WHO set to resume hydroxychloroquine trial in battle on COVID-19

The World Health Organization (WHO) is set to resume its trial of hydroxychloroquine for potential use against the new coronavirus, its head Tedros Adhanom Ghebreyesus said on Wednesday, after testing was suspended due to health concerns.
Tedros also told an online media briefing he was “especially worried” about the outbreak in Central and South America, where infections have been spreading rapidly.
https://www.reuters.com/article/us-health-coronavirus-who/who-set-to-resume-hydroxychloroquine-trial-in-battle-on-covid-19-idUSKBN23A2LT

Keros At Jefferies 2020 Virtual Healthcare Conference

Keros Therapeutics, Inc. (“Keros”) (Nasdaq: KROS), a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel treatments for patients suffering from hematological and musculoskeletal disorders with high unmet medical need, announced that Keros’ President and Chief Executive Officer Jasbir S. Seehra, Ph.D. is scheduled to present at the Jefferies Virtual Healthcare Conference on Thursday, June 4, 2020 at 9:00 am ET.
https://www.globenewswire.com/news-release/2020/05/28/2040093/0/en/Keros-Therapeutics-To-Present-At-The-Jefferies-2020-Virtual-Healthcare-Conference.html

Muddy Waters reiterates bearish view on eHealth

Online health insurance exchange operator eHealth (EHTH -1.5%) is under modest pressure on below-average volume on the heels of a second bearish report from Muddy Waters Research (MW).

The noted short seller, who released its first report in April, cites the company’s over-aggressive accounting, booking sales years ahead of actually collecting the cash. For example, it calculates that will take about nine years for cash collections to match receivables for the 2019 customer cohort. In other words, it will collect only ~64% of booked Medicare Advantage (MA) revenue during the three-year period (average “life” for a MA customer) for which it estimates revenue.

MW also claims that EHTH is also under-reporting costs associated with member retention and revenue sharing, necessary expenses to collect the cash, adding that the cash it does collect fails to meet the initial receivable booked, exclusive of its subsequent tail revenue (revenue after the three-year period) adjustments, according to its estimate.

EHTH generates cash corresponding to tail revenue only from members who remain at least 10 years, a very small percentage of each cohort (sign-ups each year). MW estimates that tail revenue cash collections are $227 per member or 22.4% of the initial receivable booked. About 2/3 of clients leave by year 3.

MW says the company books two sources of revenue, once when an application is approved by CMS [$1,013 per member last year equal to the constrained loan-to-value (LTV) amount] and revenue in excess of the LTV via from the residual tail group and increases in MA commission rates.

In Q1, the company booked $106.4M in revenue and $3.5M in net income. Cash flow ops was $8.9M.

In 2019, it recorded net income of $83.5M on revenue of $506.2M. Cash flow ops was ($71.5M).

https://seekingalpha.com/news/3580086-muddy-waters-reiterates-bearish-view-on-ehealth

Pliant Therapeutics up 55% in U.S. debut

Shares in Pliant Therapeutics (PLRX +55%) are currently exchanging hands at $24.74 on turnover of ~2.1M shares in the first day of its IPO of 9M common shares priced at $16.

The South San Francisco, CA-based biopharmaceutical firm develops treatments for fibrosis. Lead candidate is PLN-74809, a small molecule inhibitor of certain integrins (class of proteins that plays a key role in cell-extracellular matrix adhesion), for the potential treatment of ideopathic (cause unknown) pulmonary fibrosis (IPF) and a liver disorder called primary sclerosing cholangitis (PSC) characterized by inflammation and scarring of the bile ducts. Enrollment is underway in two Phase 2a studies in IPF. A Phase 2a study in PSC should launch in H2.

https://seekingalpha.com/news/3580092-pliant-therapeutics-up-55-in-u-s-debut

Novavax enlists AGC Biologics to manufacture adjuvant for COVID-19 shot

Novavax is racing against some of the world’s biggest pharmaceutical companies in its COVID-19 vaccine effort, and the biotech has now brought on a partner to manufacture its adjuvant.

The company enlisted Japanese contract development and manufacturing organization AGC Biologics to scale up and produce its Matrix-M adjuvant, a component of the novel coronavirus vaccine candidate NVX-CoV2373. The partners aim to deliver vaccine doses in 2020 and 2021, AGC says.

AGC is working to “quickly” ramp up the adjuvant supply amid the pandemic, CEO Patricio Massera said in a statement, adding that the urgency “could not be higher.”

Novavax has one of the 10 COVID-19 vaccines in human trials, and more than 120 others are in preclinical testing, according to a Tuesday update from the World Health Organization. The company has scored up to $384 million for its work from the Coalition for Epidemic Preparedness Innovations (CEPI), and last month inked a $167 buyout to bolster its manufacturing capacity.

Other big players involved in the COVID-19 vaccine race are Johnson & Johnson, Pfizer, Sanofi and AstraZeneca. Moderna, a biotech that hasn’t yet won approval for any of its therapies or vaccines, is also among frontrunners with late-stage trials planned this year.

Aside from COVID-19, Novavax is also involved in research against RSV, Ebola and other diseases. The company hasn’t yet scored any FDA approvals, but it’s getting ready to file its flu vaccine, NanoFlu, after posting positive phase 3 data back in March. The flu vaccine also uses Novavax’s Matrix-M adjuvant.

The AGC Biologics tie-up comes right on the heels of the CDMO’s purchase of a former AstraZeneca plant in Boulder, Colorado. AGC will begin commercial production there by April 2021.

The site houses two 20,000-liter mammalian cell bioreactors, with room for up to four more for potential future expansions. Aside from that site, AGC is completing expansion projects in Seattle, Copenhagen and Chiba, Japan, by the end of 2021, the company says.

https://www.fiercepharma.com/manufacturing/novavax-enlists-agc-biologics-to-manufacture-adjuvant-for-covid-19-shot

US seeks ‘onshore’ drug production amid Covid-19. Is pharma even interested?

With the COVID-19 pandemic shining a spotlight on the global pharmaceutical supply chain, U.S. legislators have put forward a raft of legislation that would seek to “onshore” drug manufacturing at the expense of major producers abroad, particularly China.
Guess who’s wary of that proposal? Big Pharma.
Congressional leaders have argued in recent months that U.S. reliance on drugs made or sourced outside the country has created a security issue that could be addressed by erecting parallel supply chains stateside and eliminating reliance on potential bad actors abroad.

Meanwhile, the White House is reportedly working on a “Buy American” executive order that would require government agencies to purchase American-made medical products, and that order could eventually include pharmaceuticals.
But the biggest obstacle to that plan could be the pharmaceutical industry and its lobbyists on Capitol Hill.
With legislation piling up, the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s biggest lobbying group, has pushed back against Congressional support for a supply chain shake-up.
The industry’s reasoning isn’t complicated: Manufacturing stateside would likely cost a princely sum compared with the cheaper wages and lower costs abroad, and would upset the balance of pharma’s global supply chain.
“While we support efforts to foster more manufacturing in the United States, moving all manufacturing here is impractical and likely not feasible,” a PhRMA spokesperson said in an email. “Policymakers must take a long-term, more holistic look at global pharmaceutical manufacturing supply chains before jumping to rash proposals that may cause significant disruptions to the U.S. supply of medicines.”

Want an example of how high the bill could go? Just look at the U.S. government’s deal late last month with little-known Phlow Corporation for a $354 million manufacturing plant in Richmond, Virginia to produce generic COVID-19 drugs and active pharmaceutical ingredients (API).
The agreement, funded by the Biomedical Advanced Research and Development Authority (BARDA), can be expanded to up to 10 years and $812 million, making it one of the largest in the drug development agency’s history. The deal will come with the participation of CivicaRx, a generics maker started by hospitals fed up with rising drug prices, and API supplier AMPAC, among others.
The Phlow deal was part of the Trump administration’s “America First” philosophy to bring drug manufacturing back stateside and out of the hands of foreign governments like China and India, two of the largest producers of API in the world.
Another BARDA deal signed this week gave $628 million to Emergent BioSolutions to scale production of targeted COVID-19 vaccine candidates to make “tens to hundreds of millions” of doses available through 2021 at three of its Baltimore-area facilities.

But the extent to which either country has control over the U.S. drug supply isn’t well known––even PhRMA doesn’t have a grasp on exactly where its members source their active ingredients (API) “because this information is generally considered proprietary,” a spokesperson said.
In an October 2019 hearing before the House Committee on Energy and Commerce, FDA Director Janet Woodcock said an estimated 28% of the API in U.S. drugs was produced stateside, a figure that has decreased in recent years.
“While there are many reasons for this shift, underlying factors that are often cited include the fact that most traditional drug production processes require a large factory site, often have environmental liabilities, and can utilize a low-cost labor force,” Woodcock said.
Chinese exports made up an estimated 13% of API used in U.S. drugs while India produced 18%, according to the FDA.
A separate FDA report (PDF) in 2011 found that both China and India had an advantage over the U.S. in terms of labor costs, presenting an attractive offer for U.S. and European drugmakers. In fact, the FDA found that companies headquartered in the U.S. or EU could save between 30% and 40% on manufacturing costs if they outsourced in India.

But for U.S. legislators, the trade numbers––as sketchy as they may be to find––and the industry’s bottom line aren’t the only side to the story.
Chinese and Indian manufacturing facilities are the most frequently cited by the FDA for quality control issues, and the novel coronavirus pandemic and the Trump administration’s ongoing trade war with China have injected geopolitical concerns into the country’s drug supply.
Strident legislation like Arkansas Republican Sen. Tom Cotton’s “Protecting our Pharmaceutical Supply Chain from China Act,” filed earlier this month, would require government payers to phase out reimbursement for drugs made or sourced in China by 2022. Other bills have also directly targeted China’s role in the supply chain as a possible national security issue.

Less punitive bills like Florida Republican Sen. Tim Scott and Georgia Rep. Buddy Carter’s “Manufacturing API, Drugs and Excipients (MADE) Act,” introduced last week, would incentivize the onshoring of drug manufacturing through tax credits granted through federal Opportunity Zones.
“The COVID-19 pandemic has made it more clear than ever that America cannot continue to rely on foreign entities like China for anything, especially when it comes to lifesaving medications,” Carter said in a release. “The reason our pharmaceutical and medical supply chains are dependent on nations like China and India is simple. They can produce cheaper factories, provide lower-cost labor, utility costs and raw materials, impose fewer regulations, and more.”
Scott and Carter’s approach reflects the thinking of advocacy groups like the Association for Affordable Medicines (AAM), the nation’s largest lobbyist for the generics drug industry.
In April, AAM released its “blueprint” (PDF) to onshore generic manufacturers, including identifying a list of essential medicines that should be made in the U.S., creating a network of friendly and reliable manufacturers, and offering several financial incentives, including HHS grants to support facility construction. The result? A more secure U.S. supply of generic medicines with more jobs for U.S. workers, the organization figures.

As far-fetched an idea as that might be, with most of the world’s largest generic makers stationed abroad, it’s not without its merits, according to some analysts.
In a note to investors last week, Bernstein analyst Ronny Gal noted that the BARDA deal with Phlow could drive traditional generic players to pursue U.S. incentives to bring their manufacturing stateside.
Take Amneal Pharmaceuticals, for example: The company is the largest U.S.-based player with API capacity and took a 65.1% majority stake in December in AvKARE, a generic supplier primarily focused on serving the Department of Defense and the Department of Veterans Affairs.
Other companies could use incentive money to upgrade existing onshore facilities if they get aggressive, Gal argued. Mylan has its Morgantown, West Virginia, site; Teva has a campus in Irvine, California; and Pfizer’s Hospira has facilities in North Carolina.
https://www.fiercepharma.com/manufacturing/pharma-pushes-back-u-s-legislation-to-bring-drug-manufacturing-stateside

Time to bring generic drug manufacturing back to the U.S.

In a hearing Tuesday afternoon on Capitol Hill, policymakers will consider repatriating America’s drug supply chain to avoid future shortages like the ones caused by Covid-19. They should think bigger.
Repatriating the American drug supply is key not just to averting shortages but to restoring and preserving the integrity of generic drugs in America. It will also create tens of thousands of high-quality jobs in part of the U.S. that have been hurt by globalization.
Reliable, high-quality generic drugs are the great value proposition of continued biomedical innovation. They are the ultimate price control on branded drugs and a unique phenomenon in all of health care, where nothing else goes generic — not hospitals, not services, not surgery.

Drugs, however, are difficult to manufacture consistently to high-quality standards. Every company making a drug must constantly run tests to make sure that intermediate and final products are exactly right. A company that sells a new, high-priced, branded drug has a strong profit motive to keep quality high, especially as it works to prove to physicians that its new medicine can be trusted.

The same cannot necessarily be said for generic drug companies. Some cut corners and invest in methods to evade being caught instead of investing in quality production. To make matters worse, generics companies overseas are outside of the Food and Drug Administration’s effective oversight. And when all that matters is cost, it just takes one cheater to drive the honest players to quit or also get dirty.

As many doctors and patients have recognized, a generic version of an essential medicine can be more or less potent than the brand or other generics. It might not have the stated amount of an active ingredient, might contain deadly impurities, or might release a day’s worth of drug into the bloodstream all at once. So an infection that could be controlled with a properly made drug might instead turn deadly. Blood pressure or high cholesterol remain unchecked. Or a transplant patient losing a precious new organ to rejection.
There’s a good chance that the generic medicines in your cabinet are made by Indian companies cited by the FDA for drug-quality violations in the last year. Look them up. If a you wanted a drug made in America, your doctor or pharmacist couldn’t guarantee that unless they prescribed the branded drug (which insurance won’t cover). The system is based on the idea that, for a given drug, all generic versions are as effective as one another and the brand, so you simply get the cheapest one.
Americans have no way to demand quality except to support repatriation so the FDA can ensure quality.
Generic drugs made in America are not inherently safer because Americans are more ethical but because they are made on the FDA’s home turf so the leading drug regulator in the world can keep U.S. manufacturers in line with warning letters based on spot inspections: more than 50 in the last 12 months related to drug quality assurance. The violations overseas are extreme and all the worse considering that the FDA typically gives companies several weeks’ notice that its inspectors are coming, giving them time to clean up their operations, or, in some cases, cook their books and coach employees to lie.

Contracting for generics: an opportunity

Even if American-made generics might cost more than the ones we get now, the presence of bad actors makes today’s generics not totally reliable, so whatever low price we pay for them is too high. But we can still be smart about how we get American-made generics.
Repatriating the entire competitive generic drug market as it exists today would be counterproductive. Competition achieves the lowest profit margins possible under free-market principals. But fixed costs for each manufacturer — with plants and corporations to run and executives to pay — stack up. Instead, we can turn to the more cost-effective model used to ensure that America has pandemic flu vaccines and drugs for smallpox: long-term procurement contracts with U.S.-based manufacturers who are capable of upholding quality standards and who will be inspected by FDA.

Long-term contracting can achieve less redundancy, fewer factories for the FDA to inspect, greater consistency, and at a lower cost. Just recently the federal Biomedical Advanced Research and Development Authority awarded a four-year $354 million contract to Phlow, a Virginia-based generics manufacturer, to produce certain essential generics. Now we need to scale such contracts many times over.
Instead of trying to get dozens of different generics manufacturers to compete on price for a widely used drug, the U.S. can negotiate long-term contracts with a few companies, allowing them each to enjoy greater economies of scale and greater absolute profits while Americans pay less overall for the drugs. These contracts can include funding for manufacturing innovation and automation to further reduce costs, all with the FDA ensuring that the end product stays the same.
The contracting model can also help solve another growing problem that Congress has not even begun to contemplate: some drugs cannot go generic under our existing legal, ethical, and regulatory frameworks.
Some new drugs are extraordinarily complex and nearly impossible to copy. I believe that generic manufacturers will never be able to reliably make the antibody-drug conjugates and gene therapies that are on the rise.
Think of the cost of branded drugs that will go generic as finite mortgage payments that America makes towards medicines it will eventually own, like a home your parents paid off and passed on to you. But the costs of drugs that can’t or won’t go generic are rent from day one. Companies that sell such drugs need never worry about patent cliffs or hustle to invent new drugs to replace lost revenues. They just collect the rent indefinitely.
The modern generics era established by the Hatch-Waxman Act in 1984 did not contemplate complex biologic drugs. The Affordable Care Act finally created a pathway for biosimilars, but it is harder to establish cost-saving interchangeability for biologics than for small-molecule drugs (though arguably that is not as easy as we once thought either). We shouldn’t have to hope that a dozen U.S.-based manufacturers figure out how to replicate AbbVie’s blockbuster antibody Humira to finally see an end to mortgage payments, now $15 billion a year, that America has been making since 2002, years after most other drugs have gone generic.
The most reliable manufacturer of any biologic is the company that has been making it for years as a brand. The same mechanism we use to remake America’s generic drug supply can also be used to contract with biopharmaceutical companies to continue to make their biologics at a contracted, low, but still profitable price once their patents expire. Yes, this is a price control. But it’s one even Milton Friedman would approve because it fixes the free market’s failure to achieve the same end through competition.
Without generics, the U.S. would spend hundreds of billions of dollars per year more on branded drugs. Because of generics, the U.S. spends about $271 billion on brands and only $73 billion on generics, although 90% of all scripts are for generics. If all drugs were to go generic, through competition or contract, then if we are still spending $271 billion on branded drugs in 2035 it’s because  the biotechnology industry has invented an entirely new set of branded drugs, all better than the generic drug foundation on which they stand. We’ll leave our kids better off without burdening them with rent.
There might be good arguments against this proposal. Let me dispatch the ones that are clearly untrue: Repatriating generic drug manufacturing is not an assault on free trade — it’s a necessarily response to unreliable trade. It would not be an unprecedented incursion of government price regulations into pharmaceuticals — the government already contracts with drug companies where the free market falls short.
We must think bigger and repatriate most, if not all, of our generic drug supply under contracts. We must always be able to look forward to paying off the mortgage of a drug to take possession of an inexpensive, reliable, public good while innovators move on to the next set of upgrades of our medical armamentarium, which also will someday go generic.
Peter Kolchinsky is a biotechnology investor and scientist, managing partner of RA Capital Management, L.P., and author of “The Great American Drug Deal” (Evelexa Press, 2020)

It’s time to bring generic drug manufacturing back to the U.S.