Ep. 24 - Azar's Memo & Biotech's Deals

Transcript
[00:00:00]
Jeff Cranmer:
Welcome to BioCentury this Week, I'm Jeff Cranmer, Executive Editor of BioCentury and I'm joined by
[00:00:10]
Simone Fishburn:
Simone Fishburn, Editor in Chief
[00:00:11]
Steve Usdin:
Steve Usdin, Washington Editor
[00:00:13]
Virginia Li:
and Virginia Li, Associate Editor.
[00:00:15]
Jeff Cranmer:
Virginia will be bringing us up to speed on the latest in biotech launches, as well as today's news about GRAIL's deal with Illumina. And we'll be checking in with Steve Usdin, our man in Washington, on the latest coming out of the Capitol.
[00:00:32] But first, registration is now open for our seventh BioCentury BayHelix China Healthcare Summit. This digital event runs from November 9th to 13th and includes: strategic panels, one-on-one virtual meetings, company presentations, and 2 conference reports from our partners at McKinsey. Register today to get immediate access to our pre-event program including: business intelligence on China biotech from BioCentury, Scene Setter presentations on China financings & deals, and 4 pre-event webinars. That starts this month. You can find all this on our website biocenturychinasummit.com.
[00:01:15] HHS secretary Alex Azar sent a memo late last week that appears to revoke the authority of HHS agency leaders at NIH, FDA, CDC, and more to sign off on rules. The memo comes at a time of heightened concerns over the politicization of regulatory decisions about COVID-19, including the appearance that Emergency Use Authorizations (EUA) were granted to hydroxychloroquine and convalescent plasma to please President Donald Trump. HHS Chief of Staff, Brian Harrison, says these concerns are misplaced. Steve, who are we to believe?
[00:01:54]
Steve Usdin:
It's really an extraordinary story. The memo is just a few sentences long, it says that the HHS secretary alone has the authority to sign regulations and any power delegated to others to sign regulations -- as you said the heads of FDA, CDC, NIH, or CMS is rescinded. The memo was leaked to me and it was leaked to the New York Times, and our reporting set off a firestorm. Former government officials, including some who led HHS agencies in both Republican and Democratic administrations told me the memo is a power grab. And they said, they're worried that it might be just to be beginning that it sets the stage for Azar to rescind other powers and to make unilateral decisions about COVID-19 vaccines. HHS pushed back hard, as you said, the HHS Chief of Staff, Brian Harrison he called me up twice over the weekend and he said that the alarm was completely unwarranted, that it's a housekeeping step that has absolutely no impact, that there's no reason for anybody to even think twice about this thing. When I told that to people who had served under him and the Trump administration they responded with a barnyard expression that describes the material that comes out of the rear end of cow.
[00:03:01] You know, it's very difficult for somebody who's not in government to know who's right about this, but the thing that's clear is , the American public, including government officials don't believe the things that Alex Azar and Donald Trump say. The confidence in public health agencies has been eroded and they don't get the benefit of the doubt on anything. I think that another aspect of this is that there is extraordinarily intense scrutiny on the FDA over any of its decisions that's going to make on COVID-19 -- and I think that one of the things that this shows is that people can have confidence that if people at FDA or at HHS feel that the proper decision-making procedures aren't being followed, we're going to know about it and we're going to know about it very quickly.
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Simone Fishburn:
Steve, I actually want to ask you a couple of questions it's very clear that there's a huge damage to the standing of these public agencies. I think CDC was probably better well known in the public before the crisis than FDA was . But there's also globally a lot of mess. I know in the UK they have a lot of reporting coming out of there, saying that they also don't know what kind of directions they're being given and how decisions are being made. How much is this a feature of the environment that we're in, it's a pandemic, it's uncharted waters -- versus the actual sort of power grabs that relate to specific politics?
[00:04:27]
Steve Usdin:
It's all been accentuated by COVID-19 because the stakes are so much higher now than they have been in the past. But it's also the case that around the world there's a lack of competence in public health agencies and in political...
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Simone Fishburn:
Some countries have done a great job.
[00:04:42]
Steve Usdin:
Oh sure, it's not everywhere, but there are plenty of places where there's been a lack of competence and that lack of competence extends to the communications function. Because public health is really all about communications. It's not just about government doing the right thing and knowing what the right thing is, but it's about persuading people that the government has their best interests at heart. And there's been an erosion in that in part, because there's a very conscious decision among some governmental leaders -- donald Trump is one, Boris Johnson is another, and there are others around the world -- to denigrate expertise and scientific decision making. When you do that, then people believe -- 1 - that they don't believe what a public health officials say and 2 - they believe that they have to try to figure it out themselves.
[00:05:27] There's millions of people around the world now who are trolling around the internet every day, looking at the statistics of how many people have been infected with COVID-19, and how many people have been hospitalized, how many people have died trying to do their own epidemiological investigations. Rather than having confidence that government is going to do that appropriately and provide appropriate guidance and decisions.
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Jeff Cranmer:
Steve, I've been hearing that some states are saying that they will not take FDA's decision on a vaccine, but rather will make their own decisions individually as states. Is that something you're hearing as well?
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Steve Usdin:
I've heard from the state public health agencies that have said they're not going to just accept whatever decision FDA makes, they're going to look at the data and come up with their own decisions about vaccinating people.
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Simone Fishburn:
What does that mean in practice? Does that mean that those states won't pay for a vaccine, they wont make it accessible to their ctizens.
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Steve Usdin:
It could, or it could be people talking and saying these things. It's really hard to imagine that any state actually would say, Oh, we don't believe the FDA and we're not going to make a vaccine available to our population. I think it's just another sign of this lack of confidence in government and in particular in federal public health agencies in the United States. I think that the only thing that's going to get us through this is going to be transparency, and the ability of independent experts to look at the data and to make judgments that the public believes.
[00:06:55] I think the fact that the vaccine companies, several of them, have published the clinical trial protocols, which is an extraordinary step, is a step in the right direction. It's very good, and they're going to have to publish all their data. And, the FDA advisory committee meetings about vaccines are going to be extraordinarily important, not just for shaping the decisions that FDA makes, but for public confidence in those decisions.
[00:07:19]
Simone Fishburn:
Actually Steve, this really rings a bell that goes back to our Back to School topic, which was how much of what's going on now can carry into the aftermath of COVID-19 to expedite drug development. And to some degree, there's no reason why that shouldn't become the norm for companies to publish those protocols.
[00:07:38] It will be really interesting to see whether that picks up or what damaged there is to the companies. That can be one way -- it's really important for the biopharmaceutical industry to maintain it's currently favorable, or relatively favorable standing with the public. The more transparent it is, especially in the light of what's going on with public health agencies, the better it would be for it. It'll be interesting to watch and see if that goes beyond COVID-19 or even just the vaccine.
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Jeff Cranmer:
I think it was late last week we had Moderna on Thursday release it's complete protocol, quickly followed by Pfizer, and then over the weekend AstraZeneca, and we'll see if other companies do the same. Probably wouldn't expect all of them to some are in China and other countries. But the pressure is certainly on the MNC's and the U.S.-based companies to do so. And as for that vaccine meeting that Steve referred to I believe that's coming up in about one month. We're waiting to see who will be on the panel, FDA will announce that about two days before the panel is held.
[00:08:41]
Steve Usdin:
So there's going to be more than one meeting. The meeting that you're talking about is going to be about general principles for reviewing vaccines. And then FDA has said that they're going to be specific meetings about any Emergency Use Authorization (EUA) requests or BLA requests for vaccine. I think we should expect to see more than one advisory committee meeting.
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Simone Fishburn:
Are those advisors going to need the security details around there?
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Jeff Cranmer:
As long as it's not held in Santa Monica or Marin County they'll probably be okay. With much love to my friends who live in both areas. And of course let's keep in mind that it was only about two weeks ago that CBER Director Peter Marks came out and said that if we're going to do an Emergency Use Authorization (EUA), it's really going to be like an Emergency Use Authorization (EUA) plus, more like a BLA than an EUA.
[00:09:31]
Steve Usdin:
One thing about that is that, former FDA commissioner[s] Scott Gottlieb, and Mark McClellan have a commentary in the Wall Street Journal today, where they express confidence in FDA and they express confidence in CBER to do the right thing when it comes to review decisions about COVID-19 vaccines. It's actually an extraordinary thing, there's a whole kind of community of former FDA commissioners and senior government officials who are behind the scenes trying to promote confidence in the agencies activities, and the same kind of people who are telling me that they don't believe what Azar said about this memo, do say that they're absolutely convinced that FDA will do the right thing when it comes to making regulatory decisions about COVID-19 vaccines.
[00:10:14]
Jeff Cranmer:
I certainly hope so, and it shouldn't be too long now before we get to see.
[00:10:17] Let's turn away from Washington over to the moneymakers. Virginia reporting out of our Idaho office has been watching emerging companies and venture backed deals. Last week was another busy week for new companies raising their first venture rounds, and coming out of stealth. Virginia, tell us about last week's launches.
[00:10:38]
Virginia Li:
Last week we saw at least four new company launches with pretty hefty A rounds; Neogene cell-therapy developer led the pack there with a $110 million raise from a stable of European investors. And we also had two Stanford's spinouts come out, there was Synthekine, which raised $82 million to develop synthetic cytokines for cancer and autoimmune disease. We also had a CRISPR company Graphite Bio come out with a $45 million round led by Versant. And lastly, we had Hexagon Bio and they are developing small molecules that are sourced from fungal metabolites, and they came out with a $47 million round.
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Jeff Cranmer:
Has the pandemic effected the rate of these early fundraisings for new biotechs?
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Virginia Li:
I've been a little bit surprised to see the level of series A rounds, and new launches that we have seen over this past year, because early on in the pandemic we expected that fundraising might be more of a struggle for new biotechs, now that meetings and due diligence are all taking place over Zoom. But we've actually been averaging several A rounds each week and year to date we've seen 151 companies raising about $4.5 billion in total in series A rounds alone. So that puts us on track to surpass last year total. We did a survey a couple of months ago with pharmas that are part of the COVID R&D Alliance, and most of that group did say that virtual meetings have been helpful for establishing new relationships. Perhaps people are getting more comfortable forming new working relationships over zoom, and we're seeing that translate into new investments.
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Simone Fishburn:
Yeah, I've been speaking to some BD Heads and some investors recently, and it really seems that Zoom or whichever platform you're using has come through for them. There's no sort of barrier anymore to uptake, everybody's comfortable on it. Actually what I'm hearing is that the flow and what we might see as a rush in the next few weeks, is really more driven by the election. While in most years what they do is they hunker down, let's say from Q2, Q3 -- we reported on this in our quarterly preview-- largely because drug pricing and biopharma is not a good topic in most election years. Right now, biopharma is a good place to be, and the flip side of that is people are anticipating that after the election there's going to be two months of chaos. The financial markets -- are seeing two months of chaos -- [and] really want to bank what they can now and get deals done. I think COVID has overlapped with this election. COVID as barrier to these deals just doesn't seem to be really a big factor.
[00:13:10] On the other hand I'd say we've got an accelerant. It could be an interesting few weeks also for Virginia covering. Virginia, so keeping up the pace of IPO and newco formations.
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Jeff Cranmer:
Definitely, there was one other deal I wanted to mention from last week. It's not a series A, it was a series E, again it's a Versant company. It's a company out of Europe where we're seeing more and more financing activities. Lava, one of my favoritely named biotechs raised an $83 million series C round. This was led I believe by Novo Ventures. An interesting thing here, Novo really focuses on Europe, investing in the U.S. as well. But, when our colleague Steven Hansen spoke to the firm, they told him that their annual average investment rate five years ago was about $100 million. In the past two to three years it is more in the $400 to $500 million range per year. So, they are deploying essentially a biotech fund a year to finance companies, in Europe and the U.S. That'll be a firm to watch, for sure in the coming months, as to what companies they release.
[00:14:21]
Simone Fishburn:
I think I want to add in there Jeff, which is, our upcoming China Healthcare conference, is also looking at some of these financings, in particular what's going on with China. For attendees, there is actually a couple of interesting decks of slides that look at the data where it's really surging ahead in China. I think even outpacing the U.S. in terms of, in particular IPOs, but also newco formation. And so I think really the question there and the question here is... Is this a peak? Is this a plateau? Is this just halfway there? And that's what's really going to be interesting to watch in 2021.
[00:14:57]
Jeff Cranmer:
Sounds good. With our last minute here, I'd just like to ask Virginia about today's big news out of GRAIL, a very closely watched cancer diagnostics company, spun out by Illumina a few years ago. Illumina still has a stake. GRAIL jumped into the IPO queue not too long ago and was probably going to be the most closely watched IPO of the year, or one of the top. And today, they're going private. Illumina's taking them out. Virginia, what's driving this deal?
[00:15:27]
Virginia Li:
GRAIL is going to be launching their first product next year, it's a liquid biopsy test called Galleri, designed to detect more than 50 types of cancer from a single blood draw, and Illumina's revenue has been fairly flat over the last few years. So, this will give them a way to diversify their business model beyond next gen sequencing, especially after their $1.2 billion bid to acquire PacBio in January was blocked by regulators.
[00:15:51]
Jeff Cranmer:
I know our colleague, Paul Bonanos, will be digging into this deal and we're likely to have a few more stories on this to try to figure out what this means for other liquid biopsy developers.
[00:16:02] That's all we have time for this week. Steve, Simone, Virginia... thanks for joining me.
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