JPM24: Pfizer’s tough sell, the next Karuna and building a biotech platform

Biotechnology’s embrace of artificial intelligence was never more literal than Tuesday at the J.P. Morgan Healthcare Conference, when AI drug discovery specialist Recursion handed out umbrellas in front the Westin St. Francis to combat the inevitable San Francisco rain.

AI, and its role in drug development, has been a major topic of discussion at the meeting, highlighted by yesterday’s presentations from Recursion and chip maker Nvidia. While people may disagree over how quickly AI will change the drug industry, technological optimism is a fitting match for this year’s more bullish JPM mood.

Other topics were top of mind, too. Back-to-back neuroscience buyouts have put that field in the spotlight, while industry veterans debated the effects of last year’s market downturn on the sector’s future. Pfizer fielded questions on obesity drugs, an area that Novo Nordisk and Eli Lilly now dominate.

A ‘Karuna on steroids’

PureTech Health is the “OG” hub-and-spoke biotech, jokes CEO and founder Daphne Zohar. Formed in 2005, the company was an early adopter of a model in which a central parent forms subsidiaries that each develop their own drugs. The strategy was out of necessity, she says. The company didn’t have enough cash early on to advance all of its ideas, so it used subsidiaries to draw in more investors.

That model led to a startup called Karuna Therapeutics. Schizophrenia experts convened by PureTech had theorized that a discarded, but potent Eli Lilly medicine, xanomeline, could be paired with another that blunts its side effects. They cut a deal for rights to xanomeline and planned an experiment to test the theory. In the meantime, “probably 100 investors passed on the idea,” according to Zohar. The only reason Karuna survived was a grant from the Wellcome Trust.

The experiment succeeded, leading to a yearslong ascent by Karuna, which in December was bought by Bristol Myers Squibb for $14 billion. It’s PureTech’s biggest hit: The firm has already received $815 million on the $18.5 million it invested, according to Zohar. It will get another $300 million when the deal closes, and potentially $400 million more in milestones.

PureTech is already working on a sequel. The same team that worked on Karuna’s drug is behind a young neuroscience startup called Seaport Therapeutics. The company intends to tweak drugs that have shown promise in testing but have flaws such as liver toxicity or low absorption by the blood.

“We’re calling it a ‘Karuna on steroids,’” Zohar said. — Ben Fidler

Pfizer tries to turn the page on a no-good year

Pfizer CEO Albert Bourla had a tough sell to make investors Monday at JPM.

Company shares fell by more than one-third in value over the past year as sales for its COVID-19 products shrank in 2023. In October the company announced layoffs and cost cuts as it revised its revenue forecasts down.

“Clearly 2023 was not a good year for us,” Bourla said Monday in San Francisco.

As part of its adjustments, Pfizer has reduced its COVID product inventory to better match anticipated demand in 2024. Boula said the company is now ready to start the year with a “clean slate.”

Pfizer is still facing tough investor questions, though.

Last year, the company launched an RSV vaccine for older adults and maternal immunization, a product it forecast to become a blockbuster seller. Yet so far GSK has been able to win greater market share with its rival RSV vaccine. Bourla disclosed that Pfizer’s shot took only 35% of the U.S. market in 2023.

The company is also struggling to develop an obesity drug that can match fast-selling medicines from Eli Lilly and Novo Nordisk.

“Obesity is going to be a big market, period,” Bourla said. “Pfizer will play in the market.”

Pfizer has hit setbacks, though. In December, the company said it was discontinuing development of a twice-daily GLP-1 agonist due to side effects.

The experimental drug, an oral pill called danuglipron, was expected to have an advantage over Novo’s and Lilly’s injections. Pfizer is continuing to test a once-daily version of the pill.

Despite the setback, Bourla is confident Pfizer still has the “capability” to play a part in the obesity drug market. The pharma is eyeing early-stage licensing deals over later-stage assets, Bourla said. — Delilah Alvarado

Building a platform in a downturn

John Maraganore spent nearly two decades turning a small startup into a pioneering developer of new medicines. The company he built, Alnylam Pharmaceuticals, is now one of the sector’s largest companies and the leading maker of treatments involving a drugmaking method known as RNA interference.

To get there, Alnylam endured years of setbacks and stock price gyrations. Such a journey is tougher in today’s environment, when companies with broad drug platforms are having a harder time raising cash. A recent report from HSBC’s innovation banking division found that funding for biotechs with platform technologies fell by more than half in 2023 amid a shift towards clinical assets.

Maraganore — now a consultant and biotech adviser — still believes new Alnylams can emerge today, despite investors’ higher expectation. But he expects those companies will be constructed more efficiently, with smaller staffs, and focused from the outset on “product opportunities,.” Investment horizons will be shorter, with a timeline from formation to clinical trials that’s “much more reasonable,” he said.

“Every cycle I’ve seen, there’s some sort of learning that informs the next generation of companies getting started,” Maraganore said. Going forward, “we’re going to see a bit more of a grounded approach to company building.” — Ben Fidler

GSK’s vaccine strength

GSK arrived at JPM on the heels of a good year. The company punctuated CEO Emma Walmsley’s presentation Tuesday with an acquisition of asthma drugmaker Aiolos Bio.

In her presentation, though, Walmsley highlighted GSK’s strength in infectious disease. The company has enjoyed a strong launch for its RSV vaccine Arexvy, the first preventive shot approved in the U.S. Cleared for use in adults over the age of 60, Arexvy competes with Pfizer’s vaccine Abrysvo.

However, GSK so far appears to have the upper hand, winning a majority market share. It’s also been helped by a partnership with major pharmacy retailer CVS.

Walmsley said GSK expects the infectious disease market to be worth more than 100 billion pounds, and sketched out 20 billion pounds in peak year sales estimates for its portfolio of products.

GSK and Pfizer could have another competitor in Moderna, which is advancing an mRNA-based vaccine for RSV. Sanofi and AstraZeneca also sell an antibody to protect newborns from RSV.

“There’s never been a solution before and we welcome the fact it’s a competitive area,” said Walmsley.

GSK plans to expand Arexvy’s use in younger adults, with a regulatory decision expected this year. — Delilah Alvarado

Ned Pagliarulo contributed writing

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