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Metrics on Covid-19: Highlights of the Evaluate Vantage Report

We can always depend on Evaluate Vantage to keep us current on developments across the industry. Here are highlights from their most recent report, a compendium of articles on all aspects of how the coronavirus is impacting healthcare, and by extension all of us who depend on the professionals fighting this disease.

The coronavirus pandemic has changed the focus for all of healthcare. Johnson & Johnson, the first big pharma company to report first quarter earnings, said its pharmaceutical and consumer health units had a strong start to the year as patients and medical suppliers stocked up, fearing supply issues. But it was a different story in medtech, where non-urgent joint replacement procedures have been hit hard, and could fall by as much as 80% in the second quarter.

Similarly, when looking at industry data on M&A activity or venture investing, little slowdown can be seen in the first quarter data. Deals were struck in the opening months of the year, but these had probably already been in progress when the virus struck; it is hard to imagine even the most motivated buyer initiating large and complex transactions while in lockdown.

Venture funds are flush with cash and remain motivated to fund start-ups, which will perhaps shield this particular sector; IPOs have also held up remarkably well considering the stock market meltdown. But no activity can remain unaffected by a protracted disruption, and estimates of when the world might return to normal are little more than guesses. Some modeling studies have suggested that periods of lockdown might be required until 2022.

An effective treatment or vaccine would be a game changer, and many in biopharma are in pursuit of this goal. Collaborations between industry, academia and not-for-profits have emerged at pace: a vaccines tie-up between Sanofi and Glaxosmithkline is a remarkable example of global rivals joining forces to merge technologies and specialisms.

a chart covids-19 study totals
a chart Commercial projects in clinical trials for Covid-19

But despite these best efforts a vaccine will take many months to develop. Sanofi and Glaxo hope to put a candidate in the clinic by the end of this year, and launch late in 2021; J&J has selected a lead candidate, and could have first batches available early next year. Moderna is already in the clinic with its RNA-based candidate and has ambitiously claimed that a product could emerge later this year.

Therapeutics to treat the Covid-19 illness are a nearer-term hope, and Gilead’s remdesivir is the biggest of these. Two large studies being conducted by medics in China have been put on hold because, with Covid-19 in the country now described as well controlled, the required subjects could not be recruited. It is thus hard to overestimate the importance of the readout of Gilead’s own two trials, which have been massively upsized. Data published in mid-April on compassionate use of the antiviral raised hopes, but until rigorous trial results are available it is impossible to judge what impact remdesivir might make.

THE QUEST FOR A CURE FOR COVID-19

Clinical readouts do not come bigger than the data due on Gilead’s remdesivir. The experimental antiviral holds the nearest hope for an effective treatment for Covid-19. Anecdotal evidence points to efficacy, but the actual level of benefit that could be meaningful remains unknown. Showing a reduction in fever or reduced need for oxygen would be helpful; a real win would be if remdesivir helps patients leave intensive care or hospital more quickly, or reduces their need for ventilation.

The moderate disease trial is versus standard of care while the severe is uncontrolled, and they measure efficacy according to a scale from 1 (death) to 7 (hospital discharged) over 11 and 14 days respectively. Gilead had earlier sought simply to measure hospital discharge rates at 14 days, but amended its trials’ details on April 8. This might be because initial data – as both its trials are open-label it could have had access to these – were not showing much in terms of the blunt earlier metrics. The severe study also now allows subjects on ventilation. Most importantly, the Gilead trials have been massively upscaled, increasing enrolment targets from 600 and 400 to 1,600 and 2,400. Remdesivir’s intravenous delivery could be a drawback beyond clinical settings; other antivirals, like Roche’s Tamiflu, for example, are much more effective if administered very early in the infection, and very few patients are hospitalized in the first few days of a Covid-19 infection.

One thing seems certain: if safety is clean, even weak signals of efficacy will create huge demand.

Industry-sponsored clinical studies against the new coronavirus have proliferated recently – an analysis of data on EvaluatePharma’s dedicated Covid-19 landing page reveals no fewer than 230 trials seeking to enroll nearly 200,000 subjects.

Commercially sponsored studies will be especially interesting to investors. This group comprises 20 trials of 17 projects. Also in the antiviral field is Abbvie with its anti-HIV combo Kaletra – data published in the NEJM by academic teams at several Chinese centers were considered disappointing by the authors. Not everyone agreed: Evercore ISI’s Umer Raffat pointed to subjects in whom treatment was initiated relatively quickly. In patients given Kaletra within 12 days of symptom onset, mortality was 15%, versus 27% for standard of care. This subset comprised just 19 subjects. But it has perhaps set a benchmark for the remdesivir trials, and results from the academic sponsored Canadian study of Kaletra are keenly awaited.

Among other projects, investors will also be tracking the malaria/lupus drug Plaquenil, championed by President Donald Trump. This was prompted by a highly equivocal academic trial in France; a randomized Chinese study showed no benefit.

Since the few scraps of data supporting this drug have largely been anecdotal, it is reassuring that Sanofi’s studies, ending late this year, are quadruple-blinded, and one measures the tough endpoint of all-cause mortality versus placebo. Choloroquine, the non-hydroxylated version of Plaquenil’s active ingredient, is separately in a 10,000-subject Covid-19 prevention study at the UK’s University of Oxford.

Roche moved to begin a phase III study of Actemra in 330 Covid-19 patients after the antibody was added to China’s emergency treatment guidelines, though the company cautioned that there was very little evidence backing IL-6 inhibition in coronavirus. Sanofi and Regeneron have separately begun a trial of the similarly acting Kevzara.

Other promising approaches that have yet to move into the clinic include using antibodies to target the so-called “spike” protein that the virus uses to invade human cells, or therapies based on the plasma from recovered patients.

Given the level of intent signalled across the biopharma sector, the list above will soon become a lot longer.

a chart Selected vaccines in development for Covid-19

THE LONG PATH TO AN EFFECTIVE CORONAVIRUS VACCINE

It will probably not be possible to declare the pandemic truly over until an effective vaccine exists. An Evaluate Vantage analysis reveals nearly 25 projects that should be of special interest.

Among these an mRNA vaccine has seized the early lead, courtesy of Moderna, though Johnson & Johnson’s promise to develop an AAV vector-based approach on a non-profit basis might have the most promise. However, despite understandable enthusiasm, the road to having a vaccine approved is long and treacherous. The need to build sufficient manufacturing infrastructure is just one aspect that will slow the process, and that is before a vaccine with a sufficient efficacy is developed. It could also take a while to find a product with the right mix of safety and ability to generate antibodies that offer sufficient protection.

A recent article by the Coalition for Epidemic Preparedness Innovation (CEPI) in the NEJM pointed to the industry’s ability to respond quickly to the need for pandemic flu vaccines, but said those against Sars had not followed a similar path. Additionally, Covid-19 is an RNA virus, and the industry’s vaccine efforts against this type of pathogen, notably RSV, have underwhelmed.

Pfizer, through a deal with Biontech, hopes to enter the clinic with another mRNA vaccine this month. Three commercial vaccines are in trials at present, from Moderna, Cansino and Inovio. However, these will soon be joined by vaccines from Johnson & Johnson and the UK’s University of Oxford, the latter through a consortium that includes Oxford Biomedica. J&J says an accelerated timeline could see its lead vaccine being ready for emergency use in 2021. That would represent an extraordinarily fast turnaround, but even so a vaccine of some sort might be needed even sooner.

a chart Selected vaccines in development for Covid-19
a chart of Absolute market cap gains and losses, by sice bracket

HOW THE PANDEMIC HAS INFECTED BIOPHARMA

The coronavirus pandemic is clearly a major threat, but for some biotechs it represents a sizeable opportunity too. The urgent need for effective therapies to treat Covid-19 has spurred a huge number of collaborations across the biopharma sector recently, boosting the share prices of big and small drug developers. Transactions that might typically take months of negotiation have apparently been signed in days, and the news flow shows little sign of slowing.

Standing out as one of the most prolific deal makers is Vir Biotechnology, a relatively young infectious disease specialist headed by George Scangos, a well-known biotech executive who previously ran Biogen and Exelixis. For Vir the Covid-19 journey began in February with the discovery of two antibodies targeting the virus’s spike protein. Next the biotech signed deals with Wuxi, Alnylam (expanded a month later), Xencor, the NIH and Biogen, variously developing antibodies, RNAi therapeutics and vaccines.

The latest deal, with Glaxosmithkline, concerns two lead MAbs against the spike protein that Vir had already identified, VIR-7831 and VIR-7832, which the partners now plan to take into phase II. Vir’s positioning as the go-to Covid-19 player is clearly allowing it to extract attractive terms: Glaxo’s involvement included a $250m investment by the pharma giant, at a 10% premium, made after Vir’s stock had already more than tripled year to date. The US biotech’s market cap touched $3.5B at the end of March;

Among the industry’s other recent coronavirus-related business development activities two deals mark an important theme: the use of plasma from patients who had had Covid-19 and recovered. This is the focus of recent tie-ups between Xbiotech and Biobridge, and Amgen and Adaptive. Both teams are seeking to identify neutralizing antibodies that the immune systems of such people had raised against Covid-19, with a view to developing these as a treatment. Ethris and Neurimmune are pursuing a conceptually similar but practically much more difficult approach, seeking to use information gleaned from recovered patients to develop mRNA treatments that would generate the relevant antibodies once inhaled.

The above list is far from exhaustive, and omits the many collaborations struck between industry and both academic institutions and not-for-profits, like the Coalition for Epidemic Preparedness Innovations (CEPI).

ASSESSING THE FINANCIAL HARM

Measures implemented across the globe to protect populations and help healthcare systems cope have affected pretty much every aspect of life. Businesses have also been disrupted, and it is almost inevitable that companies will start reporting hits to financials in the coming months.

Pain has already been inflicted on the stock markets, of course; an Evaluate Vantage analysis of almost 600 global drug makers found that drug developers of every market cap bracket fell in the first quarter.

Beyond widespread share price declines, the financial damage so far has largely been restricted to withdrawing guidance for the coming year. With the first-quarter reporting season due to start towards the end of April, investors will be scouring for real dents to earnings, and estimates of future harm.

Within biopharma, certain subsectors will be hit harder than others. Those with a big primary care focus, particularly companies in the early stages of launch, could struggle to reach doctors and patients. Firms involved in elective therapies and procedures are also considered vulnerable, including cosmetic products like Botox, for example, or those involved in joint replacements. Orthopedics groups including Stryker and Smith & Nephew have already conceded that use of their products will fall throughout the year.

The pandemic might also hit another aspect of Stryker’s business: its $5.4B takeover of rival joint maker Wright Medical, currently slated to close in the second half of the year. Stryker has not indicated that it expects any problems, but after drawing the attention of the FTC the companies already looked like they might struggle to close the deal within the targeted time frame – and that was before Covid-19 hit. The Stryker-Wright deal seems to hold the potential for a worst-case scenario: that the pandemic leads to a lengthy delay, by the end of which the target business’s valuation has shifted. Abbvie’s $63B buyout of Allergan is due to close sooner, in May. Even deals that simply need to complete paperwork could be at risk of delay, as during a global lockdown this cannot be dismissed as a mere formality.

In clinical trials, it is the very biggest studies that have the most to lose here – namely, pivotal trials that are approaching conclusion. These represent years of research and, in many cases hundreds of millions of dollars of investment, as well as promising to deliver important new therapies to patients in need in the coming years.

In an attempt to quantify the amount of late-stage research at risk of delays or worse, Evaluate Vantage searched for commercially sponsored trials of pivotal-stage projects that have yet to receive US approval, and that are slated to yield results in 2020, according to the primary completion date registered on clinicaltrials.gov. This threw up 315 phase III studies due to end this year, in 172,104 subjects. The estimated cost of running these studies is a touch over $20B, according to EvaluatePharma Vision.

The table on page 31 highlights the projects in this analysis with the biggest sales potential, according to consensus sellside forecasts from EvaluatePharma. Several of these trials are likely to be hugely expensive to run – and the sums do not include the cost of other studies that might be ongoing across pivotal programs. Remarkably, it looks like at least five near-term blockbusters are under threat: Lilly’s tirzepatide, Reata’s bardoxolone, Immunomedics’ sacituzumab govitecan, Bristol-Myers Squibb’s Tyk2 inhibitor and Galapagos’s filgotinib.

a chart of the top five joint reconstruction companies
a chart of selected pending acquisitions in healthcare

THE MEDTECH RESPONSE

Efficiently identifying people infected with the coronavirus has proved to be a major problem for almost every country. Notable exceptions include Singapore, which had experience with Sars to draw on, and Germany, which has global diagnostics groups cited domestically.

Global regulators have relaxed the rules to allow swift deployment of these genetic PCR-based diagnostics. The US FDA, for example, initially said tests had to obtain emergency use authorization (EUA); a few weeks later this was dialed back to allow Clia-certified labs – those that have been inspected by the regulator – to begin using tests before receiving an EUA, though this would still need to be applied for.

By April 8 the US FDA had waved through 32 EUAs, to big and small diagnostics groups alike. It had also granted the first EUA to a serological or antibody test, to the small private firm Cellex; these are the so-called “game changer” diagnostics that claim to be able to detect prior coronavirus infection.

In March the FDA said serological assays could be used without its oversight provided they were clinically validated and not used as the sole method to diagnose an infection. Cellex clearly thought it was worth getting authorization anyway – perhaps for marketing purposes.

Being able to identifying people who are likely to be immune will be hugely important in the coming months. But it is important to remember that obtaining an EUA does not amount to a determination by the FDA that a test has been proven accurate. The poor accuracy of antibody tests is proving very problematic. Accuracy figures are not available for most of the immunoassays that have been developed, although Biomedomics has released data on a fingerstick antibody test that its partner Becton Dickinson is selling in the US. The groups claim sensitivity of 88.7% and specificity of 90.6%. Unfortunately, if 5% of a population is truly immune, and a test with 90% sensitivity is used, its positive predictive value is 32% – meaning that 68% will yield an erroneous result. Clearly, the sort of numbers Becton Dickinson cites are woefully inadequate, and analysts from SVB Leerink believe that to have “significant potential” tests would need to have sensitivity and specificity of more than 95%.

a chart of Commercially sponsored pivotal trials of novel products due to read out this year

PCR testing is also not without its problems: finite supplies of reagents and the swabs and materials required means that capacity is struggling to keep up with demand, and of course many countries do not have the lab space available in the first place.

A substantial drop in infection rates would solve these problems, of course, which for many countries has yet to occur.

THE SCRAMBLE TO REINVENT THE VENTILATOR

The lack of mechanical ventilators to treat Covid-19 patients is a pressing problem across the world. A wide variety of efforts are being made by medtechs and non-medtech companies, regulators and academic researchers to accelerate production of approved devices, repurpose other breathing systems for emergency use, and to build new ventilators from scratch.

The engineering conglomerate Smiths Group has delayed the separation of its medtech unit, which had been scheduled for mid-year, partly so it can focus on the delivery of ventilators and other critical care devices. The company is part of the VentilatorChallengeUK alliance, from which the UK government has ordered 10,000 units. The VentilatorChallengeUK consortium also includes Airbus, BAE Systems, Ford, Rolls-Royce, McLaren and Siemens, and is working to source and assemble parts for two ventilator designs, one of which is from Smiths Group. This device, made in the UK, is a portable ventilator usually used in ambulances and not typically used for long-term intensive care. This consortium is only one of many deals in which engineering groups outside the medtech sector are retooling facilities to build breathing equipment. The US diversified company General Electric is working with Ford, to manufacture a simplified GE ventilator with the aim of producing 50,000 units by early July. Separately GE said it was adding manufacturing lines to its own ventilator production sites and increasing the number of shifts so the devices can be produced around the clock.

a chart of the biggest phase III trials that are still searching for patients, but should be getting close
a chart of Blockbusters under threat
a chart of Cumulative EUAs granted to Covid-19 tests
a chart of Makers of modifiable breathing devices aligible for EUAs

Other groups, including Mercedes and Dyson, are also developing their own breathing devices more or less from scratch, in collaboration with various academic groups. And Medtronic has made the design schematics of one of its ventilators available for free, to allow other manufacturers to build and release the device.

Even so, other initiatives will be necessary. Aware that US demand for ventilators will explode within days, the FDA is allowing breathing devices and their accessories not normally used in hospital contexts to be deployed in the fight against Covid-19.

An EUA – a temporary permission that exists as long as America is in a state of emergency – has been issued for devices including anesthesia gas machines and positive pressure breathing devices that have been modified for use as ventilators.

The devices that are eligible for inclusion under this EUA are those that are not marketed in the US, or that are currently marketed but have been subject to an alteration that would usually need a new 510(k) clearance application. So far EUAs have been granted to ventilators made by two Chinese companies, Beijing Aeonmed and Mindray, and by the US group Vyaire Medical. But many other companies could benefit, as shown by the table above, which summarizes the companies with the most US approvals of the kinds of respiratory devices now eligible for emergency authorization, once they have been modified to work as ventilators.

Covid-19 is a global epidemic with a need for myriad solutions that demand the attention of experts across the industry and around the world. Our thanks to Evaluate Vantage for their tireless coverage of these developments. The full report can be found here.

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Written by hsandm

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