Post by icemandios on Nov 2, 2022 15:51:44 GMT
November 2, 2022 11:03 AM EDT DealsR&D
In spinning out cancer pipeline, Alkermes cites Inflation Reduction Act's hypothetical incentives for biologics R&D
Max Gelman
Senior Editor
Alkermes announced Wednesday morning it would siphon off its burgeoning oncology business, and cited one of President Joe Biden’s signature pieces of legislation as a motivator.
The Irish biotech decided to spin out its cancer pipeline in order to capitalize on biologics research, execs said Wednesday, following Biden’s signing of the Inflation Reduction Act into law. With the comments, Alkermes became the third biopharma company in the last week to cite the IRA in its business and R&D decisions, following Alnylam and Eli Lilly.
Updated: Eli Lilly blames Biden's IRA for cancer drug discontinuation as the new pharma playbook takes shape
In a third-quarter earnings call Wednesday morning, CEO Richard Pops emphasized how the law enables Medicare to negotiate prices for the most expensive small molecule drugs after they spend nine years on the market, while the agency can’t cap biologics prices for 13 years.
“It’s not a matter of waiting for price controls that are being imposed in a matter of time — capital allocations have changed today in favor of biologic molecules over small molecules, given the longer period of exclusivity,” Pops said Wednesday. “It’s been reckoned that the difference between 13 and nine years is about 50% of the total cash on cash from a revenue perspective.
“So if you can interrogate a biological target with it with a biologic now, you have to do that compared to a small molecule,” he added.
Pops was responding to a question from a Goldman Sachs analyst, and appeared to conflate the marketing exclusivity period — when approved, brand-name drugs are protected from generic competition — with the point when Medicare is allowed to start negotiating prices. For biologic drugs, pharma companies are generally given 12 years of exclusivity, a period that can be longer if patents run longer, or if the treatments have orphan drug designation or contain ingredients approved for the first time.
Alkermes could not be reached for comment Wednesday morning for clarification.
The Inflation Reduction Act allows the HHS secretary, starting in 2026, to select from a list of the highest-selling Medicare Part D drugs (generally for chronic condition management) for which the agency will be allowed to set a “maximum fair price.” In 2028, the list can expand to include Medicare Part B drugs, or treatments administered by healthcare professionals.
In order to be eligible for negotiations, a drug must be one of the 50 best-selling therapies among Medicare patients. The HHS secretary will initially select 10 Part D drugs for negotiation, and within a few years can add 20 Part B and Part D medications to the negotiation list every year. In 2020, the most recent year with available data, Medicare spent at least $1 billion on 38 of the top 50 Part D drugs, and another $1 billion on seven Part B drugs.
Alkermes has an immuno-oncology drug designed to target the IL-2 pathway, currently in Phase III studies for ovarian cancer in combination with Merck’s Keytruda, which it will spin out into the new company. Researchers are also testing the therapy, known as nemvaleukin alfa, in Phase II trials for mucosal melanoma — Alkermes was granted orphan drug designation in this indication.
Further down the pipeline, the new spinout will also advance two preclinical programs, one targeting IL-12 and the other going after IL-18.
Immuno-oncology therapies, such as the ones Alkermes is currently developing, fall under the biologics umbrella, as they are made from living things such as cells, tissues or proteins. Alkermes did not make public how much revenue it expected nemvaleukin alfa to bring in before and after the IRA passage.
But Wednesday’s decision signals the company explicitly believes the IRA incentivizes biologic drug R&D and disincentivizes small molecules, a position shared by Big Pharma and industry trade groups writ large since before it was signed into law. Pharma critics have pushed back on that assertion, noting the relatively small amount of drugs eligible for price caps and how, when making business decisions for still-experimental drugs, it’s difficult to predict which drugs will become top sellers years in the future.
Pops’ comments come after Alnylam linked a decision last week to end Stargardt disease development for vutrisiran, recently approved as Amvuttra in another disease, to the IRA’s impact on R&D. Alnylam CEO Yvonne Greenstreet noted the law’s exemptions for drugs that receive a single orphan designation (which Amvuttra possesses) as a factor.
Alnylam blames the Inflation Reduction Act for a PhIII cut — would it have sold enough for negotiations?
The remarks also come after Eli Lilly scrapped a Phase I cancer drug it licensed from Fosun Pharma, tying the move to the IRA’s small molecule caps.
Once the spinout is completed, Alkermes will retain its approved drugs and neuroscience pipeline, including Lybalvi — approved to treat schizophrenia and bipolar 1 disorder in June 2021. Evercore analyst Umer Raffat wrote in a note to investors that the spinout likely signifies Alkermes has high confidence in Lybalvi’s ability to sell. Looking at the company’s past SEC filings, Raffat suggests spinning out the cancer unit could save Alkermes $100 million in R&D costs.
In spinning out cancer pipeline, Alkermes cites Inflation Reduction Act's hypothetical incentives for biologics R&D
Max Gelman
Senior Editor
Alkermes announced Wednesday morning it would siphon off its burgeoning oncology business, and cited one of President Joe Biden’s signature pieces of legislation as a motivator.
The Irish biotech decided to spin out its cancer pipeline in order to capitalize on biologics research, execs said Wednesday, following Biden’s signing of the Inflation Reduction Act into law. With the comments, Alkermes became the third biopharma company in the last week to cite the IRA in its business and R&D decisions, following Alnylam and Eli Lilly.
Updated: Eli Lilly blames Biden's IRA for cancer drug discontinuation as the new pharma playbook takes shape
In a third-quarter earnings call Wednesday morning, CEO Richard Pops emphasized how the law enables Medicare to negotiate prices for the most expensive small molecule drugs after they spend nine years on the market, while the agency can’t cap biologics prices for 13 years.
“It’s not a matter of waiting for price controls that are being imposed in a matter of time — capital allocations have changed today in favor of biologic molecules over small molecules, given the longer period of exclusivity,” Pops said Wednesday. “It’s been reckoned that the difference between 13 and nine years is about 50% of the total cash on cash from a revenue perspective.
“So if you can interrogate a biological target with it with a biologic now, you have to do that compared to a small molecule,” he added.
Pops was responding to a question from a Goldman Sachs analyst, and appeared to conflate the marketing exclusivity period — when approved, brand-name drugs are protected from generic competition — with the point when Medicare is allowed to start negotiating prices. For biologic drugs, pharma companies are generally given 12 years of exclusivity, a period that can be longer if patents run longer, or if the treatments have orphan drug designation or contain ingredients approved for the first time.
Alkermes could not be reached for comment Wednesday morning for clarification.
The Inflation Reduction Act allows the HHS secretary, starting in 2026, to select from a list of the highest-selling Medicare Part D drugs (generally for chronic condition management) for which the agency will be allowed to set a “maximum fair price.” In 2028, the list can expand to include Medicare Part B drugs, or treatments administered by healthcare professionals.
In order to be eligible for negotiations, a drug must be one of the 50 best-selling therapies among Medicare patients. The HHS secretary will initially select 10 Part D drugs for negotiation, and within a few years can add 20 Part B and Part D medications to the negotiation list every year. In 2020, the most recent year with available data, Medicare spent at least $1 billion on 38 of the top 50 Part D drugs, and another $1 billion on seven Part B drugs.
Alkermes has an immuno-oncology drug designed to target the IL-2 pathway, currently in Phase III studies for ovarian cancer in combination with Merck’s Keytruda, which it will spin out into the new company. Researchers are also testing the therapy, known as nemvaleukin alfa, in Phase II trials for mucosal melanoma — Alkermes was granted orphan drug designation in this indication.
Further down the pipeline, the new spinout will also advance two preclinical programs, one targeting IL-12 and the other going after IL-18.
Immuno-oncology therapies, such as the ones Alkermes is currently developing, fall under the biologics umbrella, as they are made from living things such as cells, tissues or proteins. Alkermes did not make public how much revenue it expected nemvaleukin alfa to bring in before and after the IRA passage.
But Wednesday’s decision signals the company explicitly believes the IRA incentivizes biologic drug R&D and disincentivizes small molecules, a position shared by Big Pharma and industry trade groups writ large since before it was signed into law. Pharma critics have pushed back on that assertion, noting the relatively small amount of drugs eligible for price caps and how, when making business decisions for still-experimental drugs, it’s difficult to predict which drugs will become top sellers years in the future.
Pops’ comments come after Alnylam linked a decision last week to end Stargardt disease development for vutrisiran, recently approved as Amvuttra in another disease, to the IRA’s impact on R&D. Alnylam CEO Yvonne Greenstreet noted the law’s exemptions for drugs that receive a single orphan designation (which Amvuttra possesses) as a factor.
Alnylam blames the Inflation Reduction Act for a PhIII cut — would it have sold enough for negotiations?
The remarks also come after Eli Lilly scrapped a Phase I cancer drug it licensed from Fosun Pharma, tying the move to the IRA’s small molecule caps.
Once the spinout is completed, Alkermes will retain its approved drugs and neuroscience pipeline, including Lybalvi — approved to treat schizophrenia and bipolar 1 disorder in June 2021. Evercore analyst Umer Raffat wrote in a note to investors that the spinout likely signifies Alkermes has high confidence in Lybalvi’s ability to sell. Looking at the company’s past SEC filings, Raffat suggests spinning out the cancer unit could save Alkermes $100 million in R&D costs.