Market Place
This week in Phispers, we look at the growing troubles at Teva. The company plans to divest non-core assets to reduce debt and lay-off 7,000 workers. The FDA approved AbbVie’s Mavyret, a drug that poses considerable challenge to Gilead’s Harvoni and Sovaldi. Meanwhile, Martin Shkreli was found guilty in three out of eight charges; diabetes drug exenatide showed benefit to Parkinson’s disease patients in a study; and in the US, the Senate passed key FDA funding bill.
Teva in dire straits: To lay off 7,000 workers, to sell non-core assets to repay
debt
Teva has been in trouble for quite sometime now. It’s a classic case of a company taking on more debt to spur growth. But it’s fallen into hard times, as three CEOs changed guard this decade.
Last week, the world’s largest manufacturer of generic medicines said it would divest non-core assets to shed a part of its US$ 35 billion debt load. While debt may be historically cheap, it still has to be repaid. And if revenues don’t keep up with payments, the downfall can be rapid for Teva.
Teva had taken on the debt in order to dominate all facets of generic drugs, including a US$ 40.5 billion acquisition of Allergan’s generics business last year. The Allergan deal added more pressure on drug prices and margins.
Teva also slashed its earnings goals for the second time this year. It warned investors it may have to renegotiate some debt agreements if cash flow worsens. Teva reduced its dividend by 75 percent.
The company also mentioned that it is in the process of laying off 7,000 workers. Greater competition in the generic drug business due to increased approvals (of generic drugs) by the US Food and Drug Administration (USFDA) has led to poor results, the company said. The continued deterioration of its business environment in Venezuela has made matters worse.
The plight of Teva has been worsened due to the leadership crisis — the company has been without a CEO and a CFO for months.
Activist shareholder Benny Landa blamed acting CEO Yitzhak Peterburg and the board of directors for leading Teva to disaster. Landa said what is happening in the company is no less than a catastrophe. “I've been saying this for three or four years: the company board of directors is incapable of making big decisions and getting the company back on track,” he said.
Price-gouging Shkreli awaits sentence; found guilty on three out of eight charges
Martin Shkreli — the co-founder of Elea Capital, MSMB Capital, Retrophin and the former CEO of Turing Pharmaceuticals who is more famous for price gouging and for defrauding investors — could spend years in prison due to last week’s investor fraud conviction if the judge focuses on the intended impact of his crime and on his antics on the social media, say legal experts.
Back in 2015, Shkreli had raised the price of an infection treatment by 5,000 percent to avoid prison due to an unusual twist to his case — defrauded investors suffered no loss from his crime.
That could work in Shkreli’s favor, because investor harm is the main factor in determining a sentence for securities fraud in the US. However, a report quotes a law enforcement source as saying that prosecutors will challenge Shkreli's underlying assumption of how to calculate the losses of investors.
While Shkreli was convicted on three securities fraud and conspiracy counts, he was acquitted of other charges, including the charge that he conspired to steal US$ 11 million in assets from Retrophin.
What’s caught the public eye though is Shkreli’s social media antics. Hours after his conviction, Shkreli declared the mixed verdict by the federal jury on YouTube as an “astounding victory.”
Without showing any sign of remorse, 34-year old Shkreli said: “I’m one of the richest New Yorkers there is, and after today's outcome it's going to stay that way.”
According to lawyers, such a conduct on social media could backfire at the time of sentencing. “He lacked any remorse, and the judge may avoid appearing lenient when she sentences him,” James Cox, a law professor at Duke University, said.
Diabetes drug exenatide could stop the progress of Parkinson’s disease
In future, clinicians may be able to stop the progress of Parkinson’s disease with a drug normally used in type 2 diabetes. At present, the drugs used to treat Parkinson’s disease only help in managing the symptoms. They do not prevent brain cells from dying.
In Parkinson’s, the brain is progressively damaged and the cells that produce the hormone dopamine are lost. Legendary boxer Muhammad Ali had died last year at the age of 74 after battling for years with Parkinson’s disease.
In the trial, half the patients were given the diabetes drug exenatide and the rest were given a placebo (dummy treatment). All the patients stayed on their usual medication. Those on just their usual medication declined over 48 weeks of treatment. But those given exenatide were stable. And three months after the experimental treatment stopped, those who had been taking exenatide were still better off.
Exenatide, derived from the saliva of Gila monster, is a glucagon-like peptide-1 (GLP-1) agonist. It treats type 2 diabetes by mimicking the hormone GLP-1, which triggers insulin secretion.
According to University College London (UCL) researchers, Parkinson’s patients treated with exenatide did better on movement tests than patients who received a placebo. If they can prove the drug changes the disease itself, it could transform the way we treat Parkinson’s.
Though the UCL team is “excited”, it has urged caution as any long-term benefit is uncertain and the drug needs more testing.
FDA approves AbbVie’s Mavyret — a drug that cures Hepatitis C in eight weeks
Last week, the USFDA approved the first-ever drug that can treat all six major strains of hepatitis C (or HCV) in just eight weeks — AbbVie’s Mavyret. For competitors like Gilead, Mavyret spells bad news. Mavyret is also being considered a ‘steal’ in the world of HCV drugs, with a price tag of US$ 26,400 for an eight-week treatment course. In comparison, Gilead’s Harvoni costs about US$ 63,000 for eight weeks, though the discounts bring the net price down to US$ 30,000.
Gilead also has its own ‘pan-genotype’ hepatitis C medicine, Epclusa, in addition to its blockbuster HCV drugs Sovaldi and Harvoni, that have been at the centre of a controversy around their steep prices.
With a combination of two new direct-acting antivirals — glecaprevir and pibrentasvir — Mavyret treats adult Hepatitis C patients with genotype 1 through 6 who don’t have cirrhosis or with mild cirrhosis, or those who are on dialysis. According to the FDA, it’s the first pan-genotypic HCV drug with an eight-week treatment duration. Other options cure the disease in 12 weeks or longer.
J&J’s Invokana is CVS Caremark’s preferred diabetes drug
Close on the heels of Express Scripts’ 2018 formulary release, rival pharmacy benefit management (PBM) giant CVS Caremark has published its own list of drugs that are in, and those that are out. Express Scripts Holding is the largest PBM organization in the US.
In the SGLT2 class of drugs to treat diabetes, CVS removed Eli Lilly and Boehringer Ingelheim’s Jardiance and added Johnson & Johnson’s Invokana as a preferred option. This, despite the fact that Invokana came with an increased risk for amputations in a cardiovascular outcomes study finished earlier this year.
A Boehringer Ingelheim spokesperson said the company is “very disappointed” with the formulary move “and the potential treatment disruption” and the impact this could have on patients. This decision restricts treatment options for patients who could benefit from Jardiance’s life-saving cardiovascular benefit, the spokesperson added.
CVS removed 17 drugs in 10 classes, with Merck’s Zetia, Daiichi Sankyo’s Benicar and Teva’s Nuvigil among them. Despite the removals, the company expects 99.76 percent of members will be able to keep using their current treatments.
US Senate overwhelmingly passes reauthorization of FDA’s user fees
In the US last week, Senators voted overwhelmingly to pass a key Food and Drug Administration (FDA) funding bill. The bill is now with President Trump, for his approval.
The Senate passed a five-year reauthorization of the FDA’s user fees in a 94-1 vote, with only Senator Bernie Sanders voting against the measure. The move is in major contrast to the recent rancor surrounding the Senate’s efforts to repeal ObamaCare.
The funding reauthorizations are based on recommendations from industry groups. This bill renews FDA’s authority to collect fees from the prescription drug and medical device industries. Together, they account for 25 percent of all FDA funding; and should amount to around US$ 8-9 billion over the next five years.
The fee helps speed up the approval of new drugs and devices. This funding reauthorization of FDA’s user fee comes about a month before the current user fee agreement expires.
The White House hasn’t said if it will sign the user fee bill. In a statement of administrative policy issued in July after the bill passed the House, the White House expressed concern with some minor provisions, though it did not threaten a veto.
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