMX): Phase 1b data for AEVI-002 in pediatric onset Crohn’s disease.
• Tricida Inc (NASDAQ: TCDA): 12-month registration stability data from a Phase 3 study of TRC 101 in chronic kidney disease.
• Curis, Inc. (NASDAQ: CRIS): Phase 1 data for CA-4948 in relapsed or refractory non-Hodgkin lymphoma.
• Ultragenyx Pharmaceutical Inc (NASDAQ: RARE): Phase 1/2 data from a second cohort that is evaluating its DTX401 in Glycogen storage disease type 1 and Phase 1/2 third cohort data for DTX301 in ornithine transcarbamylase.
• Allakos Inc (NASDAQ: ALLK): Phase 2 top-line data for AK002 in eosinophilic gastritis.
• Leap Therapeutics Inc (NASDAQ: LPTXV): Phase 1/2 data for DKN-01 plus Keytruda in esophagogastric adenocarcinoma.
• Cidara Therapeutics Inc (NASDAQ: CDTX): Phase 2 data for rezafungin in candidemia.
• Akcea Therapeutics Inc (NASDAQ: AKCA): Phase 3 data for volanesorsen in familial partial lipodystrophy.
• Deciphera Pharmaceuticals Inc (NASDAQ: DCPH) and Zai Lab Ltd (NASDAQ: ZLAB): Phase 3 data for DCC-2618 from a study dubbed INVICTUS in gastrointestinal stromal tumors
• ZEALAND PHARMA/S ADR (NASDAQ: ZEAL): Phase 1b data for dasiglucagon in obesity/diabetes.
• Aclaris Therapeutics Inc (NASDAQ: ACRS): Phase 2 open label 6-month data for ATI-502 in vitiligo and Phase 2 data for ATI-502 in atopic dermatitis.
• AnaptysBio Inc (NASDAQ: ANAB): Phase 2 data for ANB019 in generalized pustular psoriasis.
• Spark Therapeutics Inc (NASDAQ: ONCE): additional Phase 1/2 data for SPK-8011 in hemophilia A

Earnings

Monday, July 29

• Medpace Holdings Inc (NASDAQ: MEDP) (before the market open)
• Alimera Sciences Inc (NASDAQ: ALIM) (after the market close)
• Neurocrine Biosciences, Inc. (NASDAQ: NBIX) (after the market close)
• Silk Road Medical Inc (NASDAQ: SILK) (after the market close)

Tuesday, July 30

• Eli Lilly And Co (NYSE: LLY) (before the market open)
• Iradimed Corp (NASDAQ: IRMD) (before the market open)
• Blueprint Medicines Corp (NASDAQ: BPMC) (before the market open)
• Meridian Bioscience, Inc. (NASDAQ: VIVO) (before the market open)
• Merck & Co., Inc. (NYSE: MRK) (before the market open)
• Incyte Corporation (NASDAQ: INCY) (before the market open)
• Infinity Pharmaceuticals Inc. (NASDAQ: INFI) (before the market open)
• NeoGenomics, Inc. (NASDAQ: NEO) (before the market open)
• Pfizer Inc. (NYSE: PFE) (before the market open)
• Amgen, Inc. (NASDAQ: AMGN) (after the market close)
• AtriCure Inc. (NASDAQ: ATRC) (after the market close)
• EXACT Sciences Corporation (NASDAQ: EXAS) (after the market close)
• T2 Biosystems Inc (NASDAQ: TTOO) (after the market close)
• BioTelemetry Inc (NASDAQ: BEAT) (after the market close)
• Gilead Sciences, Inc. (NASDAQ: GILD) (after the market close)
• Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) (after the market close)
• Veracyte Inc (NASDAQ: VCYT) (after the market close)

Wednesday, July 31

• Amarin Corporation plc (NASDAQ: AMRN) (before the market open)
• Strongbridge Biopharma plc (NASDAQ: SBBP) (before the market open)
• United Therapeutics Corporation (NASDAQ: UTHR) (before the market open)
• Nuvectra Corp (NASDAQ: NVTR) (after the market close)
• ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) (after the market close)
• Exelixis, Inc. (NASDAQ: EXEL) (after the market close)
• DexCom, Inc. (NASDAQ: DXCM) (after the market close)
• Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) (after the market close)
• MacroGenics Inc (NASDAQ: MGNX) (after the market close)
• Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) (after the market close)
• SurModics, Inc. (NASDAQ: SRDX) (after the market close)

Thursday, Aug. 1

• Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) (before the market open)
• Akorn, Inc. (NASDAQ: AKRX) (before the market open)
• ABIOMED, Inc. (NASDAQ: ABMD) (before the market open)
• Agios Pharmaceuticals Inc (NASDAQ: AGIO) (before the market open)
• Clovis Oncology Inc (NASDAQ: CLVS) (before the market open)
• Concert Pharmaceuticals Inc (NASDAQ: CNCE) (before the market open)
• Syros Pharmaceuticals Inc (NASDAQ: SYRS) (before the market open)
• Insmed Incorporated (NASDAQ: INSM) (before the market open)
• Intellia Therapeutics Inc (NASDAQ: NTLA) (before the market open)
• Genomic Health, Inc. (NASDAQ: GHDX) (after the market close)
• Acorda Therapeutics Inc (NASDAQ: ACOR) (after the market close)
• Emergent Biosolutions Inc (NYSE: EBS) (after the market close)
• BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) (after the market close)
• Coherus Biosciences Inc (NASDAQ: CHRS) (after the market close)
• Kindred Biosciences Inc (NASDAQ: KIN) (after the market close)
• Bio-Rad Laboratories, Inc. (NYSE: BIO) (after the market close)
• Geron Corporation (NASDAQ: GERN) (after the market close)
• Corvus Pharmaceuticals Inc (NASDAQ: CRVS) (after the market close)
• CareDx Inc (NASDAQ: CDNA) (after the market close)
• Globus Medical Inc (NYSE: GMED) (after the market close)
• Verastem Inc (NASDAQ: VSTM) (after the market close)
• Ultragenyx (after the market close)
• Kura Oncology Inc (NASDAQ: KURA) (after the market close)

Friday, Aug. 2

• Momenta Pharmaceuticals, Inc. (NASDAQ: MNTA) (before the market open)

IPO

Rapt Therapeutics, a biotech company developing therapies for inflammatory diseases and cancer, is set to offer 5 million shares at an estimated price range of $14-$16. The company proposes to list its shares on the Nasdaq under the ticker symbol “RAPT.”

https://www.benzinga.com/general/biotech/19/07/14136579/the-week-ahead-in-biotech-pending-clinical-readouts-earnings-dominate

Aging baby boomers becoming new face of cannabis

Seventy-two-year-old Nancy Young shakes almost incessantly, a cruel symptom of the Parkinson’s disease she’s borne for decades. The Otego, New York, resident, who lives much of the time in Sutton with her daughter, Michelle Edelstein, Sutton Senior Centerdirector, has taken prescribed opioids OxyContin and Percocet for nearly 30 years. She said it “just barely covers the pain” of her condition.

Around Christmastime last year, Ms. Young decided, on the recommendation of people she met in the supermarket and eventually, her doctor, to try marijuana to ease her symptoms.

She didn’t roll a joint or buy a bong. Instead, she went with her daughter to a Canna Care Docs clinic in Worcester to receive a medical marijuana certification, registered with the state and purchased some edible marijuana products at the Curaleafdispensary in Oxford.

“I was looking for a way to walk and keep my feet under me, and to stop this infernal shaking,” Ms. Young said in an interview at the Sutton Senior Center.

It took a bit of experimenting to find the right way to consume cannabis. First she tried a cannabis-infused chocolate bar.

“I’m a chocaholic and I took the whole thing,” she said. “My head was going like nobody’s business.”

Ms. Young learned the hard way about “start low, go slow” with marijuana edibles. And she found a different medium she much prefers: a tincture she drops under her tongue when the tremors get bad, especially in the evening.

“It makes me relax, which in turn slows the shaking down and I can grab some sleep,” she said.

“I’m grateful to see her not take those opioids so much,” Ms. Edelstein said. Noting her mother’s reduced pain and relief from other pharmaceutical side effects, she said, “I have to say, I’m kind of an advocate for it.”

Ms. Young is one of the fastest-growing group of marijuana consumers: older adults.

A recently released study out of New York University, supported by the National Institute on Drug Abuse, looked at data from the National Survey on Drug Use and Health, an annual survey of 70,000 Americans of all ages.

Researchers found that in the 2015-2016 survey, 9% of adults ages 50 to 64, and 2.9% of those 65 or older, reported using marijuana in the past year.

That prevalence is a 27% increase for 50- to 64-year-olds, and a 107% increase – essentially doubling – for those 65 or older since the 2012-2013 survey. Compared with the 2006-2007 survey, the increases are 100% for 50- to 64-year-olds and 625% for 65 or older.

A Massachusetts survey by the state Department of Public Health, conducted in late 2017, before recreational marijuana stores were open, found that 18.7% of people in their 50s, or nearly one in five residents in that age group; 14.1% of people in their 60s; and 3.4% of residents age 70 or older reported using marijuana in the past month.

“Grandma is certainly the new face of cannabis,” said Stephanie Gluchacki, president of clinical operations for Canna Care Docs, which has 11 medical offices in Massachusetts.

She said about 24%, nearly one out of four, of their patients are ages 60 to 74, and another 10% are over 75.

“It’s definitely not the demographic one would anticipate to see,” she said.

Ann Brum, spokeswoman for MedWell Health & Wellness, another clinical group that certifies patients with qualifying conditions for medical marijuana eligibility, said baby boomers, roughly ages 55 to 73, and older patients are a growing and important part of the marijuana market.

She highlighted a market trend report by BDS Analytics, which found that two out of three baby-boomer consumers use cannabis for medical or health reasons, often to replace prescription medication.

“They’ve just had it with polypharma, med after med,” Ms. Brum said.

Another recent survey by researchers at Worcester-based Cannabis Community Care and Research Network and the University of Massachusetts at Dartmouth reported that medical marijuana consumers ages 50 or older primarily use cannabis to treat chronic pain, anxiety, depression, insomnia and arthritis.

Approximately one in five survey respondents reported that cannabis helped them reduce use of opioids. Nearly a third reduced their use of other medications.

Medical marijuana clinicians and dispensaries are targeting their outreach to tap into this growing demographic.

MedWell, which has brick-and-mortar offices elsewhere in the state, offers local pop-up medical cannabis evaluation and certification clinics, such as one scheduled for Aug. 11at the Hilton Garden Inn in Worcester.

MedWell clinicians also go into assisted living and retirement communities, or will conduct home visits to evaluate and educate patients on medical cannabis, according to Ms. Brum.

Canna Care Docs offers lunch and learn sessions at senior centers. A nurse practitioner discusses legal and health-related aspects of cannabis, but evaluations and certifications aren’t conducted as part of the seminars.

Medical marijuana dispensaries are invited to participate in these educational sessions as well.

“These Q&As allow for open conversation without judgment,” Ms. Gluchacki said.

There are several common themes among seniors, according to Ms. Gluchacki. They’re seeking relief from chronic pain, especially arthritis; they’re looking to cannabis as a sleep aid; and they’re interested in cannabis’ role in curbing Alzheimer’s symptoms, for which there is some, but not rigorously tested, association, according to the Alzheimer’s Association.

Seniors are also cost-conscious and look to cannabis as a cheaper alternative to prescription medication, she said.

Several in the marijuana industry said seniors were less likely to rely on the internet for information, preferring to have printed material to share with family and friends, and to rely on word-of-mouth.

Ms. Edelstein arranged for a lunch and learn with Canna Care Docs and Curaleaf in May.

Worried at first about what the town would think, she said, “I ran this program with a nervous stomach. And it was amazing.”

Several seniors pursued medical marijuana after that presentation, but most were still reluctant to talk publicly about their use.

“There’s a stigma that goes with it, and that’s a shame,” Ms. Edelstein said. “If it can help somebody, I say, shout it from the rooftops.”

Northbridge Senior Center has scheduled a cannabis information session with Canna Care Docs for Sept. 4.

Uxbridge Senior Center is exploring hosting an information session, according to Director Lisa Bernard.

Last year, Worcester Senior Center hosted a presentation on medical marijuana by Dr. Alan Erlich of University of Massachusetts Medical School, according to Senior Center Director Amy Vogel Waters. In addition, there will be a presentation on the use of CBD oil at the Senior Center on Sept. 19 to be made by pharmacist Vrushank Patel, manager of Auburn Pharmacy & Home Health Care.

Local retail pot shops and medical marijuana dispensaries have taken notice of the older customers who come in.

“It’s what we’re seeing,” said Caroline Frankel, owner of Caroline’s Cannabis in Uxbridge, a recreational marijuana retail store. “About 15% to 20% of our customers are over 65.”

Older adults were looking for a healthier alternative to prescription medication, she said. “The biggest thing: Seniors can’t sleep.”

Some seniors opt to buy recreational marijuana for health treatment rather than go through the expense and procedures for medical certification and registration with the state, Ms. Frankel said.

She’s also seeing older “hard-core enthusiasts who are excited to have an outlet to purchase” marijuana legally.

“In Worcester in particular, we’ve really got a good 50-plus demographic and we see that increasing,” said Matthew J. Huron, founder and CEO of Good Chemistry, which has a medical marijuana dispensary and adult-use retail store at 9 Harrison St.

He said older customers often look for advice on products, which have proliferated from what was available 30 or 40 years ago. “They have more patience, are a little more eager to learn,” he said.

Westword, a publication based in Denver, awarded Good Chemistry’s Coloradolocations the “best dispensary to take your grandmother” in 2017. The award highlighted Good Chemistry’s easy-to-understand description of different cannabis strains’ effects.

“We’re very proud of that,” said Mr. Huron.

Kate Steinberg, program manager of Curaleaf Cares, said outreach in senior centers was often the first place the company connects with many seniors.

When they come to a dispensary, located in Oxford and Hanover, they can have an extensive personal consultation and are sent home with a few products to try.

“We love that experience and knowledge we gain to maybe help other seniors,” Ms. Steinberg said. “They never have to go home, look in their bag and say, ‘Now what?’ ”

“Education is a hallmark of our company. People are overwhelmed by the number of different products,” said Katrina Yolen, Curaleaf’s senior vice president of marketing.

Tyler Coste, dispensary manager at The Botanist, a medical marijuana dispensary at 65 Pullman St., Worcester, said 35% of The Botanist’s customers are 65 or older.

He said tinctures, which are often heavily based on the nonpsychoactive CBD component of cannabis, were one of the largest-selling products for older adults. Transdermal patches and roll-on ointments were also popular.

“Easily the thing we hear the most is, ‘I don’t want to get high,’ ” said Ross Riley, outreach manager at The Botanist.

The Botanist started holding outreach seminars in Sterling, according to Mr. Riley, first for the general population and then one for seniors.

Word-of-mouth spread. “The more we’ve seen, they’ve told their friends, they go get (medical marijuana) cards,” Mr. Coste said. “That blows me away. That’s such a rewarding feeling.”

The need for information about today’s wide array of cannabis for the Woodstockgeneration was a theme cited across the industry.

A magazine publisher in Western Massachusetts recently launched Different Leaf, a print-only quarterly billed as a journal of cannabis culture, targeted to readers 45 and older.

“There are 150 to 200 products in every dispensary. It’s going to be overwhelming,” said Publisher and Editor-in-Chief Michael Kusek of Northampton, who previously ran an arts and culture magazine.

Mr. Kusek, 50, said after talking to people in the industry, he learned, “the overwhelming amount of their customer base were 50-plus.” But existing marijuana media was either business-to-business or targeted to young adults.

“My goal is to be a trusted source about cannabis,” he said.

Not everyone is pleased with the growing interest in marijuana among older adults.

“I have tremendous respect for the brain. I’m not in favor of people putting things in their body that potentially adversely affect the brain,” said Dr. Anthony J. Rothschild, professor of psychiatry at UMass Medical School.

Dr. Rothschild was one of more than 40 pediatricians, mental health and addiction clinicians and scientists in Massachusetts who signed in May a statement of concern about marijuana policy in Massachusetts.

He said the impact of THC, the psychoactive component of cannabis, on older adults is just not known. Some studies have shown harmful effects, including cognitive problems and decreased functioning on neuropsychological testing.

“Older people’s brains are more sensitive to things,” he said. “As you age, there’s loss of brain tissue. We don’t have enough data to say if it (marijuana) is bad or good.”

He said more research needed to be done, particularly on conditions such as Alzheimer’s, for which data are conflicting.

Dr. Rothschild was also concerned about people driving under the influence of marijuana and about self-medicating, similar to alcohol use, instead of seeking a doctor’s advice for conditions such as depression and sleep problems.

There’s big money in marijuana too, in industry profits as well as in tax revenue for the state and municipalities. “That’s something about this that makes me nervous,” he said.

“What bothers me,” Dr. Rothschild said, “is the enthusiasm by which a large part of the population is embracing this.”

https://www.marketscreener.com/CURALEAF-HOLDINGS-INC-46901467/news/Curaleaf-Aging-baby-boomers-becoming-new-face-of-cannabis-28972442/

Exact Sciences in advanced talks to buy Genomic Health for $2.8B

Cancer diagnostics company Exact Sciences Corp is in advanced negotiations to buy healthcare company Genomic Health Inc for about $2.8 billion to strengthen its cancer testing, Bloomberg reported on Saturday.

A deal could be announced as early as next week but the talks could still be delayed or fall apart altogether, according to the report, which cited people familiar with the matter.

https://www.marketscreener.com/EXACT-SCIENCES-CORPORATIO-9232/news/Exact-Sciences-in-advanced-talks-to-buy-Genomic-Health-for-2-8-billion-Bloomberg-28972438/?countview=0

Pfizer May Buy Low and Smart in Generics Gambit

Pfizer Chief Executive Albert Bourla knows a deal when he sees one.

The pharmaceuticals giant is in talks to merge its off-patent drugs business with generics manufacturer Mylan, The Wall Street Journal reported. The companies have discussed a stock deal in which Pfizer shareholders would own the majority of the new company, which would include well-known drugs like EpiPen, Lipitor and Viagra.

The generics industry has hit a rough patch: Consolidation of major drug-buying consortia has led to falling prices for manufacturers in the U.S. That has eroded revenues and led to severe share-price declines for companies in the sector. Adding scale is one possible way to contend with those harsh realities. Mylan also has a large presence overseas and a well-regarded pipeline of new products, such as cheaper versions of expensive biologic medications.

Should the deal reach the finish line, it certainly helps that Mr. Bourla is buying low. Mylan’s shares were down more than 75% from their 2015 peak as of Friday — par for the course in the beleaguered sector. Over that time Pfizer’s shares are up by more than 20%.

Familiarity increases the odds of success. The companies already work together on manufacturing EpiPen, which should limit headaches from integrating operations. And while industry sales aren’t growing, the generics drugs business still generates significant cash flow. The new company will thus be able to carry significant leverage on its balance sheet. Pfizer plans to issue $12 billion in fresh debt in conjunction with the deal.

Just as importantly for Pfizer, the deal accomplishes a goal that the company has discussed in various forms for years: separating its business of newer drugs with patent protection from its maturing products. Spinning out older drugs may increase the valuation of newer medicines in its portfolio such as the pneumonia vaccine Prevnar 13 or prostate cancer drug Xtandi.

To that end, Pfizer agreed last month to buy cancer specialist Array BioPharma for more than $10 billion and agreed last December to combine its consumer-health business with GlaxoSmithKline and eventually spin it out. A possible deal with Mylan would be entirely consistent with this strategy.

That ought to keep Pfizer shares, which have rallied about 13% over the past year, in healthy spirits.

https://www.marketscreener.com/PFIZER-23365019/news/Pfizer-May-Buy-Low-and-Smart-in-Generics-Gambit-28972414/?countview=0

Lawmakers lobby for vote on care provider-friendly surprise billing ban

Two lawmakers have banded together to whip members of a U.S. House of Representatives health panel to vote on an alternative policy to ban “surprise” medical bills.

The effort by Reps. Donna Shalala (D-Fla.) and Phil Roe (R-Tenn.) within the House Committee on Education and Labor focuses on a bill more generous to physicians and hospitals than legislation already approved by the House Energy and Commerce Committee. The move could further tangle the already contentious debate over how the feds should end the practice of balance billing. The issue of “surprise” medical bills is often instigated by specialty physician groups that contract with hospitals without joining their insurance networks.

Rep. Raul Ruiz (D-Calif.), an emergency physician, and Roe introduced the bill. Shalala, who headed HHS under President Bill Clinton, is a co-sponsor.

Shalala and Roe both said they are lobbying for their panel to hold the vote in September.

A senior committee aide pushed back on the idea the panel would take up the Ruiz-Roe bill.

“We do not comment on member to member meetings, but the committee will work from the two bipartisan proposals that have already moved out of House and Senate committees,” the aide said, referring to legislation from the House Energy and Commerce and Senate HELP committees.

Shalala characterized her conversation with panel Chair Bobby Scott (D-Va.) as promising. She said he indicated he’d consider the alternative proposal if she and Roe can recruit enough support.

“He said, ‘I’m going to let democracy prevail,’ which means he’s going to let us all have an opportunity to influence the bill,” Shalala said.

The bill’s more than 30 co-sponsors include other members of Scott’s committee, such as Rep. Joseph Morelle (D-N.Y.) who helped craft his state’s policy on which Ruiz and Roe based their measure.

The New York approach establishes an arbiter to resolve disputes between insurers and doctors or hospitals over payment for out-of-network treatment. The fall-back payment is median charges, which critics of the approach note aren’t necessarily based on actual prices.

The Ruiz-Roe approach would set payment at a “commercially reasonable rate.” It garnered endorsement of major specialty physician groups and criticisms of policy analysts.

Loren Adler, who has been working closely on the issue as associate director of the USC-Brookings Schaeffer Initiative for Health Policy, said this proposal’s payment rate would reward physician staffing groups which he blames for escalating the problem.

“Not only would the Ruiz bill allow these staffing companies to keep the inflated rates they’ve generated through the threat of surprise billing, but it rewards them by doubling or tripling what they get paid,” Adler said.

The push by Shalala and Roe show that the fraught debate within the provider world over a balance billing solution is only building in the vacuum left by congressional inaction. The Senate and House are heading out for a month-long recess without voting on a policy that President Donald Trump and lawmakers say is a high priority. This isn’t for lack of a policy to vote on.

The House Energy and Commerce Committee just passed its legislation — staunchly opposed by hospital and physician groups — after Ruiz and other lawmakers brokered provider-friendly concessions, including an arbitration backstop for pay disputes in certain cases. Those compromises haven’t ameliorated hospital and physician pressure.

The Senate health committee also advanced a proposal, which accompanied a slew of additional reforms to hospital payment and contracting practices.

But now comes to push from Shalala and Roe, even though observers of the debate originally thought that Scott’s committee might waive its authority over the matter given the work of Energy and Commerce. The Education and Labor panel oversees employer insurance plans, and has a say on any federal solution to the balance billing issue within the commercial market.

Then there’s also a new effort by the third major health committee in the House — Ways and Means. This could light a third front on the lobbying wars between insurers, hospitals and physician groups.

“Until something gets to the House floor and to the Senate floor, there are people who care deeply about this issue who will continue to talk about it,” Ruiz said.

For Sen. Bill Cassidy (R-La.), who is pushing for changes to the health committee’s legislation, the compromise secured by Ruiz on the Energy and Commerce bill isn’t enough. He wants to let specialists like radiologists and pathologists to dispute the benchmark rates for lesser payment amounts.

And he hinted that he sees an opening for his fight in the impending August recess.

“Over the next 30 days senators and members of Congress returning home are going to hear from doctors and hospitals and others, regarding their concerns about the bill as currently constructed, about the need to have a safety valve in case the arrangements just are not what they should be,” Cassidy said.

But Roe said that the additional proposals won’t sink Congress’ effort.

“I don’t think that’s going to happen,” Roe said. “Here’s what I think: I think the president wants it fixed, I think our constituents want it fixed, I think it’s going to happen.”

https://www.modernhealthcare.com/politics-policy/lawmakers-lobby-vote-provider-friendly-surprise-billing-ban

Digital health companies see new ‘exit’ strategy with IPOs

Livongo and Health Catalyst began trading on the Nasdaq on Thursday, joining a slew of companies to end a nearly three-year drought since the last initial public offering of a digital health company.

The two companies joined Phreesia, a healthcare software provider that went public one week earlier on July 18, and Change Healthcare, a revenue cycle management company formed through a series of acquisitions and a merger with McKesson’s technology business, which began trading in June.

The digital health companies going public this year don’t feel like startups. They are established companies led by seasoned executives, said Pam Arlotto, president and CEO of healthcare consultancy Maestro Strategies.

Data warehousing and analytics company Health Catalyst was founded more than a decade ago, while Livongo, a company that tackles chronic diseases, was founded by former Allscripts Healthcare Solutions CEO Glen Tullman and is led by a team of health technology heavyweights, including former Cerner Corp. President Zane Burke. Phreesia, a provider of patient intake software, launched in 2005.

“These are not ‘cool, hip’ digital startups,” Arlotto said. “These are very serious companies with strong track records.”

That’s consistent with trends across industries, as a company’s median age at the time of an IPO has grown over the past few decades. In 1980, the median age for a company at IPO was six years. In 2017, the median age was 11 years, according to an analysis by Jay Ritter, a finance professor at the University of Florida known for his work on IPOs.

That additional time allows companies to establish successful business models and profitability.

“We were able to demonstrate profitability last year, and that was important to us,” Phreesia CEO Chaim Indig said on July 18, adding that going public “provides a level of clarity to the mission and transparency to the organization.”

Dan Burton, Health Catalyst’s CEO, said Thursday that the company had been discussing launching an IPO for the past several years.

“To use data and analytics to massively improve a really large industry is a decades-long mission,” he said. “Going public provides us with the capital that we need to continue to grow and scale.”

Livongo, the youngest of the bunch with a 2014 launch, is the only one of the companies that offers a consumer-focused service. Although its customers include health systems, health plans and employers, these groups subsequently cover costs for members who enroll in Livongo’s diabetes, hypertension, weight management and behavioral health programs help them stay on track with treatment.

Going public “gives us additional capital by which we can serve our members and clients, whether that’s through the existing conditions that we have today or additional conditions,” said Burke, the company’s CEO.

The IPO also represents a key branding opportunity for the company, Burke said.

So far, all three companies have received a warm welcome in the public markets.

Livongo, which was priced at $28 a share, closed at $38.10 its first day of public trading—a jump of 36%. Health Catalyst closed at $39.17, up 51%. Phreesia, which has been trading for just over a week, closed Thursday at $24.80, a 38% rise from its initial price of $18 per share when it began trading.

iRhythm Technologies, the digital health company that went public in 2016, closed at $81.53 on Thursday.

The IPOs from Livongo, Health Catalyst and Phreesia are ushering in a new era for digital health, testing the waters for going public as a viable exit strategy rather than being sold to give the founders and initial investors a return on investment.

Investment in the digital health sector has been strong with startups raising a record $9.5 billion in venture capital funding in 2018, up 32% from the year prior. But entrepreneurs have been reliant on being bought out as an exit avenue, according to an analysis by market research firm Mercom Capital Group.

“The last three years it’s been just M&A,” said Raj Prabhu, Mercom Capital Group’s CEO and co-founder.

Rock Health, an early-stage venture fund focused on digital health, has a “watch list” of 23 startups that might be next to IPO. The list, which includes companies like American Well, 23andMe and HeartFlow, is based on an analysis of the 15 companies that have gone public since 2011 or are rumored to begin trading this year.

On average, those 15 companies raised $199 million and launched an IPO after 9.4 years, according to the report from Rock Health.

“We’re not saying that we predict that (the companies on the watch list) will go public,” said Sean Day, a research analyst at Rock Health and author of the report. “But if another company does go public in the next 12 months or so, our bet would be it comes from this list.”

It can be tempting to slip into taking these IPO successes as an indication of the digital health field as a whole, and many have been eying the stocks as a possible benchmark. But in a diverse space, it’s important to assess companies by their work.

“It can be easy to hinge, or want to hinge, the fate of a sector on a single story,” said Megan Zweig, who leads research for Rock Health. “I think those stories are going to be really specific to those companies.”

https://www.modernhealthcare.com/technology/digital-health-companies-see-new-exit-strategy-ipos

Spinning off from Tenet could signal positive future for Conifer

Tenet Healthcare Corp.’s plan to spin off its revenue-cycle subsidiary could be good news for the future independent company, which will be free to spend money as it wishes.

“You’re liberating the spinoff company to redeploy capital in a way that is most aligned with the nature of that subsidiary as opposed to the nature of the parent,” said Brian Brownschidle, executive director with XMS Capital Partners.

The Dallas-based hospital chain was gunning to sell Conifer Health Solutions, but after 18 months of fielding underwhelming offers settled on a tax-free spinoff, after which Conifer will be a separate, publicly traded company. The transaction won’t be finalized until the end of the second quarter of 2021, pending regulatory approval and other logistical hurdles.

This could be a positive outcome for Conifer. A stand-alone business specializing in a higher-margin, growth area like healthcare information technology can more easily justify acquisitions that are additive to its core business than if it were part of a larger corporation, Brownschidle said.

Plus, shares in a tech-enabled company like Conifer will likely trade higher on the stock market than Tenet’s, which trade on par with other hospital companies, said John Ransom, a managing director of healthcare equity research with Raymond James & Associates.

In any case, Conifer’s CEO, Stephen Mooney, jumped ship. Tenet announced his departure in the same news release as the Conifer spinoff, although Tenet CEO Ron Rittenmeyer said in an interview the two events are unrelated. “It’s very positive; no negative,” Rittenmeyer said. “We’re not pushing him out the door.”“There’s no way we plan to load up Conifer and cause that to have a capital structure problem on the way out. … It’s a balancing act.”

 Conifer Chief Operating Officer Kyle Burtnett has assumed the CEO role on an interim basis while the company seeks a permanent replacement.

Tenet isn’t the first big company to spin off a healthcare arm. General Electric Co. announced about a year ago plans to jettison its profitable healthcare business. German industrial manufacturing firm Siemens’ healthcare spinoff, Siemens Healthineers, hit the Frankfurt Stock Exchange in March 2018.

Revenue-cycle management is a consolidated industry, and it’s “sticky,” meaning hospitals tend to stay with the vendors they use, said Brian Tanquilut, a healthcare equity analyst with Jefferies. That is, unless hospitals are sold. Then the buyer can use whichever revenue-cycle provider it prefers. Would-be suitors for Conifer were spooked by the fact that Tenet, Conifer’s largest customer, is still divesting hospitals, Tanquilut said. When those hospitals are sold, there’s no guarantee the buyer will stick with Conifer.

Some bidders wanted 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 owner for the sold hospital’s revenue-cycle management, Rittenmeyer told investors on a call last week. That’s not something the company would agree to. Other bidders didn’t want to be accountable for collecting 100% of Tenet’s cash, another deal-breaker.

Tenet received nine preliminary bids to purchase Conifer, including three that were high enough to consider. The company spoke with 74 potential buyers overall.

Saum Sutaria, Tenet’s chief operating officer, told investors that Conifer’s capabilities have evolved over the past two years, despite the difficulty of doing so during the dealmaking process. He said the market for revenue-cycle outsourcing is still strong and growing.

Analysts question whether this transaction will significantly reduce Tenet’s debt. The aim of a sale would have been to pay down Tenet’s long-term debt, which was $14.8 billion as of March 31.

Rittenmeyer said the spinoff will still lower Tenet’s debt by shifting some of it to Conifer, although he won’t say how much until six months before the deal closes. “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.”

https://www.modernhealthcare.com/finance/spinning-tenet-could-signal-positive-future-conifer