Originally Published as The Niche Podcast
Two Mercks - three stories, Paraxel gets genomes, Genomes get Money, and 2021 is the year of the upsized public offering.
Sponsors
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Story References
https://tinyurl.com/Niche-33-Merck1
https://tinyurl.com/Niche-33-Merck2
https://tinyurl.com/Niche-33-Merck3
https://tinyurl.com/Niche-33-2
https://tinyurl.com/Niche-33-3
https://tinyurl.com/Niche-33-4
https://tinyurl.com/Niche-33-5
https://tinyurl.com/Niche-33-6
Music by Luke Goodson
https://www.soundcloud.com/lukegoodson
Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry.
Introduction
Welcome to The Niche Podcast – Your weekly rundown of the biotech, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, two Mercks - three stories, Paraxel gets genomes, Genomes get Money, and 2021 is the year of the upsized public offering.
Merck KGaA Gets FDA Approval
Merck has shown up in the news a lot this week. First, Tepmetko was approved by the FDA as a once-daily oral MET inhibitor. The oncology treatment was developed by Merck KGaA – that’s the German Merck. In case you’re confused Merck in the USA was a part of the original Merck KGaA but the company was split because of WW1. Merck KGaA’s Tepmetko is squarely in the precision oncology segment. It’s specifically approved for a rare form of metastatic non-small cell lung cancer with mesenchymal-epithelial transition exon 14 skipping alterations – or NSCLC METex14. With this launch, Merck will now directly compete with Novartis’ Tabrecta, which was approved May 2020 and had around $35M in sales last year. Treatment is basically similar between these two drugs, but Merck gets the “once-daily” claim with Novartis’ therapy being a twice daily – probably not a deal-breaker for someone with metastatic lung cancer. These are small markets, with high therapy costs - Tepmetko is set to be $20,898.60 for a 30-day supply, Tabrecta is just under $18K for 28 days. Key to both drugs success is an increase in market size. One way to do this will be expanded genetic testing among NSCLC patients for METex14. That’s an advocacy both Novartis and Merck KGaA will get behind.
Merck (MSD) Drops Q4 Results, Changes CEO
The US Merck, sold as MSD globally, made several announcements this week. First, nothing surprising, they dropped their 2020 financial reports. Numerous big players have put out reports in the last two weeks with more expected soon and unfortunately, we just don’t have time to get into all of them. For Merck, the big picture is in upward direction despite a slow year. Their total growth in sales was 2% year over year, but Q4 results were up 5%. A huge… no enormous… no mind-blowing amount of Merck’s current growth is from Keytruda. I cannot emphasize this hard enough. The oncology mega-blockbuster saw a year-over-year 30% sales increase to $14.4B. As they continue to garner approvals for new indications expect Keytruda to grow significantly next year as well. It’s unclear when competition from niche oncology therapies will chip away at total sales, but at least in the mid terms Keytruda will continue to dominate. The other key news from the report is the plan to spin off Organon into an independent company at the back half of this year. This has been planned and announced for a long time. I suspect without a pandemic it could have happened sooner. Organon will focus on women’s health and biosimilars.
The most momentous news this week was the announcement of the June 30th retirement of CEO Kenneth Frazier. Mr. Frazier has worked at Merck in numerous leadership roles for nearly 30 years. His 10-year run as CEO has seen the company through tumultuous waters in a competitive space. When he took over leadership he was the first African-American to lead a fortune 500 company. He will be replaced by Robert Davis, Merck’s CFO. Mr. Frazier will continue to serve as executive chairman of the board of directors. I suspect Merck will continue on in a relatively stable direction even with a change in leadership.
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Parexel and NeoGenomics
A leading Clinical Research Organization, Parexel announced a partnership with NeoGenomics this week. NeoGenomics provides genetic testing in the oncology space. The collaboration is intended to integrate improved patient matching for oncology trial design through Paraxel’s pipeline. As we have mentioned on the show, a burgeoning sector is precision oncological treatments like Tepmetko and Tabrecta. There is a flock of companies in preclinical through early clinical pipelines targeting these patient populations. This solidified relationship should allow Parexel to identify and screen potential enrollees and successfully match them with targeted companies through one centralized pipeline. Based on the language of the announcement, Paraxel may also be receiving data insights from NeoGenomics that they can then utilize in customer acquisition. No financials surrounding the deal were disclosed.
23andMe
Speaking of utilizing data, 23andMe is going public through a SPAC giving itself a valuation of $3.5B and around $900M in cash. All those genomes people have paid to have analyzed – turns out 80% of folks gave 23andMe permission to do genetic research. This gives the company a massive and incredibly important dataset which is obviously fiscally valuable and has been written about extensively since the launch of personalize genome testing. The language of this announcement is quintessential Silicone Valley hyperbole including the terms “revolution” “industry disruptor” and “fundamentally… transform.” Their actual plans? Something to do with personalized healthcare and capitalism. We’ll tuned to find out more.
Supersize me! (Public Offering Edition).
It is no surprised based on markets and investor trends to see so many IPOs and additional POs. But the number that are getting upsized and expanded is pretty amazing to watch. Two from this last week. First, Revolution Medicine upsides to a $260.9M PO. They originally went public at $17.00 a share in February 2020. This new offering will likely raise capital for expanded clinical research operations. Their key SHP2 inhibitor is at phase 2 clinical trial under a fully funded partnership with Sanofi, so these new funds are likely for some their 6 other targets.
Sana Biotechnology has gone absolutely bonkers in raising money. In June 2020 they pulled $700 million from top names across the biopharma space. Now they have gone public with a $588M IP). These shares will likely be significantly more valuable, at least in the near term. I say this because there is a huge amount of big name and very successful capital behind Sana. That creates momentum and investor confidence. What’s the long-term value of a company that raises $1.3B in 7 months? Well, that’s impossible to speculate on, because they haven’t made anything yet. But my guess is right between oof and oh wow.
Closing Credits
Thanks for joining me on The Niche Podcast; your weekly summary of top news in the biotech, clinical trials, and life science industries. You can learn more at thenichepod.com or find us on your favorite podcast app. Like, comment, subscribe, and most of all share with your friends. If you like what you hear, please rate and review, it really helps us. Once again, I’m Dr. Noah Goodson, I’ll see you next week.