Claudin18.2 continues to fan the dealmaking flames

 Claudin18.2 emerged as a cancer mechanism to watch last year, and Leap Therapeutics is betting on this space getting hotter. The biotech is asking its shareholders to accept huge dilution in an all-stock acquisition of Flame Biosciences, which owns two very early-stage assets against this target. Should the transaction complete, Flame shareholders will end up owning 58% of the combined entity, or 47% on a fully diluted basis. Flame licensed its Claudin18.2 assets from Novarock last year so new Leap will owe milestone payments should progress be made. And while two unwanted Flame assets will be put up for sale, 80% of any after-tax proceeds would flow back to Flame’s investors. Combined cash of $115m will last until mid-2025, and Leap's management will take the top seats but this all feels like thin icing on a meagre cake for Leap's investors. Still, having endured four years of share price stagnation perhaps they will decide that this deal delivers hope of better returns than DKN-01, which has failed to set the stock alight despite years of development. Much now depends on the progress of more advanced Claudin18.2 projects: over to Astellas, which will present detailed phase 3 data later this year.  

 

Leap and Flame's combined pipeline
Project	Description	Trial details	Note
Phase 2
DKN-01	Anti-DKK1 MAb	Defiance in 2L CRC; Distinguish + tislelizumab in GEA	Leap owned; development to continue
FL-101	IL-1β neutralising antibody	NCT04758949 in NSCLC withdrawn	From Flame; to be sold/out-licensed
Phase 1/2
FL-301	Anti-Claudin18.2 MAb	NCT05181865 in solid tumours withdrawn	From Flame via Novarock, milestones due; development to continue
Preclinical
FL-302	Anti-Claudin18.2/ CD137 bispecific		From Flame via Novarock, milestones due; development to continue
FL-501	Anti-GDF15 MAb		From Flame; development to continue
FL-103	IL-1β neutralising antibody		From Flame; to be sold/out-licensed
CRC=colorectal cancer; GEA=gastroesophageal  adenocarcinoma. Source: Evaluate Pharma & clinicaltrials.gov. https://www.evaluate.com/vantage/articles/news/deals-snippets/claudin182-continues-fan-dealmaking-flames

Why biotech is poised for a recovery this year

 The drug industry is now divided between the haves and the have-nots.

That wide gap in mood was in stark relief as thousands of industry professionals descended upon San Francisco last week for JPMorgan‘s big healthcare conference. On one side were giddy pharma executives with plenty of access to cash and their stocks trading near record highs. On the other side, there were cash-strapped small biotech bosses, speaking of layoffs and suspended clinical trials.

During his presentation, Merck & Co. Chief Executive Officer Robert Davis used the word confident more than 20 times, at one point telling his interlocutor, JPMorgan analyst Chris Schott: "Hopefully you’re getting the sense that my confidence is quite high."

Mr. Davis has reason to feel that way. Merck’s stock returned 49% last year, compared with an 18% loss for the S&P 500—not bad for a company that is facing the loss of patent protection later this decade for a drug that brings in nearly half of its sales.

Ticker	Security	Last	Change	Change %
MRK	MERCK & CO. INC.	110.45	-1.80	-1.60%
Powered By

For starters, there is the macroeconomic environment. Just as rising rates helped drive money into defensive healthcare stocks—and away from growth areas such as biotech—stabilizing rates could see some of that money move elsewhere this year. As Umer Raffat, an analyst at Evercore ISI wrote on Friday, the "tale of 2022 large cap performance has been rates and generalist fund flows, not execution as some companies may believe."

There will probably be plenty of gyrations this year as the economy looks set to enter a recession. But fresh data showing inflation eased in December means the Federal Reserve may start slowing down its rate increases, with traders actually pricing in a cut later this year.

That means the biotech sector has a decent chance of staging a recovery. We are already seeing some signs of that to start the year, with the SPDR S&P Biotech ETF up 5.9% while the NYSE Arca Pharmaceutical Index is down marginally. That is a reversal from last year, when the pharma index returned 4.9% versus a 26% decline for the biotech fund.

Pharma executives at the conference did lots of complaining about the recently passed Inflation Reduction Act, known as the IRA (some CEOs call it the Innovation Reduction Act), which will for the first time allow the government to negotiate drug prices.

Earlier this week, the Department of Health and Human Services released its timeline for Medicare drug-price negotiations, with the list of the first 10 drugs selected to be published on Sept. 1. That will make the law feel a lot more tangible to investors.

One of big pharma’s responses to such pressures is to join forces with biotech. During the JPMorgan conference, AstraZeneca, Ipsen and Chiesi announced three separate deals, each in the $1 billion range. Notably, each deal included contingent value rights, or CVRs—essentially an agreement to give shareholders in the acquired company rights to additional payments if certain drugs in development meet prespecified milestones.

Ticker	Security	Last	Change	Change %
AZN	ASTRAZENECA PLC	70.74	-0.34	-0.48%

Kevin Davies, Mizuho‘s head of healthcare investment banking, says that such deals help soothe deal-making jitters, with pharma reluctant to overpay for companies themselves while many biotechs are still hanging on to their high valuation expectations of 2021.

The deal flurry isn’t expected to abate, putting the biotech sector on path to continue the outperformance with which it started 2023.

https://www.foxbusiness.com/healthcare/why-biotech-poised-recovery-this-year

Vice Premier Touts China 'Reopening To The World' In Davos Investment Pitch

 China is using the World Economic Forum's annual meeting and gathering of global elites at Davos to announce the country's total reopening after three years of Covid lockdown and isolation, further vowing to gets its economy back on track to pre-pandemic growth levels.

Chinese Vice Premier Liu He hailed the end of Beijing's "zero-COVID" curbs and a new era of an "open door" for foreign investments. In his address at Davos he called on "entrepreneurs, including foreign investors" to "play a critical role as they are the key elements of social wealth creation" in line with President Xi's so-called "common prosperity" vision.

The speech was peppered with some nearly dozen references to strengthening economic cooperation among the world's major economies and maintaining "world peace". He said in this way China and the world can "firmly safeguard world peace."

"China will always promote all-round opening up, and improve the level and quality of opening up," Liu said. "Foreign investments are welcome in China, and the door to China will only open up further."

China's economic tsar further assessed the Covid situation, which has lately grabbed world headlines due to widespread accusations that health authorities are lying and trying to conceal the true death count, telling WEF founder Klaus Schwab the situation is now "steady" and that people are recovering quickly, which is a "surprise". He also pledged that the Chinese economy will get back on track this year despite the pandemic era slowed growth indicators.

As the WSJ notes of the timing of Liu's Davos attendance, "The Chinese economy on Tuesday notched up a 3% year-over- year expansion in gross domestic product in 2022 as the country was ravaged by Beijing’s 'zero-Covid' pandemic restrictions and a sharp property-sector downturn." And further of his words: "Mr. Liu said China’s current account surplus to its GDP stood at over 2% in 2022, compared with 1.8% in 2021."

He continued in the speech: "We have to abandon the Cold War mentality, try to understand the essence of things from the perspective of material duality, endeavor to build a community with a shared future for mankind, and join hands to respond to global challenges," according to a translation. He stressed: "We believe that an equitable international economic order must be preserved by all of us" - in what's perhaps a subtle swipe at China's main rival the United States.

On Wednesday Liu is expected to meet with US Treasury Secretary Janet Yellen in Zurich in what will be a first ever in-person meeting, following several virtual meetings. A Chinese foreign ministry statement previewed that the two will seek to "strengthen macroeconomic and financial policy coordination."

It should be noted that Russia - an ally which Beijing has refused to condemn - is conspicuously absent from Davos this year.

* * *

A note by Goldman Sachs summarized the Vice Premier's main points in his Davos speech as follows:

• Liu He reaffirmed that policymakers would prioritize economic development, let market play a fundamental role in the economy (Liu emphasized that it’s not possible for China to shift back to the planned economy track) and promote higher-level of opening up.
• He further stated that policymakers would relax restrictions in the property sector imposed when the sector was overheated, and help expand effective demand. Property remains as one of the nation's pillar industries, accounting for 40% of bank lending, 50% of local government revenues, and 60% of urban households’ assets.
• Liu He clarified that "dual circulation" focuses on expanding domestic demand, but policymakers would stick to opening up and enhancing international cooperation.
• On common prosperity, Liu He stated that this would be a long-term policy goal and aimed to reduce inequality. Policymakers would promote development and encourage wealth creation.
• In the Q and A on China’s Covid situation, Liu He mentioned dining-in, tourism and transportation services have largely normalized in China, and inbound tourists only needed to provide 48-hour negative Covid test results. Liu believed that the recovery of GDP growth to its normal pace is highly possible, and expect imports to improve significantly, firms to step up investment, and household consumption to normalize. The healthcare system functions normally now and Covid policy focuses on treatment of the elderly population, according to Liu He.

https://www.zerohedge.com/economics/vice-premier-touts-china-reopening-world-davos-investment-pitch

SmileDirectClub Plan to Drive Profitability, Positive Cash Flow

  SmileDirectClub, Inc. (Nasdaq: SDC), today announced plans for a realignment of its operating programs and global workforce to further hone its focus on its core business and technology-enabled innovation portfolio, and to introduce additional cost savings to the Company’s operating plan in order to enable growth and sustainable positive cash flow.

Plan Details

By taking these steps to right-size the business, the Company expects to introduce an additional $120 to $140 million in savings in 2023 excluding transition costs and place SmileDirectClub on a path to positive cash flow in late 2023.

“These actions are the natural next steps in the changes we introduced in 2022 to realign our operations in order to execute against our growth opportunity with efficiency and financial discipline,” said David Katzman, Chief Executive Officer of SmileDirectClub. “We are pleased with the progress we’ve made with the introduction of our innovative SmileMaker Platform and the upcoming launch of our CarePlus premium offering, as we design a technology-led product portfolio that continues to give consumers choice, convenience and affordability in oral care.”

Preliminary Fiscal Year 2023 Guidance

Once implemented, the changes are expected to protect the investment in SmileDirectClub’s strategic priorities while right-sizing the cost structure of the core business with the potential to drive positive Adjusted EBITDA by Q3 2023. These changes include anticipated reductions in general and administrative expenses of $50 million to $55 million and reductions in marketing and selling costs of $60 million to $65 million with a focus on greater efficiency.

For the year ended December 31, 2023, the Company expects total revenue to be in the range of $400 million to $450 million for the core business, which does not include any anticipated revenue upside from its upcoming United States rollout of the SmileMaker Platform or the launch of its CarePlus program. As these initiatives are introduced to the market at scale, the Company will provide more details and additional full-year expectations in the future.

https://finance.yahoo.com/news/smiledirectclub-announces-plan-drive-profitability-213500830.html

Bausch + Lomb Acquires AcuFocus

 Bausch + Lomb Corporation (NYSE/TSX: BLCO) ("Bausch + Lomb"), a leading global eye health company dedicated to helping people see better to live better, and AcuFocus, Inc. ("AcuFocus"), a privately held ophthalmic medical device company, today announced that an affiliate of Bausch + Lomb has acquired AcuFocus, pursuant to a merger transaction with the parent company of AcuFocus.

AcuFocus has delivered breakthrough small aperture intraocular technology to address the diverse unmet needs in eye care, including the IC-8® Apthera™ intraocular lens (IOL), which was approved by the U.S. Food and Drug Administration in July 2022 as the first and only small aperture non-toric extended depth of focus (EDOF) IOL for certain cataract patients who have as much as 1.5 diopters of corneal astigmatism and wish to address presbyopia at the same time. Known as the IC-8 IOL in global markets, this IOL is available in select markets across Europe, as well as in Australia, New Zealand and Singapore.

https://finance.yahoo.com/news/bausch-lomb-acquires-acufocus-inc-220900327.html

ADMA: Guidance exceeds views

 Fourth Quarter 2022 Preliminary Unaudited Total Revenues of Approximately $49-$50 Million, an 89% Year-Over-Year Increase

Full Year 2022 Preliminary Unaudited Total Revenues of Approximately $153-$154 Million, an 90% Increase Over Full Year 2021

Full Year 2023 Total Revenues are Expected to be $210 Million or More, Representing Approximately 40% Year-Over-Year Growth Rate

First-Time Positive EBITDA Expected During Second Half of 2023

https://finance.yahoo.com/news/adma-biologics-announces-preliminary-fourth-120000794.html

Pfizer to sell all its drugs in low-income countries at non-profit price

 U.S. drugmaker Pfizer Inc said on Tuesday it will offer its full portfolio of drugs, including off-patent medicines such as chemotherapies and oral cancer treatments, on a not-for-profit basis to 45 low-income countries in the world.

In an expansion of the company's "An Accord for a Healthier World" program, which is aimed at increasing access to innovative treatments in some of the world's poorest countries, Pfizer said it will now offer a total of 500 products.

When the drugmaker launched the program in May 2022, it offered only its patented medicines including COVID-19 treatment Paxlovid and its big-selling breast cancer drug, Ibrance, at a not-for-profit price. 

https://finance.yahoo.com/news/pfizer-sell-drugs-low-income-114602708.html