Five Prime up on insider buys

Thinly traded micro cap Five Prime Therapeutics (FPRX +13%) is up on average volume in early trade. After the close yesterday, regulatory filings were made showing direct stock purchases by interim CEO and Director William Ringo (34,451 shares) and beneficial owner BVF Partners LP (601,482 shares).

The immuno-oncology therapy developer has been in a long-term downtrend since peaking at $48.87 about two years ago.

On the working capital front, at the end of June it had ~$214M in quick assets while operations consumed ~$56M in H1.

https://seekingalpha.com/news/3504738-five-prime-13-percent-insider-buys

Number of drug ‘super spenders’ rises 63% in 2 years

The number of drug “super spenders” is growing rapidly, a new study from Prime Therapeutics shows.

The pharmacy benefit manager (PBM), which is owned by 14 Blues plans, analyzed data on 17 million members who had at least one month of eligibility for drug benefits in 2016, 2017 and 2018.
In 2016, 2,994 members were categorized as “super spenders,” meaning their pharmacy and medical drug therapy claims totaled $250,000 or more.

By 2018, that number had increased by 63% to 4,869, Prime Therapeutics found. This increase led to an additional $800 million in drug costs, according to the study.
In addition, the number of members whose costs were over $750,000 increased by 38% over that time frame, and the drug costs for those members increased to $417 million by 2018.

“With continued growth in treatments for rare diseases, including one-time treatments that may carry million-dollar price tags, it’s very likely that healthcare cost will become even more skewed, with a smaller and smaller fraction of insured members accounting for a larger and larger portion of the total healthcare cost,” said Jonathan Gavras, M.D., senior vice president and chief medical officer at Prime, in a statement.
“We must work to ensure drug and gene therapies are priced appropriately to the value they provide, obtained and billed via the cost-effective channel with the highest quality patient management, and value-based contracts are in place to recoup costs if the drug or gene therapy does not maintain effectiveness,” Gavras said.
Prime Therapeutics noted in its analysis that the number of specialty drugs has been on the rise quite rapidly over the past few years, and they now make up 50% of total drug spend. Fifty-nine drugs were approved in 2018, and 34 of those were for rare diseases, the PBM said.

Nearly half (48%) of the increase Prime found was attributable to cancer categories including breast, lung, kidney and colorectal cancers, non-Hodgkin lymphoma, melanoma and multiple myeloma. Drugs for those diseases accounted for $378 million of the additional cost.
Inherited, single-gene disorders also accounted for a significant part of the increase: $243 million, or 31%. The largest increases were attributed to hemophilia A and B, cystic fibrosis, spinal muscular atrophy, congenital hypophosphatasia, hereditary angioedema, cystinosis and Duchenne muscular dystrophy.
Based on the findings, the researchers estimate that these members will account for $4 billion in drug costs over the next five years.
https://www.fiercehealthcare.com/payer/prime-therapeutics-number-drug-super-spenders-rises-63-two-years

Primary care company One Medical has hired banks ahead of an IPO

Primary care organization One Medical has hired banks including JPMorgan and Morgan Stanley in preparation for an initial public offering, CNBC reports.

The company, which was valued at about $1.5 billion in a financing round last year, is expected to file its prospectus by the first quarter of 2020 and possibly sooner, CNBC reported, citing people familiar with the matter who asked not to be named because the plans are confidential.
A spokeswoman for One Medical declined to comment.

Backed by Google parent company Alphabet, San Francisco-based One Medical operates 72 primary care practices in nine major U.S. cities. The company aims to provide a more modern healthcare experience by offering 24/7 virtual care, same-day appointments, a mobile app for online appointment scheduling, access to digital healthcare records and digital health reminders.

The company was founded in 2007 by physician Tom Lee, who led the company until 2017 when Amir Dan Rubin, a former UnitedHealth group executive, took the reins as president and CEO. Rubin recently told CNBC that the company has seen “tremendous growth” in other areas of its business, including partnerships with self-insured employers for on-site and nearby health clinics.

IPO recaps

One Medical joins a growing list of healthcare technology companies to go public this year or with plans to go public soon including Livongo, Health Catalyst, Change Healthcare and Phreesia.
Chronic disease management company Livongo Health and data and analytics company Health Catalyst both had strong public debuts in July. Phreesia, which developed a patient intake management platform, closed its first day of trading as a public company July 19 about 40% above its set price.
But investors remain skeptical about recent IPOs. Phreesia opened up on the New York Stock Exchange at $26.75 after being originally priced at $18 per share. The stock climbed as much as 53% above its offering price. It’s now slightly down at $25.48. Livongo has dropped 32% since trading in July, and Health Catalyst is up about 4% from its initial price.

Progyny, a company that manages fertility benefits for employees at large firms, filed its preliminary prospectus with the Securities and Exchange Commission Sept. 27 for its IPO.
The company will trade under the symbol “PGNY” on the Nasdaq.
Progyny launched its fertility benefits solution in 2016 with its first five employer clients and has grown its client base to over 80. The company currently provides coverage to 1.4 million employees, the company said in its S-1 filing.
The company has raised nearly $100 million in venture capital with investors including Kleiner Perkins and M Ventures, Merck’s corporate venture arm, according to Crunchbase.
Progyny counts Google and Microsoft among its largest clients; in the first half of 2019, Google accounted for 17% of Progyny’s total revenue and Microsoft accounted for 11%. Facebook also is a large client, according to CNBC.
Progyny generated $103.4 million in revenue in the first half of 2019 and net income of $4.04 million. That compares to $48.4 million in revenue in the first six months of 2018 and a net loss of $2.4 million, the company said. Full-year 2017 revenue was $48.6 million, and that grew to $105.4 million in 2018, representing year-over-year growth of 117%.

The company said in its S-1 filing that its unique approach and range of benefits results in above-average fertility outcomes for its members, with in-network IVF pregnancy rates of 60.7% compared to 52.5% across all IVF fertility clinics.
The market for fertility treatments in the U.S. was approximately $6.7 billion in 2017, Progyny said in its S-1 filing. As only 50% of individuals suffering from infertility seek treatment, the company estimates the potential size of the U.S. fertility market to be at least twice as large.
“We believe we are well-positioned for growth as our current base of 1.4 million members represents only 2% of what we believe to be our total addressable market. In addition, we believe we can continue to increase our business with our existing clients as they expand their employee bases and adopt more of our services over time,” the company said.
https://www.fiercehealthcare.com/tech/primary-care-company-one-medical-has-hired-banks-ahead-ipo-cnbc-reports

Fitbit rises as it shifts production outside of China

Fitbit (NYSE:FIT) jumps 3.5% in premarket trading as it shifts manufacturing operations away from China for effectively all of its trackers and smartwatches.

Expects that its products will no longer be subject to Section 301 tariffs starting in January 2020.

“In 2018, in response to the ongoing threat of tariffs, we began exploring potential alternatives to China, said Fitbit CFO Ron Kisling. “As a result of these explorations, we have made changes to our supply chain and manufacturing operations and have additional changes underway.”

https://seekingalpha.com/news/3504713-fitbit-rises-3_5-percent-shifts-production-outside-china

SITC 2019 preview – Nextcure’s time to shine

The biotech calendar’s next key conference gets under way in a month, and a presentation by Nextcure will be a focus for some investors.

With most of the programme for the Society of the Immunotherapy of Cancer conference now revealed, investors have fresh expectations from what has recently become one of the most important meetings of the biotech calendar.
The late-breaking presentations remain under wraps until November 1, but are rumoured to include a slot for Pieris, a stock that has crashed in the past month. In the meantime, those investors who bought into Nextcure, a biotech whose valuation has climbed 40% since it raised $75m in a May flotation, will look to proof of efficacy of NC318, the group’s lead asset.
NC318 inhibits a novel protein called Siglec-15, which is present on immunosuppressive macrophages. The group’s IPO document cited one partial remission in 13 patients, and more will be hoped for at SITC, where phase I data in PD-(L)1-refractory NSCLC subjects are to be presented.
Also out with SITC data in checkpoint blocker-refractory subjects will be Mirati – not with the anti-Kras project MRTX849, which features at this month’s AACR-NCI-EORTC triple meeting, but with the TRK, Ret and DDR inhibitor sitravatinib.

Selected presentations from the 2019 SITC conference
Project	Company	Detail	Trial
Bempegaldesleukin	Nektar	Opdivo combo in 1st-line melanoma cohort from Pivot-02	NCT02983045
Sitravatinib	Mirati	Trk, Ret & DDR inhibitor combo with Opdivo in checkpoint-refractory urothelial carcinoma	NCT03606174
NC318	Nextcure	Single agent anti-tumor activity in PD-1 refractory NSCLC	NCT03665285
CDX-1140 +/- CDX-301	Celldex	CD40 agonist MAb +/- FLT3 ligand	NCT03329950
CPI-006	Corvus	Anti-CD73 MAb, phase I data	NCT03454451
CV8102	Curevac	Single-agent TLR & RIG1 agonist or combo with anti-PD-1 MAbs	NCT03291002
AK104	Akeso Biopharma	Phase I study of anti-PD-1 x CTLA-4 bispecific	NCT03261011
IMA101	Immatics	First study of TILs with defined multiple targets	NCT02876510
CA-170	Curis	Small-molecule Vista antagonist, mesothelioma cohort	NCT02812875
RP1	Replimune	Phase I data on oncolytic virus +/- Opdivo	NCT03767348
ONCOS-102	Targovax	Phase I data on oncolytic virus + Keytruda	NCT03003676
P-BCMA-ALLO1	Poseida	Off-the-shelf multiple myeloma Car-T therapy	Preclinical data
AUTO6NG	Autolus	GD2-targeting Car-T therapy	Preclinical data
BT8009	Bicycle Therapeutics	Anti-nectin-4/4-1BB bispecific	Preclinical data
AMV564	Amphivena	Anti-CD33 bispecific	?
Source: SITC.

Combinations will also feature, in particular Curevac’s TLR/Rig1 agonist CV8102 and Nektar’s ill-fated IL-2 asset bempegaldesleukin.
Investors in August did not buy Nektar’s excuse for bempegaldesleukin’s waning efficacy in the Pivot-02 study, and SITC will see data from this trial’s first-line melanoma cohort (Nektar’s call for calm backfires, August 9, 2019).
Another group that has disappointed of late is Bicycle Therapeutics, which presented an underwhelming update concerning its MT1-MMP inhibitor BT1718 at the Esmo congress. At SITC attention turns to the anti-nectin-4/4-1BB bispecific BT8009; Bicycle might want to bask in the reflected glory of Seattle Genetics’ recently filed anti-nectin-4 antibody-drug conjugate, enfortumab vedotin.
There will also be presentations on I-O combinations of oncolytic virus projects from Repligen and Targovax. Cell therapy enthusiasts, meanwhile, will look to early data from Immatics, Iovance, Poseida and Autolus.
That said, the best is yet to come. Pieris, whose stock has nearly halved since unveiling disappointing AZD1402/PRS-060 data in asthma, has according to analysts at Evercore ISI secured an SITC late-breaker for its oncology lead, PRS-343, which is an anti-Her2/4-1BB bispecific.
For the rest of the late-breakers investors will have to wait another three weeks.
The 2019 SITC meeting takes place at National Harbor, Maryland on November 6-10.
https://www.evaluate.com/vantage/articles/events/conferences/sitc-2019-preview-nextcures-time-shine

US pricing watchdog spotlights an old pharma trick

Hiking the price of a drug before generics appear is a long-enshrined practice, a situation that applies to most of the products singled out by Icer.
Any concern that Icer might be compromising its integrity by working closer with pharma companies on cost-effectiveness assessments can surely be put to bed with yesterday’s report. The US pricing watchdog’s first “Unsupported Price Increase Report” baldly points the finger at seven products that have enjoyed substantial price rises over the past couple of years for which little clinical justification could be found.
Unsurprisingly, the companies involved have widely decried the report, which went so far as to put a number on the excessive costs borne by patients, and the US healthcare system more widely. According to Icer this amounted to $5.1bn over 2016-18, a figure that will provide those campaigning for action on drug pricing a new stick with which to beat the pharmaceutical industry.
Icer looked for clinical justifications for the price rises, but other lifecycle considerations will matter just as much to a company deciding how much to charge for a medicine. In reality, factors like patent life or new competition in the field are probably the biggest influences on a company’s pricing strategy, though of course this message does not play as well when it comes to justifying the value of a drug.
But a look at the products highlighted by Icer shows that, in the period that the watchdog assessed, all were facing either an imminent threat to sales from low-cost competitors or newer therapies. And hiking the price of a product ahead of patent expiry is a long-established practice.

Named and shamed… Icer’s naughty list
Product	Company	Q4’16-Q4’18 net price change	Increase in spending impact due to net price chg ($m)	US sales 2018 ($bn)	US sales 2024e ($bn)	Note
Humira	Abbvie	15.9%	1,857	13.7	10.2	Biosimilars to launch in US in 2023; US sales forecast to peak in 2022
Rituxan	Roche	23.6%	806	4.4	1.5	Biosimilars expected to launch late 2019/2020; US sales forecast to peak in 2018
Lyrica	Pfizer	22.2%	688	3.6	0.1	Generics launched July 2019; US sales peaked 2018
Truvada	Gilead	23.1%	550	2.6	0.2	Generics to launch in Sept 2020; US sales forecast to peak in 2018
Neulasta	Amgen	13.4%	489	3.9	1.4	Biosimilar launched June 2018; US sales peaked 2017
Cialis	Lilly	32.5%	403	1.1	0.1	Generics launched September 2018; US sales peaked 2016
Tecfidera	Biogen	9.8%	313	3.3	1.9	US PTO decision due Feb 2020; US sales forecast to peak in 2019
Total increase in spending over two years			5,106
Revlimid*	Celgene	–	–	6.5	7.1	Generics expected to launch in 2022; US sales forecast to peak in 2022
Genvoya*	Gilead	21.7%	651	3.6	2.3	New HIV quad therapy launched in 2015; US sales peaked 2018
*Drugs with price increases with new clinical evidence, though Icer did not conclude that the evidence justified those price increases. Source: Icer unsupported price increase report, EvaluatePharma for sales figures.

Lilly, for example, was very motivated to eke what it could out of Cialis: the impotence pill felt the pain of generics in 2017 when Viagra copycats reached the market. A year later Cialis itself lost exclusivity.
The biggest offender, Abbvie, has never been afraid of price hikes and so Humira’s presence on this list should not come as a surprise. The company made it clear that, in the wake of an aggressive price cut in Europe to defend market share, Humira’s US price would continue to rise (Abbvie manoeuvres to defend Humira to the last, November 7, 2018).
It should also be noted that Icer’s report identified 26 drugs whose prices fell during this period. The biggest faller, Sanofi’s Lantus, saw its spending impact due to net price change decline $1.3bn.
Generic competition
Celgene is presumably pursuing a similar strategy to Abbvie with Revlimid, which has started to see some generic competition in certain European countries before an expected launch of copycats in the US in 2022.
Amgen too has for years been relying on price hikes to deliver growth in its Neulasta franchise. In a report last year Leerink analyst Geoffrey Porges estimated that between 2014 and 2017 price increases boosted the product’s sales despite falling volumes (Price hikes are dead – long live price hikes, October 11, 2018).
It is also not surprising that Biogen has taken the opportunity to hike Tecfidera while it can. A crucial patent hearing in February next year will rule on the MS drug’s exclusivity, and if the decision goes against the biotech company generics could enter in 2021.
It is unlikely that a robust defence of these price hikes will be heard from those not employed by the pharmaceutical industry, and there seems to be broad consensus in the US that its healthcare system is simply too costly. Whether one agrees with Icer’s methods or not, investigations like these are probably the only way to change pricing practices.
https://www.evaluate.com/vantage/articles/news/policy-and-regulation/us-pricing-watchdog-spotlights-old-pharma-trick

Dermira up on start of late-stage development of lebrikizumab

Dosing is underway in a Phase 3 clinical trial evaluating Dermira’s (NASDAQ:DERM) lebrikizumab, an IL-13 inhibitor, in patients at least 12 years old with moderate-to-severe atopic dermatitis (AD).

The late-stage program will include another identical Phase 3. Total enrollment in the two studies will be ~800 subjects across ~200 sites in the U.S., Europe and Asia.

Topline data from the 16-week induction period should be available in H1 2021.

Almirall S.A. (OTC:LBTSF) owns exclusive rights in Europe under a February 2019 agreement (option exercised in June).

DERM is up 3% premarket on light volume.

https://seekingalpha.com/news/3504710-dermira-3-percent-premarket-start-late-stage-development-lebrikizumab