Biotech Market Update: Q1 2024 in Review

Pharma giants chase biotech deals

With patent cliffs looming, leaders in the pharma industry have strategically turned to biotech partnerships and investments. A prime example is Johnson & Johnson (NYSE:JNJ) and Novo Holdings' recent participation in a Series A funding round for Swedish biotech startup Asgard Therapeutics. The developer of in vivo treatments represents an opportunity for established pharma companies to support innovation and explore new therapeutic avenues.

“Pharma companies have now been (put) to work,” said Maha Katabi, general partner at Sofinnova Investments, during a panel at January's Biotech Showcase event. “There is a great need to replenish (the) innovation pipeline. There's plenty of innovation in our sector, especially in the hands of biotech companies, and once proof of concept is achieved, that becomes a very rarefied but unique class that pharma is very interested in talking to.”

Other pharma companies have also pursued acquisitions and partnerships to strengthen their market positions. In Q1, AbbVie (NYSE:ABBV) agreed to acquire immune drug developer Landos for US$138 million, enhancing its presence in the immunology sector. Additionally, Pfizer's (NYSE:PFE) completed US$43 billion acquisition of Seagen in December 2023 prompted it to focus on four types of cancer, with plans to have eight new drugs on the market by 2030.

Ahead of the 2028 patent expiration of its top-selling cancer drug Keytruda, Merck (NYSE:MRK) made progress in refilling its drug pipeline by announcing plans to acquire cancer biotech company Harpoon Therapeutics for US$680 million in January, and by obtaining approval for Winrevair, a lung disease drug acquired through its 2021 buyout of Acceleron Pharma. Merck expects that Winrevair will create US$35 billion in sales by 2035. The company also announced its intention to develop newer versions of its HPV vaccines, Gardasil and Gardasil 9, in March.

In light of these strategic moves, it’s worth noting the progress made by biosimilar developers in offering more affordable alternatives to expensive biologic drugs. Simlandi, a biosimilar to AbbVie’s Humira developed by Alvotech (NASDAQ:ALVO) and Teva Pharmaceuticals (NYSE:TEVA), won US Food and Drug Administration (FDA) approval in February following initial rejections due to manufacturing issues. Simlandi has become the first biosimilar to be designated as interchangeable with Humira, whose patent expired in January 2023.

Pharma and biotech companies react to IRA policies

The Centers for Medicare & Medicaid Services confirmed on January 3 that sickle cell disease would be the initial focus of a pilot program designed to improve patient access to costly cell and gene therapies.

Elsewhere, implementation of drug price negotiations under the IRA had a significant impact on the pharma and biotech industries, with several lawsuits filed by Big Pharma against the US Department of Health and Human Services alleging that drug price provisions violate due process. AstraZeneca went as far as to argue that Medicaid’s authority under the IRA is unconstitutional, a claim that was ultimately dismissed by the US District Court in Delaware.

Initial offers for 10 drugs — including Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica and Stelara, as well as insulins Fiasp and NovoLog — were sent to manufacturers on February 1. Administration officials said they expect these negotiations to extend into the summer, with final prices being determined by September 1.

Pfizer has stated that concerns over the IRA are the main reason for the company’s shift to developing biologics, which are safe from price negotiations for 13 years, instead of small-molecule drugs, which only have a nine year window.

Although experts like Peter Rubin, executive director of No Patient Left Behind, are concerned that these provisions could have negative effects on research and development into new small-molecule drugs, companies such as Madrigal Pharmaceuticals (NASDAQ:MDGL) demonstrated continued potential for innovation in this area in Q1. Madrigal's groundbreaking FDA approval for its MASH treatment and subsequent public offering of its common stock highlight the opportunities that still exist within the small-molecule drug landscape.

Aside from that, in February, AstraZeneca received FDA approval for Tagrisso, a small-molecule drug to be administered alongside chemotherapy in lung cancer patients.

CAR-T therapies, ADCs and weight-loss drugs in focus

The field of CAR-T therapy, a promising area of cancer immunotherapy that a report from Evaluate calls “the hottest real estate in oncology,” has garnered significant interest from investors and regulators in recent years.

In January, Johnson & Johnson secured regulatory backing from the European Medicines Agency for earlier use of its CAR-T treatment Carvykti in treating multiple myeloma. The company also in February announced promising findings from a late-stage study on Nipocalimab, an investigational monoclonal antibody.

According to BioInformant, companies working on CAR-T therapies have attracted a total of US$6.7 billion in venture capital investment and raised US$5.76 billion through their IPOs over the past decade.

Looking forward to the future, EY Global Life Sciences Deals Leader Subin Baral told Pharmaceutical Technology in December of last year that CAR-T therapies likely hold the most investment potential within personalized medicine, although he clarified that the biggest investment surge is likely a few years away, indicating the potential for long-term growth. Recently, researchers have identified use cases for CAR-T therapy to treat lupus.

Despite this promise, 25 recent reports of rare blood cancers in patients who received CAR-T therapy prompted the FDA to order drugmakers to add warnings to their packaging. Nevertheless, FDA spokesperson Carly Kempler told NBC News that “the overall benefits of these products continue to outweigh their potential risks.”

Subin expects more exploration of other therapies in the short term, such as antibody-drug conjugates (ADCs). ADCs feature an antibody linked to a cytotoxic payload, which is released when the ADC binds to its target.

Several pharma companies also focused on the weight loss drug market in 2024's first quarter. For example, Roche Holding (OTCQX:RHHBF,SWX:ROG) discontinued eight drug candidates to concentrate on obesity treatments, and Viking Therapeutics (NASDAQ:VKTX), a small biotech firm, saw its share price double after reporting promising results in mid-stage trials for its obesity drug VK2735. For its part, Danish company Zealand Pharma (CPH:ZEAL) reported positive results in February for survodutide, which could be a potential obesity treatment.

Novo Holdings announced plans to purchase global contract development and manufacturing organization Catalent (NYSE:CTLT) for US$16.5 billion in February, an acquisition that will enable increased production of its blockbuster drugs Ozempic and Wegovy by taking over operations at three plants in Italy. In a significant development, Medicare said in March that it will cover Wegovy under Part D plans for select patients with a history of heart disease.

Also in March, Novo Nordisk (NYSE:NVO), which is owned by Novo Holdings, shared promising results from a study of its latest obesity treatment, amycretin. The biologic drug demonstrated an average weight loss of 13.1 percent in 12 weeks, surpassing Wegovy’s 6 percent average. Similarly, Eli Lilly’s (NYSE:LLY) biologic diabetes drug Mounjaro generated over US$5 billion in sales in 2023, driving a 20 percent revenue increase compared to 2022. The strong financial performance of both companies has led analysts to predict they could become healthcare’s first trillion-dollar firms.

Biotech research trends to watch in 2024

Looking ahead to Q2, Brian Buntz, pharma and biotech editor at WTWH Media, anticipates increased stability in the biotech sector, citing a time-series analysis of the NASDAQ Biotech Index (INDEXNASDAQ:NBI).

In addition, several crucial FDA approvals are anticipated between April and June that may affect the pharma and biotech landscapes. These include potential expanded approvals for CAR-T therapies and Pfizer’s gene therapy for hemophilia B. Alnylam Pharmaceuticals (NASDAQ:ALNY), on the other hand, has encountered challenges as the data readout for its heart disease drug HELIOS-B was pushed to June or July, raising concerns about the drug’s efficacy.

In the field of neurological disorders, some promising developments emerged during Q1, and will potentially influence market trends in the healthcare industry. Recent research has revealed that focused ultrasounds could enhance the plaque-clearing effects of Aduhelm, an anti-amyloid-beta monoclonal antibody drug developed by Biogen (NASDAQ:BIIB) and Eisai (TSE:4523) that has shown difficulty penetrating the blood-brain barrier. This discovery may lead to more effective treatment options for patients with Alzheimer’s disease and other neurological conditions.

Various promising drugs for schizophrenia are currently in different stages of development. Karuna Therapeutics' KarXT, designed to minimize side effects while maximizing therapeutic effects by targeting a different brain chemical than traditional treatments, is expected to receive an FDA decision in September. Other contenders in the race for FDA approval include Cerevel Therapeutics Holdings (NASDAQ:CERE), which AbbVie plans to acquire by mid-2024, and Nuplazid by Acadia Pharmaceuticals (NASDAQ:ACAD), which is already approved for psychosis in Parkinson’s disease.

Finally, Novo Nordisk in March announced its intention to purchase RNA drug developer Cardior, along with its mid-stage treatment CDR132L. Results from that trial are expected in September and could influence the company’s market position and the broad landscape of RNA-based therapeutics.