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Good morning, everyone. Damian here with a counterintuitive idea in pharma, an ode to scientific matrimony, and the solution to a CAR-T mystery.
The need-to-know this morning
• AstraZeneca announced a licensing deal for a GLP-1 drug candidate in the early stages of clinical development, aiming to compete against more established treatments for diabetes and obesity from Novo Nordisk and Eli Lilly. AstraZeneca paid $185 million upfront for global rights to the oral drug developed by Eccogene, a Chinese drugmaker, and committed another $1.85 billion in future payments contingent on achieving certain milestones.
• AstraZeneca also reported third-quarter adjusted earnings of $1.73 per share on total revenue of $11.49 billion — a modest beat for the top and bottom lines. Cancer drug sales in the quarter rose 15% year over year to $4.6 billion.
• Takeda won approval from the Food and Drug Administration for an oral, targeted therapy to treat patients with metastatic colon cancer no longer responsive to previous chemotherapy. The new drug, called Fruzaqla, works by blocking three related molecular pathways that tumors use to grow.
• Atara Biotherapeutics said its treatment for progressive multiple sclerosis failed to improve a disability score compared to placebo in a mid-stage clinical trial. The company is halting further development of the drug, called ATA188.
• Amylyx Pharmaceuticals reported $103 million in third-quarter sales for its ALS drug Relyvrio – missing analysts’ consensus estimate. A closely followed confirmatory study of Relyvrio will read out results in the second quarter of 2024, the company said.
Lilly tries a rare tactic: competing on price
The widely expected approval of Eli Lilly’s treatment for obesity came with an unexpected detail: The drug will carry a list price that is 20% lower than its competitor, Novo Nordisk’s Wegovy.
The decision to sell Zepbound, the obesity brand name for a Lilly drug also sold as Mounjaro, at a discount was based on conversations with employers, the company said, who get to choose whether to opt into obesity coverage in their insurance plans. By charging less, more patients will likely get access to Zepbound, thereby creating a larger market, the company said.
While charging less money to undermine a competitor might seem intuitive, in the pharmaceutical business, it can be dangerous. Many pharmacy benefit managers prefer higher-priced medicines because they allow for larger monetary rebates, creating a system that incentivizes drug companies to charge ever more for their latest products. Lilly is betting that patient demand and employer-friendliness can help Zepbound buck industry tradition.
At least one biotech contractor is doing OK
The prolonged downturn for the biotech industry has brought financial havoc upon the many companies that sell the picks and shovels needed to cash in on a pharmaceutical gold rush. But Charles River Laboratories, which makes its money selling lab rats and drug discovery help, provided a rare bright spot for a beleaguered sector.
The company beat Wall Street’s profit estimates thanks to an increase in demand for its discovery and safety assessment services. Biotech clients are spending less money, Charles River said, but the rate of cancellations is going down. The company lowered the high end of its full-year revenue and profit guidances, which, in light of its competitors repeatedly pulling their projections outright, is about as good as shareholders might expect.
Elsewhere, Thermo Fisher Scientific, maker of lab tools, lost about $15 billion in value last month after cutting its profit forecast for the second time this year. Lonza, a contract manufacturer, is in a similar position and recently replaced its CEO without explanation. Each has cited sharply declining demand from the drug industry for its woes.
Investors don’t get Sanofi’s relationship with science
Last month, when Sanofi revoked its earnings projections and announced an increased investment in research, the company “renewed our vows with science,” CEO Paul Hudson said. The company’s shares fell 19% that day, suggesting the market had some objections to the union.
“Would I have liked the stock market reaction to be more generous? Of course,” Hudson said at a Financial Times event in London yesterday. “But this is a long-term game, and if you’re trying to deliver long-term value, you try not to make too many short-term decisions.”
To Hudson, delivering on the company’s profit guidance would have required partnering up or selling off promising medicines in the company’s pipeline, a questionably wise trade of future promise for immediate returns. “The market will hopefully learn to understand that.”
The curious case of a rare CAR-T side effect
For a small number of patients who receive CAR-T cancer therapy, the powerful tumor treatment brings on a severe and mysterious reaction that leads to memory impairment and brain swelling.
As STAT’s Angus Chen reports, scientists believe they have decoded the uncommon reaction, which has roots in the intricacies of the immune system. HHV-6, a common herpes virus, is a harmless inhabitant of nearly every person on the planet, embedding itself in infection-fighting T cells. But when those cells are removed from the body and cultured in a lab, as in the case of CAR-T treatment, those cells can start replicating and stir up a life-threatening infection.
“These are transformative therapies, and we should not pump the brakes on them,” said Caleb Lareau, a cancer immunologist at the Memorial Sloan Kettering Cancer Center who published a paper on the subject this week. “But there is a gap where patients are dying, and we don’t know why. This might provide insight into one facet into why patients might develop complications.”