Alexion teams up with Stealth Bio to advance elamipretide

Alexion Pharmaceuticals (NASDAQ:ALXN) inks an agreement with Stealth BioTherapeutics (NASDAQ:MITO) securing an option to co-develop and commercialize elamipretide for mitochondrial diseases.

Elamipretide, an inner mitochondrial membrane-targeting therapeutic, is currently in Phase 3 development for an inherited disorder called primary mitochondrial myopathy (PMM) characterized by skeletal muscle weakness, chronic fatigue and exercise intolerance. Alexion will have an opportunity to exercise its option based on results from this study.

Under the terms of the agreement, if Alexion exercises its option, the parties will co-develop elamipretide in the U.S. for PMM, Barth syndrome (enlarged & weakened heart) and Leber hereditary optic neuropathy (inherited vision loss). If approved, the companies will co-promote on an equal basis in the U.S. Alexion will have exclusive development and commercialization rights ex-U.S.

Alexion will pay Stealth $30M upfront, including an option fee, an equity investment and development funding. If it exercises its option, it will make additional payments, including an option exercise fee, an additional equity investment, development funding and milestones.

Stealth will host a conference call this morning at 8:30 am ET to discuss the deal.

https://seekingalpha.com/news/3504950-alexion-teams-stealth-bio-advance-elamipretide

Premarket analyst action, Oct. 10

Mereo Biopharma (NASDAQ:MREO) initiated with Outperform rating and $8 (177% upside) price target at SVB Leerink.

BioCardia (OTCQB:BCDA) initiated with Buy rating and $9 (169% upside) price target at Maxim Group.

AIM ImmunoTech (NYSEMKT:AIM) upgraded to Buy with a $2 (251% upside) price target at Maxim. Shares up 14% premarket.

The Medicines Company (NASDAQ:MDCO) downgraded to Hold with a $50 (3% downside risk) price target at Jefferies. Shares down 3% premarket.

UnitedHealth Group (NYSE:UNH) downgraded to Hold with a $235 (6% upside) price target at Jefferies. Shares down 1% premarket.

https://seekingalpha.com/news/3504968-jefferies-softens-view-unitedhealth-premarket-analyst-action

Reata reacquires rights to bardoxolone from AbbVie

Reata Pharmaceuticals (NASDAQ:RETA) has reacquired development and commercialization rights to its Nrf2 activator product platform from licensee AbbVie (NYSE:ABBV). Specifically, it owns exclusive global rights bardoxolone methyl, omaveloxolone and all other next-generation Nrf2 activators, excluding certain markets in Asia for bardoxolone which are licensed to Kyowa Kirin Co., Ltd.

Under the terms of the deal, Reata will pay AbbVie $330M in cash, consisting of $75M upfront and the remainder in Q2 2020 and Q4 2021. AbbVie will also receive tiered low single-digit royalties from worldwide sales of omaveloxolone and certain other next-gen Nrf2 activators (bardoxolone excluded).

The companies inked their original license agreement in September 2010.

Reata has amended its loan and security agreement with Oxford Finance LLC and Silicon Valley Bank, freeing up $75M contingent on positive results from either the CARDINAL study of bardoxolone in Alport syndrome or MOXIe study of omaveloxolone in Friedreich’s ataxia. The total loan facility has been increased to $155M (from $125M).

https://seekingalpha.com/news/3504928-reata-reacquires-rights-bardoxolone-abbvie

Mitch McConnell meets Cal. pot execs, pitched cannabis banking reform need

Senate Majority Leader Mitch McConnell, a longtime opponent of reforming marijuana laws, is spending more time than usual thinking about cannabis on a trip to California this week.
McConnell is attending at least two days’ worth of meetings with cannabis industry executives, small-business owners and advocates in Southern California, in order to discuss potential cannabis-related banking reform, among other topics, according to people familiar with the matter. McConnell’s schedule includes two cannabis-related lunches with executives and advocates, one of which will take place in Newport Beach, Calif., and a tour of at least one cannabis-related company in the area.
It was not immediately clear whether McConnell’s California Wednesday and Thursday schedule signals a shift in his thinking about cannabis banking reform, the people said. McConnell’s Washington office did not respond to several requests for comment.

“I think this is absolutely positive that McConnell is meeting with stakeholders in the cannabis market,” PI Financial analyst Jason Zandberg told MarketWatch over the phone. “The U.S. market needs the banking act to flourish, without it — there are legitimate companies that are following the rules that are facing major obstacles. Banking legislation would be a huge positive catalyst.”
The cannabis industry representatives will attempt to convince McConnell that reform is necessary because the current legal regime unfairly penalizes businesses that obey federal laws, such as hemp farmers producing the crop for legal CBD products, according to a person familiar with the lobbying strategy.

“We’re happy to see that Leader McConnell is coming to see how a regulated market is an improvement over prohibition,” National Cannabis Industry Association executive director Aaron Smith told MarketWatch in an interview. “Right now the priority is banking, which affects [McConnell’s] constituents in the hemp and CBD industry, as well as legal cannabis businesses here in California. That’s really our primary ask — common-sense policies around banking and public safety, and we’re hopeful [McConnell] will see the need for that and move forward along with Chairman [Sen. Mike] Crapo.”
The senator’s visit to the Golden State comes weeks after the Democratic-controlled House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act, a bill aimed at giving banks and credit unions additional clarity around servicing cannabis companies that wish to open accounts for things like paying bills. Because marijuana is illegal at the federal level, financial institutions can encounter legal problems, and cannabis companies — including those that operate cannabidiol, or CBD, businesses — face difficulties banking.
Large amounts of cash sloshing around the cannabis sector makes pot companies the target of robberies and other crimes, lobbyists in favor of the SAFE Act have said.
Up until recently, McConnell appeared to be a major roadblock to the Senate taking up the bill, and has said in the past that marijuana is hemp’s “illicit cousin, which I choose not to embrace.” The hemp industry holds a significant amount of power in Kentucky, McConnell’s home state, and a new provision in the SAFE Act grants specific protections to hemp farmers.

Crapo, an influential Republican senator from Idaho, told Politico in September that he wanted to hold a Senate Banking Committee vote on a cannabis banking bill. Progressive groups such as the American Civil Liberties Union, the Center for American Progress and others have criticized top House Democrats for moving forward with a bill that doesn’t address social-justice issues tied to decades of cannabis prohibition.
ETFMG Alternative Harvest ETF MJ, -0.95%  , which tracks a basket of cannabis stocks, has lost nearly half its value in the past 12 months, while the broad S&P 500 index SPX, +0.91%   has gained 1.6%.
https://www.marketwatch.com/story/mitch-mcconnell-travels-to-california-where-pot-execs-pitch-need-for-cannabis-banking-reform-2019-10-09?siteid=rss&rss=1

Healthcare leads the way as US hits lowest unemployment mark in decades

• The healthcare industry gained 38,800 jobs in September, up from the amount added in August but largely on par with the average increase over the past 12 months, according to figures the U.S. Bureau of Labor released Friday.
• Ambulatory services saw the most gain with 28,700 jobs. Hospitals accounted for 8,100 positions while nursing and residential care facilities brought in 2,000.
• The number of healthcare jobs added in August was revised upward significantly to 37,200 from the initial estimate of 23,900. Hospital employment was revised up to 14,000 from nearly 9,000.

The numbers show healthcare employment “remains remarkably strong” as it continue to grow month to month, Jefferies analysts said in a note.
“We believe the combination of strong demand growth from healthcare employers and shortages of many clinicians (nurses, physicians) creates a positive set-up for the healthcare temp staffing industry,” the analysts wrote.
Healthcare job gains year-to-year have averaged 2.5% for 2019, up from 1.8% in 2018, the analysts noted.
Overall in the U.S., 136,000 jobs were added last month, sending the unemployment rate down 0.2 percentage points to 3.5%, the lowest it’s been since December 1969. Healthcare led the way, followed by professional and business services at 34,000, and government employment at 22,000.
Home healthcare job gains were down slightly in September at 5,700. Physicians offices added 5,200 jobs while outpatient care centers gained 4,800.
Although the jobs numbers are strong for the industry and hospitals, some individual systems are dealing with labor strife. Kaiser Permanente appears to be holding off a strike of nearly 85,000 nonclinical workers that had been planned this month after agreeing to annual wage increase guarantees and a defined benefit pension plan.
And last month, 65,00 nurses across a dozen Tenet hospitals took to the picket line after failing to reach a contract agreement with the hospital operator.
https://www.healthcaredive.com/news/healthcare-leads-the-way-as-us-hits-lowest-unemployment-mark-in-decades/564455/

Former FDA chief Gottlieb sees Trump-pitched pricing model easy to game

• As the international pricing index model slogs through the regulatory process, former Food and Drug Administration head Scott Gottlieb predicted Monday it will be “very hard to implement,” with drug companies likely to scheme around the controversial idea.
• About a year ago, President Donald Trump pitched the idea as a way to attack “global freeriding.” The proposal ties drug prices in the U.S. to foreign countries, starting with the Medicare Part B program. The Office of Budget and Management has yet to release the proposed rule despite more than 100 days of review.
• Gottlieb anticipated the rule will eventually come out but is skeptical it would achieve its goals, speaking at the Biopharma Congress in Washington. The former FDA chief added that companies could offer American-style rebates to Europe to keep foreign list prices equally high. “I don’t want to give too much away, because I’ll tell people how to game around this,” said Gottlieb, who now sits on Pfizer’s board of directors.

Despite a prolonged and ongoing regulatory review, Trump administration officials have reaffirmed their support for the IPI model, which has been criticized by PhRMA as importing foreign price controls.
Joe Grogan, director of the White House’s Domestic Policy Council, said Monday the administration is being “very conscious of getting policy right.” Grogan was the associate director of health programs at the Office of Management and Budget until February, when he moved over to the White House.
Grogan said the IPI model counteracts the unfairness to American taxpayers from pharma activities that benefit foreign countries. He described a typical model for companies as parking intellectual property in Ireland, manufacturing the drug outside the U.S. and then importing it at a premium price.
While acknowledging debate around the plan’s specifics, Grogan said the broader disparity between U.S. and foreign prices is “something that needs to be addressed somehow.”
But Gottlieb was more skeptical about the idea’s eventual effectiveness. As an FDA commissioner remembered for calling the pharma industry out on its “shenanigans” and “Kabuki drug-pricing constraints,” he anticipates more schemes coming to avoid the IPI model.
In addition to bring U.S.-style rebates to Europe to keep prices high, Gottlieb said drug companies could circumnavigate the rule if it includes an exemption for biosimilar competition.
“The rule itself now carves around settings where there is a biosimilar, so you can see branded companies settling with one biosimilar manufacturer, giving them a little bit of market share and getting them out of the IPI,” he said.
https://www.healthcaredive.com/news/fda-scott-gottlieb-ipi-model-easy-to-game-joe-grogan/564579/

U.S. says gene testing firm gets 25-year ban in $42.6 million kickback settlement

A New Orleans-based genetics testing company and its three principals will pay $42.6 million to resolve charges they defrauded the federal government by paying kickbacks for referrals and billing for medically unnecessary tests, the U.S. Department of Justice said on Wednesday.
UTC Laboratories Inc, which has also been known as Renaissance RX or RenRX, also agreed to a 25-year ban from participating in any federal healthcare program, the Justice Department said.
Wednesday’s accord resolved six whistleblower lawsuits accusing the company of violating the federal False Claims Act.
UTC will pay $41.6 million, while its three principals, including founder Dr. Tarun Jolly, will pay $1 million. The Justice Department said there was no admission of liability.
Lawyers for the defendants could not immediately be reached for comment. Jolly also could not immediately be reached.
The Justice Department accused the defendants of having paid physicians from 2013 to 2017 to induce them to order genetic tests, purportedly in return for involvement in a clinical trial to create a registry of people who underwent genetic testing.
It also said the defendants offered kickbacks to other entities and individuals, and billed Medicare for unnecessary genetic tests.
According to whistleblowers’ complaints, the “Diagnosing Adverse Drug Reactions Registry,” or DART trial, was intended to catalog the effects of genetic testing on the drug regimens and clinical outcomes for 250,000 patients.
The defendants were accused of having falsely represented that Medicare would cover testing that was a prerequisite for enrollment in the registry.
“Healthcare fraud, in any incarnation, hurts patients, honest medical practitioners, and all of the nation’s taxpayers,” U.S. Attorney Peter Strasser in New Orleans said in a statement.
The False Claims Act lets whistleblowers sue on behalf of the government, and share in recoveries.
On Sept. 27, federal agents raided a series of genetic testing laboratories and criminally charged 35 people over an alleged fraud that caused $2.1 billion of losses to federal healthcare insurance programs.
The government has also issued a consumer alert concerning genetic testing fraud.
https://www.reuters.com/article/us-usa-utc-labs/u-s-says-gene-testing-firm-gets-25-year-ban-in-42-6-million-kickback-settlement-idUSKBN1WO2TB