Wall Street’s roil has stabilized somewhat in recent days, with the S&P 500 brushing up against its 200-day moving average and rising more than 10 percent since its October lows, as of publication time.
The index’s 50-day moving average is trending up, according to financial data firm Refinitiv. But it still must climb another 7.4 percent to form a “golden cross,” which is when a stock or index’s short-term moving average rises above one of its longer-term moving averages. The S&P 500’s 20-day and 100-day moving averages are closer to the milestone, only needing increases of 5 percent and 1.2 percent, respectively.
The Dow Jones Industrial Average has already formed a small golden cross: its 20-day moving average is 1.2 percent higher than its 200-day moving average.
Investors Optimistic about Healthcare Sector
– Investors are most optimistic about the Healthcare sector, which is trading close to its 3-year average “price to earnings-per-share” ratio of 48.1x, according to Simply Wall Street.
– Analysts are expecting an annual earnings growth of 13.4 percent, higher than the sector’s past year earnings growth of 5 percent.
– Merck and Johnson & Johnson were among last week’s top gainers driving the market.
Inflation Appears to be Slowing
– The recent lower-than-expected inflation figures could indicate it is slowing.
– The Fed may continue raising rates, considering the strength in recent labor market and retail sales data.
Scientists at UCL National Amyloidosis Centre at the Royal Free Hospital, London are hoping their gene editing therapy using CRISPR will be a breakthrough for patients suffering from hereditary transthyretin (ATTR) amyloidosis. In a phase 1 clinical trial, the first six patients have shown positive interim results for gene-editing treatment.
The CRISPR breakthrough comes in treating transthyretin amyloidosis, a mutation in the transthyretin (TTR) gene. Those with this mutation produce an abnormal protein, which gradually builds up in the heart and nerves. Symptoms can include numbness in the hands and feet, loss of control of the bowel and bladder, and loss of mobility.
Hereditary transthyretin amyloidosis gets progressively worse and is fatal. Up until this point, most of the treatment options available to patients have included management of the symptoms and prevention of progression.
Those taking part in the trial have received a molecule knows as CRISPR/Cas9 via one-off infusion. The purpose of this is to deactivate the incorrect gene within the liver cell.
“With the gene no longer active in the liver, it is expected that the patient will only produce negligible levels of the harmful transthyretin protein,” UCL stated in a press release.
Scientists saw in the first six patients a reduced production of the harmful transthyretin protein by up to 96 percent, 28 days after the treatment. Additionally, there were no serious adverse effects witnessed. This data was published in the New England Journal of Medicine.
“As the trial progresses, patients will be given higher doses of the gene editing therapy with the hope that will drive the levels of toxic protein even lower,” UCL explained.
CRISPR/Cas9, a Nobel Prize-winning technology, has been used to edit cells outside the body in the past. However, UCL is presenting the first clinical data which CRISPR/Cas9 is being used as medicine itself for a potential therapy.
“This is wonderful news for patients with this condition. If this trial continues to be successful, the treatment may permit patients who are diagnosed early in the course of the disease to lead completely normal lives without the need for ongoing therapy,” Professor Julian Gillmore, the trial lead, of the UCL National Amyloidosis Centre, part of the UCL Centre for Amyloidosis and Acute Phase Proteins said in a press release.
“Until very recently, the majority of treatments we have been able to offer patients with this condition have had limited success. If this trial continues to go well, it will mean we can offer real hope and the prospect of meaningful clinical improvement to patients who suffer from this condition,” Gillmore continued.
The global trial includes patients from the Royal Free London and a hospital located in Auckland, New Zealand. The investigational therapy, designated NTLA-2001, is being developed by Intellia Therapeutics; a biotechnology company based in the United States.
This could be a big step forward in using CRISPR as gene therapy. Typically, the therapy is injected into the site of illness. However, this newest approach injects CRISPR directly into the bloodstream, which could revolutionize how clinicians treat certain illnesses.
She grew up in Hungary, daughter of a butcher. She decided she wanted to be a scientist, although she had never met one. She moved to the United States in her 20s, but for decades never found a permanent position, instead clinging to the fringes of academia.
Now Katalin Kariko, 66, known to colleagues as Kati, has emerged as one of the heroes of Covid-19 vaccine development. Her work, with her close collaborator, Dr. Drew Weissman of the University of Pennsylvania, laid the foundation for the stunningly successful vaccines made by Pfizer-BioNTech and Moderna.
For her entire career, Dr. Kariko has focused on messenger RNA, or mRNA — the genetic script that carries DNA instructions to each cell’s protein-making machinery. She was convinced mRNA could be used to instruct cells to make their own medicines, including vaccines.
But for many years her career at the University of Pennsylvania was fragile. She migrated from lab to lab, relying on one senior scientist after another to take her in. She never made more than $60,000 a year.
By all accounts intense and single-minded, Dr. Kariko lives for “the bench” — the spot in the lab where she works. She cares little for fame. “The bench is there, the science is good,” she shrugged in a recent interview. “Who cares?”
Dr. Anthony Fauci, director of the National Institutes of Allergy and infectious Diseases, knows Dr. Kariko’s work. “She was, in a positive sense, kind of obsessed with the concept of messenger RNA,” he said.
Dr. Kariko’s struggles to stay afloat in academia have a familiar ring to scientists. She needed grants to pursue ideas that seemed wild and fanciful. She did not get them, even as more mundane research was rewarded.
“When your idea is against the conventional wisdom that makes sense to the star chamber, it is very hard to break out,” said Dr. David Langer, a neurosurgeon who has worked with Dr. Kariko.
Dr. Kariko’s ideas about mRNA were definitely unorthodox. Increasingly, they also seem to have been prescient.
“It’s going to be transforming,” Dr. Fauci said of mRNA research. “It is already transforming for Covid-19, but also for other vaccines. H.I.V. — people in the field are already excited. Influenza, malaria.”
‘I Felt Like a God’
For Dr. Kariko, most every day was a day in the lab. “You are not going to work — you are going to have fun,” her husband, Bela Francia, manager of an apartment complex, used to tell her as she dashed back to the office on evenings and weekends. He once calculated that her endless workdays meant she was earning about a dollar an hour.
For many scientists, a new discovery is followed by a plan to make money, to form a company and get a patent. But not for Dr. Kariko. “That’s the furthest thing from Kate’s mind,” Dr. Langer said.
She grew up in the small Hungarian town of Kisujszallas. She earned a Ph.D. at the University of Szeged and worked as a postdoctoral fellow at its Biological Research Center.
In 1985, when the university’s research program ran out of money, Dr. Kariko, her husband, and 2-year-old daughter, Susan, moved to Philadelphia for a job as a postdoctoral student at Temple University. Because the Hungarian government only allowed them to take $100 out of the country, she and her husband sewed £900 (roughly $1,246 today) into Susan’s teddy bear. (Susan grew up to be a two-time Olympic gold medal winner in rowing.)
When Dr. Kariko started, it was early days in the mRNA field. Even the most basic tasks were difficult, if not impossible. How do you make RNA molecules in a lab? How do you get mRNA into cells of the body?
In 1989, she landed a job with Dr. Elliot Barnathan, then a cardiologist at the University of Pennsylvania. It was a low-level position, research assistant professor, and never meant to lead to a permanent tenured position. She was supposed to be supported by grant money, but none came in.
She and Dr. Barnathan planned to insert mRNA into cells, inducing them to make new proteins. In one of the first experiments, they hoped to use the strategy to instruct cells to make a protein called the urokinase receptor. If the experiment worked, they would detect the new protein with a radioactive molecule that would be drawn to the receptor.
“Most people laughed at us,” Dr. Barnathan said.
One fateful day, the two scientists hovered over a dot-matrix printer in a narrow room at the end of a long hall. A gamma counter, needed to track the radioactive molecule, was attached to a printer. It began to spew data.
Their detector had found new proteins produced by cells that were never supposed to make them — suggesting that mRNA could be used to direct any cell to make any protein, at will.
“I felt like a god,” Dr. Kariko recalled.
She and Dr. Barnathan were on fire with ideas. Maybe they could use mRNA to improve blood vessels for heart bypass surgery. Perhaps they could even use the procedure to extend the life span of human cells.
Dr. Barnathan, though, soon left the university, accepting a position at a biotech firm, and Dr. Kariko was left without a lab or financial support. She could stay at Penn only if she found another lab to take her on. “They expected I would quit,” she said.
Universities only support low-level Ph.D.s for a limited amount of time, Dr. Langer said: “If they don’t get a grant, they will let them go.” Dr. Kariko “was not a great grant writer,” and at that point “mRNA was more of an idea,” he said.
But Dr. Langer knew Dr. Kariko from his days as a medical resident, when he had worked in Dr. Barnathan’s lab. Dr. Langer urged the head of the neurosurgery department to give Dr. Kariko’s research a chance. “He saved me,” she said.
Dr. Langer thinks it was Dr. Kariko who saved him — from the kind of thinking that dooms so many scientists.
Working with her, he realized that one key to real scientific understanding is to design experiments that always tell you something, even if it is something you don’t want to hear. The crucial data often come from the control, he learned — the part of the experiment that involves a dummy substance for comparison.
“There’s a tendency when scientists are looking at data to try to validate their own idea,” Dr. Langer said. “The best scientists try to prove themselves wrong. Kate’s genius was a willingness to accept failure and keep trying, and her ability to answer questions people were not smart enough to ask.”
Dr. Langer hoped to use mRNA to treat patients who developed blood clots following brain surgery, often resulting in strokes. His idea was to get cells in blood vessels to make nitric oxide, a substance that dilates blood vessels, but has a half-life of milliseconds. Doctors can’t just inject patients with it.
He and Dr. Kariko tried their mRNA on isolated blood vessels used to study strokes. It failed. They trudged through snow in Buffalo, N.Y., to try it in a laboratory with rabbits prone to strokes. Failure again.
And then Dr. Langer left the university, and the department chairman said he was leaving as well. Dr. Kariko again was without a lab and without funds for research.
A meeting at a photocopying machine changed that. Dr. Weissman happened by, and she struck up a conversation. “I said, ‘I am an RNA scientist — I can make anything with mRNA,’” Dr. Kariko recalled.
Dr. Weissman told her he wanted to make a vaccine against H.I.V. “I said, ‘Yeah, yeah, I can do it,’” Dr. Kariko said.
Despite her bravado, her research on mRNA had stalled. She could make mRNA molecules that instructed cells in petri dishes to make the protein of her choice. But the mRNA did not work in living mice.
“Nobody knew why,” Dr. Weissman said. “All we knew was that the mice got sick. Their fur got ruffled, they hunched up, they stopped eating, they stopped running.”
It turned out that the immune system recognizes invading microbes by detecting their mRNA and responding with inflammation. The scientists’ mRNA injections looked to the immune system like an invasion of pathogens.
But with that answer came another puzzle. Every cell in every person’s body makes mRNA, and the immune system turns a blind eye. “Why is the mRNA I made different?” Dr. Kariko wondered.
A control in an experiment finally provided a clue. Dr. Kariko and Dr. Weissman noticed their mRNA caused an immune overreaction. But the control molecules, another form of RNA in the human body — so-called transfer RNA, or tRNA — did not.
A molecule called pseudouridine in tRNA allowed it to evade the immune response. As it turned out, naturally occurring human mRNA also contains the molecule.
Added to the mRNA made by Dr. Kariko and Dr. Weissman, the molecule did the same — and also made the mRNA much more powerful, directing the synthesis of 10 times as much protein in each cell.
The idea that adding pseudouridine to mRNA protected it from the body’s immune system was a basic scientific discovery with a wide range of thrilling applications. It meant that mRNA could be used to alter the functions of cells without prompting an immune system attack.
“We both started writing grants,” Dr. Weissman said. “We didn’t get most of them. People were not interested in mRNA. The people who reviewed the grants said mRNA will not be a good therapeutic, so don’t bother.’”
Leading scientific journals rejected their work. When the research finally was published, in Immunity, it got little attention.
Dr. Weissman and Dr. Kariko then showed they could induce an animal — a monkey — to make a protein they had selected. In this case, they injected monkeys with mRNA for erythropoietin, a protein that stimulates the body to make red blood cells. The animals’ red blood cell counts soared.
The scientists thought the same method could be used to prompt the body to make any protein drug, like insulin or other hormones or some of the new diabetes drugs. Crucially, mRNA also could be used to make vaccines unlike any seen before.
Instead of injecting a piece of a virus into the body, doctors could inject mRNA that would instruct cells to briefly make that part of the virus.
“We talked to pharmaceutical companies and venture capitalists. No one cared,” Dr. Weissman said. “We were screaming a lot, but no one would listen.”
Eventually, though, two biotech companies took notice of the work: Moderna, in the United States, and BioNTech, in Germany. Pfizer partnered with BioNTech, and the two now help fund Dr. Weissman’s lab.
‘Oh, It Works’
Soon clinical trials of an mRNA flu vaccine were underway, and there were efforts to build new vaccines against cytomegalovirus and the Zika virus, among others. Then came the coronavirus.
Researchers had known for 20 years that the crucial feature of any coronavirus is the spike protein sitting on its surface, which allows the virus to inject itself into human cells. It was a fat target for an mRNA vaccine.
Chinese scientists posted the genetic sequence of the virus ravaging Wuhan in January 2020, and researchers everywhere went to work. BioNTech designed its mRNA vaccine in hours; Moderna designed its in two days.
The idea for both vaccines was to introduce mRNA into the body that would briefly instruct human cells to produce the coronavirus’s spike protein. The immune system would see the protein, recognize it as alien, and learn to attack the coronavirus if it ever appeared in the body.
The vaccines, though, needed a lipid bubble to encase the mRNA and carry it to the cells that it would enter. The vehicle came quickly, based on 25 years of work by multiple scientists, including Pieter Cullis of the University of British Columbia.
Scientists also needed to isolate the virus’s spike protein from the bounty of genetic data provided by Chinese researchers. Dr. Barney Graham, of the National Institutes of Health, and Jason McClellan, of the University of Texas at Austin, solved that problem in short order.
Testing the quickly designed vaccines required a monumental effort by companies and the National Institutes of Health. But Dr. Kariko had no doubts.
On Nov. 8, the first results of the Pfizer-BioNTech study came in, showing that the mRNA vaccine offered powerful immunity to the new virus. Dr. Kariko turned to her husband. “Oh, it works,” she said. “I thought so.”
To celebrate, she ate an entire box of Goobers chocolate-covered peanuts. By herself.
Dr. Weissman celebrated with his family, ordering takeout dinner from an Italian restaurant, “with wine,” he said. Deep down, he was awed.
“My dream was always that we develop something in the lab that helps people,” Dr. Weissman said. “I’ve satisfied my life’s dream.”
Dr. Kariko and Dr. Weissman were vaccinated on Dec. 18 at the University of Pennsylvania. Their inoculations turned into a press event, and as the cameras flashed, she began to feel uncharacteristically overwhelmed.
A senior administrator told the doctors and nurses rolling up their sleeves for shots that the scientists whose research made the vaccine possible were present, and they all clapped. Dr. Kariko wept.
Things could have gone so differently, for the scientists and for the world, Dr. Langer said. “There are probably many people like her who failed,” he said.
I had been staring her in the eyes, as she had ordered, but when a doctor on my other side began jabbing me with a needle, I started to turn my head. “Don’t look at it,” the first doctor said. I obeyed.
This was in early August in New Orleans, where I had signed up to be a participant in the clinical trial for the Pfizer-BioNTech COVID-19 vaccine. It was a blind study, which meant I was not supposed to know whether I had gotten the placebo or the real vaccine. I asked the doctor if I would really been able to tell by looking at the syringe. “Probably not,” she answered, “but we want to be careful. This is very important to get right.”
I became a vaccine guinea pig because, in addition to wanting to be useful, I had a deep interest in the wondrous new roles now being played by RNA, the genetic material that is at the heart of new types of vaccines, cancer treatments and gene-editing tools. I was writing a book on the Berkeley biochemist Jennifer Doudna. She was a pioneer in determining the structure of RNA, which helped her and her doctoral adviser figure out how it could be the origin of all life on this planet. Then she and a colleague invented an RNA-guided gene-editing tool, which won them the 2020 Nobel Prize in Chemistry.
The tool is based on a system that bacteria use to fight viruses. Bacteria develop clustered repeated sequences in their DNA, known as CRISPRs, that can remember dangerous viruses and then deploy RNA-guided scissors to destroy them. In other words, it’s an immune system that can adapt itself to fight each new wave of viruses—just what we humans need. Now, with the recently approved Pfizer-BioNTech vaccine and a similar one from Moderna being slowly rolled out across the U.S. and Europe, RNA has been deployed to make a whole new type of vaccine that will, when it reaches enough people, change the course of the pandemic.
Up until last year, vaccines had not changed very much, at least in concept, for more than two centuries. Most have been modeled on the discovery made in 1796 by the English doctor Edward Jenner, who noticed that many milkmaids were immune to smallpox. They had all been infected by a form of pox that afflicts cows but is relatively harmless to humans, and Jenner surmised that the cowpox had given them immunity to smallpox. So he took some pus from a cowpox blister, rubbed it into scratches he made in the arm of his gardener’s 8-year-old son and then (this was in the days before bioethics panels) exposed the kid to smallpox. He didn’t become ill.
Before then, inoculations were done by giving patients a small dose of the actual smallpox virus, hoping that they would get a mild case and then be immune. Jenner’s great advance was to use a related but relatively harmless virus. Ever since, vaccinations have been based on the idea of exposing a patient to a safe facsimile of a dangerous virus or other germ. This is intended to kick the person’s adaptive immune system into gear. When it works, the body produces antibodies that will, sometimes for many years, fend off any infection if the real germ attacks.
One approach is to inject a safely weakened version of the virus. These can be good teachers, because they look very much like the real thing. The body responds by making antibodies for fighting them, and the immunity can last a lifetime. Albert Sabin used this approach for the oral polio vaccine in the 1950s, and that’s the way we now fend off measles, mumps, rubella and chicken pox.
At the same time Sabin was trying to develop a vaccine based on a weakened polio virus, Jonas Salk succeeded with a safer approach: using a killed or inactivated virus. This type of vaccine can still teach a person’s immune system how to fight off the live virus but is less likely to cause serious side effects. Two Chinese companies, Sinopharm and Sinovac, have used this approach to develop vaccines for COVID-19 that are now in limited use in China, the UAE and Indonesia.
Another traditional approach is to inject a subunit of the virus, such as one of the proteins that are on the virus’s coat. The immune system will then remember these, allowing the body to mount a quick and robust response when it encounters the actual virus. The vaccine against the hepatitis B virus, for example, works this way. Using only a fragment of the virus means that they are safer to inject into a patient and easier to produce, but they are often not as good at producing long-term immunity. The Maryland-based biotech Novavax is in late-stage clinical trials for a COVID-19 vaccine using this approach, and it is the basis for one of the two vaccines already being rolled out in Russia.
The plague year of 2020 will be remembered as the time when these traditional vaccines were supplanted by something fundamentally new:genetic vaccines, which deliver a gene or piece of genetic code into human cells. The genetic instructions then cause the cells to produce, on their own, safe components of the target virus in order to stimulate the patient’s immune system.
For SARS-CoV-2—the virus that causes COVID-19—the target component is its spike protein, which studs the outer envelope of the virus and enables it to infiltrate human cells. One method for doing this is by inserting the desired gene, using a technique known as recombinant DNA, into a harmless virus that can deliver the gene into human cells. To make a COVID vaccine, a gene that contains instructions for building part of a coronavirus spike protein is edited into the DNA of a weakened virus like an adenovirus, which can cause the common cold. The idea is that the re-engineered adenovirus will worm its way into human cells, where the new gene will cause the cells to make lots of these spike proteins. As a result, the person’s immune system will be primed to respond rapidly if the real coronavirus strikes.
This approach led to one of the earliest COVID vaccine candidates, developed at the aptly named Jenner Institute of the University of Oxford. Scientists there engineered the spike-protein gene into an adenovirus that causes the common cold in chimpanzees, but is relatively harmless in humans.
The lead researcher at Oxford is Sarah Gilbert. She worked on developing a vaccine for Middle East respiratory syndrome (MERS) using the same chimp adenovirus. That epidemic waned before her vaccine could be deployed, but it gave her a head start when COVID-19 struck. She already knew that the chimp adenovirus had successfully delivered into humans the gene for the spike protein of MERS. As soon as the Chinese published the genetic sequence of the new coronavirus in January 2020, she began engineering its spike-protein gene into the chimp virus, waking each day at 4 a.m.
Her 21-year-old triplets, all of whom were studying biochemistry, volunteered to be early testers, getting the vaccine and seeing if they developed the desired antibodies. (They did.) Trials in monkeys conducted at a Montana primate center in March also produced promising results.
Bill Gates, whose foundation provided much of the funding, pushed Oxford to team up with a major company that could test, manufacture and distribute the vaccine. So Oxford forged a partnership with AstraZeneca, the British-Swedish pharmaceutical company. Unfortunately, the clinical trials turned out to be sloppy, with the wrong doses given to some participants, which led to delays. Britain authorized it for emergency use at the end of December, and the U.S. is likely to do so in the next two months.
Johnson & Johnson is testing a similar vaccine that uses a human adenovirus, rather than a chimpanzee one, as the delivery mechanism to carry a gene that codes for making part of the spike protein. It’s a method that has shown promise in the past, but it could have the disadvantage that humans who have already been exposed to that adenovirus may have some immunity to it. Results from its clinical trial are expected later this month.
In addition, two other vaccines based on genetically engineered adenoviruses are now in limited distribution: one made by CanSino Biologics and being used on the military in China and another named Sputnik V from the Russian ministry of health.
There is another way to get genetic material into a human cell and cause it to produce the components of a dangerous virus, such as the spike proteins, that can stimulate the immune system. Instead of engineering the gene for the component into an adenovirus, you can simply inject the genetic code for the component into humans as DNA or RNA.
Let’s start with DNA vaccines. Researchers at Inovio Pharmaceuticals and a handful of other companies in 2020 created a little circle of DNA that coded for parts of the coronavirus spike protein. The idea was that if it could get inside the nucleus of a cell, the DNA could very efficiently churn out instructions for the production of the spike-protein parts, which serve to train the immune system to react to the real thing.
The big challenge facing a DNA vaccine is delivery.How can you get the little ring of DNA not only into a human cell but into the nucleus of the cell? Injecting a lot of the DNA vaccine into a patient’s arm will cause some of the DNA to get into cells, but it’s not very efficient.
Some of the developers of DNA vaccines, including Inovio, tried to facilitate the delivery into human cells through a method called electroporation, which delivers electrical shock pulses to the patient at the site of the injection. That opens pores in the cell membranes and allows the DNA to get in. The electric pulse guns have lots of tiny needles and are unnerving to behold. It’s not hard to see why this technique is unpopular, especially with those on the receiving end. So far, no easy and reliable delivery mechanism has been developed for getting DNA vaccines into the nucleus of human cells.
That leads us to the molecule that has proven victorious in the COVID vaccine race and deserves the title of TIME magazine’s Molecule of the Year: RNA. Its sibling DNA is more famous. But like many famous siblings, DNA doesn’t do much work. It mainly stays bunkered down in the nucleus of our cells, protecting the information it encodes. RNA, on the other hand, actually goes out and gets things done. The genes encoded by our DNA are transcribed into snippets of RNA that venture out from the nucleus of our cells into the protein-manufacturing region. There, this messenger RNA (mRNA) oversees the assembly of the specified protein. In other words, instead of just sitting at home curating information, it makes real products.
Scientists including Sydney Brenner at Cambridge and James Watson at Harvard first identified and isolated mRNA molecules in 1961. But it was hard to harness them to do our bidding, because the body’s immune system often destroyed the mRNA that researchers engineered and attempted to introduce into the body. Then in 2005, a pair of researchers at the University of Pennsylvania, Katalin Kariko and Drew Weissman, showed how to tweak a synthetic mRNA molecule so it could get into human cells without being attacked by the body’s immune system.
When the COVID-19 pandemic hit a year ago, two innovative young pharmaceutical companies decided to try to harness this role played by messenger RNA: the German company BioNTech, which formed a partnership with the U.S. company Pfizer; and Moderna, based in Cambridge, Mass. Their mission was to engineer messenger RNA carrying the code letters to make part of the coronavirus spike protein—a string that begins CCUCGGCGGGCA … —and to deploy it in human cells.
BioNTech was founded in 2008 by the husband-and-wife team of Ugur Sahin and Ozlem Tureci, who met when they were training to be doctors in Germany in the early 1990s. Both were from Turkish immigrant families, and they shared a passion for medical research, so much so that they spent part of their wedding day working in the lab. They founded BioNTech with the goal of creating therapies that stimulate the immune system to fight cancerous cells. It also soon became a leader in devising medicines that use mRNA in vaccines against viruses.
In January 2020, Sahin read an article in the medical journal Lancet about a new coronavirus in China. After discussing it with his wife over breakfast, he sent an email to the other members of the BioNTech board saying that it was wrong to believe that this virus would come and go as easily as MERS and SARS. “This time it is different,” he told them.
BioNTech launched a crash project to devise a vaccine based on RNA sequences, which Sahin was able to write within days, that would cause human cells to make versions of the coronavirus’s spike protein. Once it looked promising, Sahin called Kathrin Jansen, the head of vaccine research and development at Pfizer. The two companies had been working together since 2018 to develop flu vaccines using mRNA technology, and he asked her whether Pfizer would want to enter a similar partnership for a COVID vaccine. “I was just about to call you and propose the same thing,” Jansen replied. The deal was signed in March.
By then, a similar mRNA vaccine was being developed by Moderna, a much smaller company with only 800 employees. Its chair and co-founder, Noubar Afeyan, a Beirut-born Armenian who immigrated to the U.S., had become fascinated by mRNA in 2010, when he heard a pitch from a group of Harvard and MIT researchers. Together they formed Moderna, which initially focused on using mRNA to try to develop personalized cancer treatments, but soon began experimenting with using the technique to make vaccines against viruses.
In January 2020, Afeyan took one of his daughters to a restaurant near his office in Cambridge to celebrate her birthday. In the middle of the meal, he got an urgent text message from the CEO of his company, Stéphane Bancel, in Switzerland. So he rushed outside in the freezing temperature, forgetting to grab his coat, to call him back.
Bancel said that he wanted to launch a project to use mRNA to attempt a vaccine against the new coronavirus. At that point, Moderna had more than 20 drugs in development but none had even reached the final stage of clinical trials. Nevertheless, Afeyan instantly authorized him to start work. “Don’t worry about the board,” he said. “Just get moving.” Lacking Pfizer’s resources, Moderna had to depend on funding from the U.S. government. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, was supportive. “Go for it,” he declared. “Whatever it costs, don’t worry about it.”
It took Bancel and his Moderna team only two days to create the RNA sequences that would produce the spike protein, and 41 days later, it shipped the first box of vials to the National Institutes of Health to begin early trials. Afeyan keeps a picture of that box on his cell phone.
An mRNA vaccine has certain advantages over a DNA vaccine, which has to use a re-engineered virus or other delivery mechanism to make it through the membrane that protects the nucleus of a cell. The RNA does not need to get into the nucleus. It simply needs to be delivered into the more-accessible outer region of cells, the cytoplasm, which is where proteins are constructed.
The Pfizer-BioNTech and Moderna vaccines do so by encapsulating the mRNA in tiny oily capsules, known as lipid nanoparticles.Moderna had been working for 10 years to improve its nanoparticles.This gave it one advantage over Pfizer-BioNTech: its particles were more stable and did not have to be stored at extremely low temperatures.
By November, the results of the Pfizer-BioNTech and Moderna late-stage trials came back with resounding findings: both vaccines were more than 90% effective. A few weeks later, with COVID-19 once again surging throughout much of the world, they received emergency authorization from the U.S. Food and Drug Administration and became the vanguard of the biotech effort to beat back the pandemic.
The ability to code messenger RNA to do our bidding will transform medicine. As with the COVID vaccines, we can instruct mRNA to cause our cells to make antigens—molecules that stimulate our immune system—that could protect us against many viruses, bacteria, or other pathogens that cause infectious disease. In addition, mRNA could in the future be used, as BioNTech and Moderna are pioneering, to fight cancer. Harnessing a process called immunotherapy, the mRNA can be coded to produce molecules that will cause the body’s immune system to identify and kill cancer cells.
RNA can also be engineered, as Jennifer Doudna and others discovered, to target genes for editing. Using the CRISPR system adapted from bacteria, RNA can guide scissors-like enzymes to specific sequences of DNA in order to eliminate or edit a gene. This technique has already been used in trials to cure sickle cell anemia. Now it is also being used in the war against COVID. Doudna and others have created RNA-guided enzymes that can directly detect SARS-CoV-2 and eventually could be used to destroy it.
More controversially, CRISPR could be used to create “designer babies” with inheritable genetic changes. In 2018, a young Chinese doctor used CRISPR to engineer twin girls so they did not have the receptor for the virus that causes AIDS. There was an immediate outburst of awe and then shock. The doctor was denounced, and there were calls for an international moratorium on inheritable gene edits. But in the wake of the pandemic, RNA-guided genetic editing to make our species less receptive to viruses may someday begin to seem more acceptable.
Throughout human history, we have been subjected to wave after wave of viral and bacterial plagues. One of the earliest known was the Babylon flu epidemic around 1200 B.C. The plague of Athens in 429 B.C. killed close to 100,000 people, the Antonine plague in the 2nd century killed 5 million, the plague of Justinian in the 6th century killed 50 million, and the Black Death of the 14th century took almost 200 million lives, close to half of Europe’s population.
The COVID-19 pandemic that killed more than 1.8 million people in 2020 will not be the final plague. However, thanks to the new RNA technology, our defenses against most future plagues are likely to be immensely faster and more effective. As new viruses come along, or as the current coronavirus mutates, researchers can quickly recode a vaccine’s mRNA to target the new threats. “It was a bad day for viruses,” Moderna’s chair Afeyan says about the Sunday when he got the first word of his company’s clinical trial results. “There was a sudden shift in the evolutionary balance between what human technology can do and what viruses can do. We may never have a pandemic again.”
The invention of easily reprogrammable RNA vaccines was a lightning-fast triumph of human ingenuity, but it was based on decades of curiosity-driven research into one of the most fundamental aspects of life on planet earth: how genes are transcribed into RNA that tell cells what proteins to assemble. Likewise, CRISPR gene-editing technology came from understanding the way that bacteria use snippets of RNA to guide enzymes to destroy viruses. Great inventions come from understanding basic science. Nature is beautiful that way.
Sitting in the dark before 6 am in my Los Angeles house with my face lit up by yet another Zoom screen, wearing a stylish combination of sweatpants, dress shirt and last year’s JPM conference badge dangling around my neck for old times’ sake, I wonder at the fact that it’s J.P. Morgan Annual Healthcare Conference week again and we are where we are. Quite a year for all of us – the pandemic, the healthcare system’s response to the public health emergency, the ongoing fight for racial justice, the elections, the storming of the Capital – and the subject of healthcare winds its way through all of it – public health, our healthcare system’s stability, strengths and weaknesses, the highly noticeable healthcare inequities, the Affordable Care Act, Medicaid and vaccines, healthcare politics and what the new administration will bring as healthcare initiatives.
I will miss seeing you all in person this year at the J.P. Morgan Annual Healthcare Conference and our annual Sheppard Mullin reception – previously referred to as “standing room only” events and now as “possible superspreader events.” What a difference a year makes. I admit that I will miss the feeling of excitement in the rooms and hallways of the Westin St. Francis and all of the many hotel lobbies and meeting rooms surrounding it. Somehow the virtual conference this year lacks that je ne sais quoi of being stampeded by rushing New York-style street traffic while in an antiquated San Francisco hotel hallway and watching the words spoken on stage transform immediately into sharp stock price increases and drops. There also is the excitement of sitting in the room listening to paradigm shifting ideas (teaser – read the last paragraph of this post for something truly fascinating). Perhaps next year, depending on the vaccine…
So, let’s start there. Today was vaccine day at the JPM Conference, with BioNTech, Moderna, Novovax and Johnson & Johnson all presenting. Lots of progress reported by all of the companies working on vaccines, but the best news of the day was the comment from BioNTech that the UK and South Africa coronavirus variants likely are still covered by the BioNTech/Pfizer vaccine. BioNTech’s CEO, Prof. Uğur Şahin, M.D., promised more data and analysis to be published shortly on that.
We also saw continued excitement for mRNA vaccines, not only for COVID-19 but also for other diseases. There is a growing focus (following COVID-19 of course) on vaccines for cancer through use of neoantigen targets, and for a long list of infectious disease targets.For cancer, though, there continues to be a growing debate over whether the best focus is on “personalized” vaccines or “off the shelf” vaccines – personalized vaccines can take longer to make and have much, much higher costs and infrastructure requirements. We expect, however, to see very exciting news on the use of mRNA and other novel technologies in the next year or two that, when approved and put into commercialization, could radically change the game, not only as to mortality, but also by eliminating or significantly reducing the cost of care with chronic conditions (which some cancers have become, thanks to technological advancement). We are fortunate to be in that gap now between “care” and “cure,” where we have been able with modern medical advances to convert many more disease states into manageable chronic care conditions. Together with today’s longer lifespans, that, however, carries a much higher price tag for our healthcare system. Now, with some of these recent announcements, we look forward to moving from “care” to “cure” and substantially dropping the cost of care to our healthcare system.
Continuing consolidation also was a steady drumbeat underlying the multiple presentations today on the healthcare services side of the conference – health plans, health systems, physician organizations, home health. The drive to scale continues, as we have seen from the accelerated pace of mergers and acquisitions in the second half of 2020, which continues unabated in January 2021. There was today’s announcement of the acquisition by Amerisource Bergen of Walgreens Boots Alliance’s Alliance Healthcare wholesale business (making Walgreens Boots Alliance the largest single shareholder of Amerisource Bergen at nearly 30% ownership), following the announcement last week of Centene’s acquisition of Magellan Health (coming fast on the heels of Molina Healthcare’s purchase of Magellan’s Complete Care line of business).
On the mental health side – a core focus area for Magellan Health – Centene’s Chief Executive Officer, Michael Neidorff, expressed the common theme that we have been seeing in the past year that mental health care should be integrated and coordinated with primary and specialty care. He also saw value in Magellan’s strong provider network, as access to mental health providers can be a challenge in some markets and populations. The behavioral/mental health sector likely will see increased attention and consolidation in the coming year, especially given its critical role during the COVID-19 crisis and also with the growing Medicaid and Medicare populations.There are not a lot of large assets left independent in the mental health sector (aside from inpatient providers, autism/developmental disorder treatment programs, and substance abuse residential and outpatient centers), so we may see more roll-up focus (such as we have seen recently with the autism/ABA therapy sector) and technology-focused solutions (text-based or virtual therapy).
There was strong agreement among the presenting health plans and capitated providers (Humana, Centene, Oak Street and multiple health systems) today that we will continue to see movement toward value-based care (VBC) and risk-based reimbursement systems, such as Medicare Advantage, Medicare direct contracting and other CMS Innovation Center (CMMI) programs and managed Medicaid. Humana’s Chief Executive Officer, Bruce Broussard, said that the size of the MA program has grown so much since 2010 that it now represents an important voting bloc and one of the few ways in which the federal government currently is addressing healthcare inequities – e.g., through Over-the-Counter (OTC) pharmacy benefits, benefits focused on social determinants of health (SDOH), and healthcare quality improvements driven by the STARS rating program. Broussard also didn’t think Medicare Advantage would be a negative target for the Biden administration and expected more foreseeable and ordinary-course regulatory adjustments, rather than wholesale legislative change for Medicare Advantage.
There also was agreement on the exciting possibility of direct contracting for Medicare lives at risk under the CMMI direct contracting initiative. Humana expressed possible interest in both this year’s DCE program models and in the GEO regional risk-based Medicare program model that will be rolling out in the next year. Humana sees this as both a learning experience and as a way to apply their chronic care management skills and proprietary groups and systems to a broader range of applicable populations and markets. There is, however, a need for greater clarity and transparency from CMMI on program details which can substantially affect success and profitability of these initiatives.
Humana, Centene and Oak Street all sang the praises of capitated medical groups for Medicare Advantage and, per Michael Neidorff, the possibility of utilizing traditional capitated provider models for Medicaid membership as well. The problem, as noted by the speakers, is that there is a scarcity of independent capitated medical groups and a lack of physician familiarity and training. We may see a more committed effort by health plans to move their network provider groups more effectively into VBC and risk, much like we have seen Optum do with their acquired fee for service groups. Privia Health also presented today and noted that, while the market focus and high valuations today are accorded to Medicare lives, attention needs to be paid to the “age in” pipeline, as commercial patients who enroll in original Medicare and Medicare Advantage still would like to keep their doctors who saw them under commercial insurance. Privia’s thesis in part is to align with patients early on and retain them and their physicians, so as to create a “farm system” for accelerated Medicare population growth. Privia’s Chief Executive Officer, Shawn Morris, also touted Privia’s rapid growth, in part attributable to partnering with health systems.
As written in our notes from prior JPM healthcare conferences, health systems are continuing to look outside to third parties to gain knowledge base, infrastructure and management skills for physician VBC and risk arrangements. Privia cited their recent opening of their Central Florida market in partnership with Health First and rapid growth in providers by more than 25% in their first year of operations.
That being said, the real market sizzle remains with Medicare Advantage and capitation, percent of premium arrangements and global risk. The problem for many buyers, though, is that there are very few assets of size in this line of business. The HealthCare Partners/DaVita Medical Group acquisition by Optum removed that from the market, creating a high level of strategic and private equity demand and a low level of supply for physician organizations with that expertise. That created a focus on groups growing rapidly in this risk paradigm and afforded them strong valuation, like with Oak Street Health this past year as it completed its August 2020 initial public offering. Oak Street takes on both professional and institutional (hospital) risk and receives a percent of premium from its contracting health plans. As Oak Street’s CEO Mike Pykosz noted, only about 3% of Medicare dollars are spent on primary care, while approximately two-thirds are spent on hospital services. If more intensive management occurs at the primary care level and, as a result, hospitalizations can be prevented or reduced, that’s an easy win that’s good for the patient and the entire healthcare system (other than a fee for service based hospital).Pykosz touted his model of building out new centers from scratch as allowing greater conformity, control and efficacy than buying existing groups and trying to conform them both physically and through practice approaches to the Oak Street model. He doesn’t rule out some acquisitions, but he noted as an example that Oak Street was able to swiftly role out COVID-19 protocols rapidly and effectively throughout his centers because they all have the same physical configuration, the same staffing ratio and the same staffing profiles. Think of it as a “franchise” model where each Subway store, for example, will have generally the same look, feel, size and staffing. He also noted that while telehealth was very helpful during the COVID-19 crisis in 2020 and will continue as long as the doctors and patients wish, Oak Street believes that an in-person care management model is much more effective and telehealth is better for quick follow-ups or when in-person visits can’t occur.
Oak Street also spoke to the topic of Medicare Advantage member acquisition, which has been one of the more difficult areas to master for many health plans and groups, resulting in many cases with mergers and acquisitions becoming a favored growth vehicle due to the difficulties of organic membership growth. Interestingly, both Oak Street and Humana reported improvements in membership acquisition during the COVID-19 crisis. Oak Street credited digital marketing and direct response television, among other factors. Humana found that online direct-to-consumer brokers became an effective pathway during the COVID-19 crisis and focused its energy on enhancing those relationships and improving hand-offs during the membership enrollment process. Humana also noted the importance of brand in Medicare Advantage membership marketing.
Staying with Medicare Advantage, there is an expectation of a decrease in Medicare risk adjustment revenue in 2021, in large part due to the lower healthcare utilization during the COVID crisis and the lesser number of in-person visits during which HCC-RAF Medicare risk adjustment coding typically occurs. That revenue drop however likely will not significantly decrease Medicare Advantage profitability though, given the concomitant drop in healthcare expenses due to lower utilization, and per conference reports, is supposed to return to normal trend in 2022 (unless we see utilization numbers fall back below 90% again). Other interesting economic notes from several presentations, when taken together, suggest that while many health systems have lost out on elective surgery revenue in 2020, their case mix index (CMI) in many cases has been much higher due to the COVID patient cases. We also saw a number of health systems with much lower cash days on hand numbers than other larger health systems (both in gross and after adjusting for federal one-time stimulus cash payments), as a direct result of COVID. This supports the thesis we are hearing that, with the second wave of COVID being higher than expected, in the absence of further federal government financial support to hospitals, we likely will see an acceleration of partnering and acquisition transactions in the hospital sector.
Zoetis, one of the largest animal health companies, gave an interesting presentation today on its products and service lines. In addition to some exciting developments re: monoclonal antibody treatments coming on line for dogs with pain from arthritis, Zoetis also discussed its growing laboratory and diagnostics line of business. The animal health market, sometime overshadowed by the human healthcare market, is seeing some interesting developments as new revenue opportunities and chronic care management paradigms (such as for renal care) are shifting in the animal health sector. This is definitely a sector worth watching.
We also saw continuing interest, even in the face of Congressional focus this past year, on growing pharmacy benefit management (PBM) companies, which are designed to help manage the pharmacy spend. Humana listed growth of its PBM and specialty pharmacy lines of business as a focus for 2021, along with at-home care. In its presentation today, SSM Health, a health system in Wisconsin, Oklahoma, Illinois, and Missouri, spotlighted Navitus, its PBM, which services 7 million covered lives in 50 states.
One of the most different, interesting and unexpected presentations of the day came from Paul Markovich, Chief Executive Officer of Blue Shield of California. He put forth the thesis that we need to address the flat or negative productivity in healthcare today in order to both reduce total cost of care, improve outcomes and to help physicians, as well as to rescue the United States from the overbearing economic burden of the current healthcare spending. Likening the transformation in healthcare to that which occurred in the last two decades with financial services (remember before ATMs and banking apps, there were banker’s hours and travelers cheques – remember those?), he described exciting pilot projects that reimagine healthcare today. One project is a real-time claims adjudication and payment program that uses smart watches to record physician/patient interactions, natural language processing (NLP) to populate the electronic medical record, transform the information concurrently into a claim, adjudicate it and authorize payment. That would massively speed up cash flow to physician practices, reduce paperwork and many hours of physician EMR and billing time and reduce the billing and collection overhead and burden. It also could substantially reduce healthcare fraud.
Paul Markovich also spoke to the need for real-time quality information that can result in real-time feedback and incentivization to physicians and other providers, rather than the costly and slow HEDIS pursuits we see today. One health plan noted that it spends about $500 million a year going into physician offices looking at medical records for HEDIS pursuits, but the information is totally “in the rearview mirror” as it is too old when finally received and digested to allow for real-time treatment changes, improvement or planning. Markovich suggested four initiatives (including the above, pay for value and shared decision making through better, more open data access) that he thought could save $100 billion per year for the country.Markovich stressed that all of these four initiatives required a digital ecosystem and asked for help and partnership in creating one. He also noted that the State of California is close to creating a digital mandate and statewide health information exchange that could be the launching point for this exciting vision of data sharing and a digital ecosystem where the electronic health record is the beginning, but not the end of the healthcare data journey.
The S&P index of top health care companies finished Monday higher than where it opened the year, Axios’ Bob Herman reports.
The big picture: A global coronavirus pandemic, social unrest, mass unemployment, and the halting of medical procedures haven’t been enough to derail Wall Street’s rosy view of the health care industry.
Where things stand: The coronavirus started to affect the economy toward the tail end of the first quarter, but the health care industry was relatively unscathed.
Among the 109 publicly traded health care companies tracked by Axios, first-quarter profits exceeded $50 billion, good for a 7.4% net profit margin.
Pharmaceutical companies and health insurers generated the highest returns. Wall Street believes drug companies stand to benefit from potential coronavirus treatments or vaccines.
The stock price of Gilead Sciences, for example, is up 18% so far this year, partially on the assumption its coronavirus drug, remdesivir, will produce billions of dollars of revenue — even though the drug has showed only modest benefit for patients.
Between the lines: The second quarter likely will be worse, as the brunt of the coronavirus lockdown was felt in April and May. But normal operations have already started resuming for some health care sectors, regardless of the virus’ spread.
Heavy hearts soared Monday with news that Moderna’s Covid-19 vaccine candidate — the frontrunner in the American market — seemed to be generating an immune response in Phase 1 trial subjects. The company’s stock valuation also surged, hitting $29 billion, an astonishing feat for a company that currently sells zero products.
But was there good reason for so much enthusiasm? Several vaccine experts asked by STAT concluded that, based on the information made available by the Cambridge, Mass.-based company, there’s really no way to know how impressive — or not — the vaccine may be.
While Moderna blitzed the media, it revealed very little information — and most of what it did disclose were words, not data. That’s important: If you ask scientists to read a journal article, they will scour data tables, not corporate statements. With science, numbers speak much louder than words.
Even the figures the company did release don’t mean much on their own, because critical information — effectively the key to interpreting them — was withheld.
Experts suggest we ought to take the early readout with a big grain of salt. Here are a few reasons why.
The silence of the NIAID
The National Institute for Allergy and Infectious Diseases has partnered with Moderna on this vaccine. Scientists at NIAID made the vaccine’s construct, or prototype, and the agency is running the Phase 1 trial. This week’s Moderna readout came from the earliest of data from the NIAID-led Phase 1.
NIAID doesn’t hide its light under a bushel. The institute generally trumpets its findings, often offering director Anthony Fauci — who, fair enough, is pretty busy these days — or other senior personnel for interviews.
But NIAID did not put out a press release Monday and declined to provide comment on Moderna’s announcement.
The n = 8 thing
The company’s statement led with the fact that all 45 subjects (in this analysis) who received doses of 25 micrograms (two doses each), 100 micrograms (two doses each), or a 250 micrograms (one dose) developed binding antibodies.
Later, the statement indicated that eight volunteers — four each from the 25-microgram and 100-microgram arms — developed neutralizing antibodies. Of the two types, these are the ones you’d really want to see.
We don’t know results from the other 37 trial participants. This doesn’t mean that they didn’t develop neutralizing antibodies. Testing for neutralizing antibodies is more time-consuming than other antibody tests and must be done in a biosecurity level 3 laboratory. Moderna disclosed the findings from eight subjects because that’s all it had at that point. Still, it’s a reason for caution.
Separately, while the Phase 1 trial included healthy volunteers ages 18 to 55 years, the exact ages of these eight people are unknown. If, by chance, they mostly clustered around the younger end of the age spectrum, you might expect a better response to the vaccine than if they were mostly from the senior end of it. And given who is at highest risk from the SARS-CoV-2 coronavirus, protecting older adults is what Covid-19 vaccines need to do.
There’s no way to know how durable the response will be
The report of neutralizing antibodies in subjects who were vaccinated comes from blood drawn two weeks after they received their second dose of vaccine.
“That’s very early. We don’t know if those antibodies are durable,” said Anna Durbin, a vaccine researcher at Johns Hopkins University.
There’s no real way to contextualize the findings
Moderna stated that the antibody levels seen were on a par with — or greater than, in the case of the 100-microgram dose — those seen in people who have recovered from Covid-19 infection.
But studies have shown antibody levels among people who have recovered from the illness vary enormously; the range that may be influenced by the severity of a person’s disease. John “Jack” Rose, a vaccine researcher from Yale University, pointed STAT to a study from China that showed that, among 175 recovered Covid-19 patients studied, 10 had no detectable neutralizing antibodies. Recovered patients at the other end of the spectrum had really high antibody levels.
So though the company said the antibody levels induced by vaccine were as good as those generated by infection, there’s no real way to know what that comparison means.
STAT asked Moderna for information on the antibody levels it used as a comparator. The response: That will be disclosed in an eventual journal article from NIAID, which is part of the National Institutes of Health.
“The convalescent sera levels are not being detailed in our data readout, but would be expected in a downstream full data exposition with NIH and its academic collaborators,” Colleen Hussey, the company’s senior manager for corporate communications, said in an email.
Durbin was struck by the wording of the company’s statement, pointing to this sentence: “The levels of neutralizing antibodies at day 43 were at or above levels generally seen in convalescent sera.”
“I thought: Generally? What does that mean?” Durbin said. Her question, for the time being, can’t be answered.
Rose said the company should disclose the information. “When a company like Moderna with such incredibly vast resources says they have generated SARS-2 neutralizing antibodies in a human trial, I would really like to see numbers from whatever assay they are using,” he said.
Moderna’s approach to disclosure
The company has not yet brought a vaccine to market, but it has a variety of vaccines for infectious diseases in its pipeline. It doesn’t publish on its work in scientific journals. What is known has been disclosed through press releases. That’s not enough to generate confidence within the scientific community.
“My guess is that their numbers are marginal or they would say more,” Rose said about the company’s SARS-2 vaccine, echoing a suspicion that others have about some of the company’s other work.
“I do think it’s a bit of a concern that they haven’t published the results of any of their ongoing trials that they mention in their press release. They have not published any of that,” Durbin noted.
Still, she characterized herself as “cautiously optimistic” based on what the company has said so far.
“I would like to see the data to make my own interpretation of the data. But I think it is at least encouraging that we’ve seen immune responses with this RNA vaccine that we haven’t seen with previous RNA vaccines for other pathogens. Whether it’s going to be enough, we don’t know,” Durbin said.
Moderna has been more forthcoming with data on at least one of its other vaccine candidates. In a statement issued in January about a Phase 1 trial for its cytomegalovirus (CMV) vaccine, it quantified how far over baseline measures antibody levels rose in vaccines.
IN RECENT WEEKS, investment bankers have pressed health care companies on the front lines of fighting the novel coronavirus, including drug firms developing experimental treatments and medical supply firms, to consider ways that they can profit from the crisis.
The media has mostly focused on individuals who have taken advantage of the market for now-scarce medical and hygiene supplies to hoard masks and hand sanitizer and resell them at higher prices. But the largest voices in the health care industry stand to gain from billions of dollars in emergency spending on the pandemic, as do the bankers and investors who invest in health care companies.
Over the past few weeks, investment bankers have been candid on investor calls and during health care conferences about the opportunity to raise drug prices. In some cases, bankers received sharp rebukes from health care executives; in others, executives joked about using the attention on Covid-19 to dodge public pressure on the opioid crisis.
Gilead Sciences, the company producing remdesivir, the most promising drug to treat Covid-19 symptoms, is one such firm facing investor pressure.
Remdesivir is an antiviral that began development as a treatment for dengue, West Nile virus, and Zika, as well as MERS and SARS. The World Health Organization has said there is “only one drug right now that we think may have real efficacy in treating coronavirus symptoms” — namely, remdesivir.
The drug, though developed in partnership with the University of Alabama through a grant from the federal government’s National Institutes of Health, is patented by Gilead Sciences, a major pharmaceutical company based in California. The firm has faced sharp criticism in the past for its pricing practices. It previously charged $84,000 for a yearlong supply of its hepatitis C treatment, which was also developed with government research support. Remdesivir is estimated to produce a one-time revenue of $2.5 billion.
During an investor conference earlier this month, Phil Nadeau, managing director at investment bank Cowen & Co., quizzed Gilead Science executives over whether the firm had planned for a “commercial strategy for remdesivir” or could “create a business out of remdesivir.”
Johanna Mercier, executive vice president of Gilead, noted that the company is currently donating products and “manufacturing at risk and increasing our capacity” to do its best to find a solution to the pandemic. The company at the moment is focused, she said, primarily on “patient access” and “government access” for remdesivir.
“Commercial opportunity,” Mercier added, “might come if this becomes a seasonal disease or stockpiling comes into play, but that’s much later down the line.”
Steven Valiquette, a managing director at Barclays Investment Bank, last week peppered executives from Cardinal Health, a health care distributor of N95 masks, ventilators and pharmaceuticals, on whether the company would raise prices on a range of supplies.
Valiquette asked repeatedly about potential price increases on a variety of products. Could the company, he asked, “offset some of the risk of volume shortages” on the “pricing side”?
Michael Kaufmann, the chief executive of Cardinal Health, said that “so far, we’ve not seen any material price increases that I would say are related to the coronavirus yet.” Cardinal Health, Kaufman said, would weigh a variety of factors when making these decisions, and added that the company is “always going to fight aggressively to make sure that we’re getting after the lowest cost.”
“Are you able to raise the price on some of this to offset what could be some volume shortages such that it all kind of nets out to be fairly consistent as far as your overall profit matrix?” asked Valiquette.
Kaufman responded that price decisions would depend on contracts with providers, though the firm has greater flexibility over some drug sales. “As you have changes on the cost side, you’re able to make some adjustments,” he noted.
The discussion, over conference call, occurred during the Barclays Global Healthcare Conference on March 10. At one point, Valiquette joked that “one positive” about the coronavirus would be a “silver lining” that Cardinal Health may receive “less questions” about opioid-related lawsuits.
Cardinal Health is one of several firms accused of ignoring warnings and flooding pharmacies known as so-called pill mills with shipments of millions of highly addictive painkillers. Kaufmann noted that negotiations for a settlement are ongoing.
Owens & Minor, a health care logistics company that sources and manufactures surgical gowns, N95 masks, and other medical equipment, presented at the Barclays Global Healthcare Conference the following day.
Valiquette, citing the Covid-19 crisis, asked the company whether it could “increase prices on some of the products where there’s greater demand.” Valiquette then chuckled, adding that doing so “is probably not politically all that great in the sort of dynamic,” but said he was “curious to get some thoughts” on whether the firm would consider hiking prices.
The inquiry was sharply rebuked by Owens & Minor chief executive Edward Pesicka. “I think in a crisis like this, our mission is really around serving the customer. And from an integrity standpoint, we have pricing agreements,” Pesicka said. “So we are not going to go out and leverage this and try to ‘jam up’ customers and raise prices to have short-term benefit.”
AmerisourceBergen, another health care distributor that supplies similar products to Cardinal Health, which is also a defendant in the multistate opioid litigation, faced similar questions from Valiquette at the Barclays event.
Steve Collis, president and chief executive of AmerisourceBergen, noted that his company has been actively involved in efforts to push back against political demands to limit the price of pharmaceutical products.
Collis said that he was recently at a dinner with other pharmaceutical firms involved with developing “vaccines for the coronavirus” and was reminded that the U.S. firms, operating under limited drug price intervention, were among the industry leaders — a claim that has been disputed by experts who note that lack of regulation in the drug industry has led to few investments in viral treatments, which are seen as less lucrative. Leading firms developing a vaccine for Covid-19 are based in Germany, China, and Japan, countries with high levels of government influence in the pharmaceutical industry.
AmerisourceBergen, Collis continued, has been “very active with key stakeholders in D.C., and our priority is to educate policymakers about the impact of policy changes,” with a focus on “rational and responsible discussion about drug pricing.”
Later in the conversation, Valiquette asked AmerisourceBergen about the opioid litigation. The lawsuits could cost as much as $150 billion among the various pharmaceutical and drug distributor defendants. Purdue Pharma, one of the firms targeted with the opioid litigation, has already pursued bankruptcy protection in response to the lawsuit threat.
“We can’t say too much,” Collis responded. But the executive hinted that his company is using its crucial role in responding to the pandemic crisis as leverage in the settlement negotiations. “I would say that this crisis, the coronavirus crisis, actually highlights a lot of what we’ve been saying, how important it is for us to be very strong financial companies and to have strong cash flow ability to invest in our business and to continue to grow our business and our relationship with our customers,” Collis said.
The hope that the coronavirus will benefit firms involved in the opioid crisis has already materialized in some ways. New York Attorney General Letitia James announced last week that her lawsuit against opioid firms and distributors, including Cardinal Health and AmerisourceBergen, set to begin on March 20, would be delayed over coronavirus concerns.
MARKET PRESSURE has encouraged large health care firms to spend billions of dollars on stock buybacks and lobbying, rather than research and development. Barclays declined to comment, and Cowen & Co. did not respond to a request for comment.
The fallout over the coronavirus could pose potential risks for for-profit health care operators. In Spain, the government seized control of private health care providers, including privately run hospitals, to manage the demand for treatment for patients with Covid-19.
But pharmaceutical interests in the U.S. have a large degree of political power. Health and Human Services Secretary Alex Azar previously served as president of the U.S. division of drug giant Eli Lilly and on the board of the Biotechnology Innovation Organization, a drug lobby group.
During a congressional hearing last month, Azar rejected the notion that any vaccine or treatment for Covid-19 should be set at an affordable price. “We would want to ensure that we work to make it affordable, but we can’t control that price because we need the private sector to invest,” said Azar. “The priority is to get vaccines and therapeutics. Price controls won’t get us there.”
The initial $8.3 billion coronavirus spending bill passed in early March to provide financial support for research into vaccines and other drug treatments contained a provision that prevents the government from delaying the introduction of any new pharmaceutical to address the crisis over affordability concerns. The legislative text was shaped, according to reports, by industry lobbyists.
As The Intercept previously reported, Joe Grogan, a key White House domestic policy adviser now serving on Donald Trump’s Coronavirus Task Force, previously served as a lobbyist for Gilead Sciences.
“Notwithstanding the pressure they may feel from the markets, corporate CEOs have large amounts of discretion and in this case, they should be very mindful of price gouging, they’re going to be facing a lot more than reputational hits,” said Robert Weissman, president of public interest watchdog Public Citizen, in an interview with The Intercept.
“There will be a backlash that will both prevent their profiteering, but also may push to more structural limitations on their monopolies and authority moving forward,” Weissman said.
Weissman’s group supports an effort led by Rep. Andy Levin, D-Mich., who has called on the government to invoke the Defense Production Act to scale up domestic manufacturing of health care supplies.
There are other steps the government can take, Weissman added, to prevent price gouging.
“The Gilead product is patent-protected and monopoly-protected, but the government has a big claim over that product because of the investment it’s made,” said Weissman.
“The government has special authority to have generic competition for products it helped fund and prevent nonexclusive licensing for products it helped fund,” Weissman continued. “Even for products that have no connection to government funding, the government has the ability to force licensing for generic competition for its own acquisition and purchases.”
Drug companies often eschew vaccine development because of the limited profit potential for a one-time treatment. Testing kit companies and other medical supply firms have few market incentives for domestic production, especially scaling up an entire factory for short-term use. Instead, Levin and Weissman have argued, the government should take direct control of producing the necessary medical supplies and generic drug production.
Last Friday, Levin circulated a letter signed by other House Democrats that called for the government to take charge in producing ventilators, N95 respirators, and other critical supplies facing shortages.
The once inconceivable policy was endorsed on Wednesday when Trump unveiled a plan to invoke the Defense Production Act to compel private firms to produce needed supplies during the crisis. The law, notably, allows the president to set a price ceiling for critical goods used in an emergency.
For the first time, scientists have used the gene-editing technique CRISPR inside the body of an adult patient, in an effort to cure congenital blindness, Bryan reports.
Why it matters: CRISPR has already been used to edit cells outside a human body, which are then reinfused into the patient.
But the new study could open the door to using gene editing to treat incurable conditions that involve cells that can’t be removed from the body, like Huntington’s disease and dementia.
Details: The research was sponsored by biotech companies Editas Medicine of Cambridge, Massachusetts, and Allergan of Dublin, Ireland, and was carried out at Oregon Health and Science University.
Scientists led by Eric Pierce of Harvard Medical School injected microscopic droplets carrying a benign virus into the eye of a nearly blind patient suffering from the genetic disorder Leber congenital amaurosis.
The virus had been engineered to instruct the cells to create CRISPR machinery. The hope is that CRISPR will edit out the genetic defects that cause blindness, restoring at least some vision.
“We literally have the potential to take people who are essentially blind and make them see,” Charles Albright, chief scientific officer at Editas, told AP.
“It gives us hope that we could extend that to lots of other diseases — if it works and if it’s safe,” National Institutes of Health director Francis Collins told NPR.