 The Senate released a report that was over 125 pages long and covered a year-long investigation into drug pricing last Wednesday. The report goes into detail of four companies that hit major headlines in 2015 for obscenely high drug prices, including the infamous Martin Shkreli and his 5,000% price hike for Daraprim. With Donald Trump as the new president-elect, biotech stocks and health care stocks in general saw a bump following the election.
Many market players were unhinged by the possibility of a Clinton presidency and fears surrounding her stance on the industry overall. However, following what is being called “The Trump Bump,” new developments that have coincidentally been found on President-elect Trump’s Twitter feed have some investors a bit skittish. He too has expressed interest in lowering the cost of pharmaceutical drugs.
The committee was clear and made the distinction between the companies investigated in the report and other new businesses and drug companies developing new drugs. With Republican control of the Congress, many are seeing this as a bit more protection for pharma and biotech companies. Republican Senator Susan Collins told The New York Times that she did not think the solution would be for the government to set drug prices.
“Our report does not recommend that the government get into the business of setting prices for prescription drugs," Collins said. "We think that would have a harmful impact on the pipeline of innovative drugs.”
Despite the negative light shone on companies like Turing Pharmaceuticals, Retrophin Inc. (RTRX, Financial), Rodelis Therapeutics and Valeant Pharmaceuticals (VRX, Financial), new and novel drugmakers as well as researchers continue to press forward. New government regulation brought about by President Obama’s 21st Century Cures Act Bill aims to direct government funds to aid in the rapid commercialization of unique therapies and underserved areas of research.
Vitality Biosciences (VBIO, Financial), for instance, recently announced it has received the Drug Enforcement Administration's approval to scale up its activities at its facilities used for the development of novel pharmaceutical drugs. The company has targeted what has (up until 2014) been an illegal substance across the U.S., but recent developments and state legalization have aided in the expansion of the active ingredient for use with medical applications.
Recent moves made by the DEA brought up additional regulation on the topic. However, Vitality has been working with the DEA as well as the California Research Advisory Panel (a part of the California Attorney General’s Office) to ensure substantial on-site guidelines are put in place to prevent any deviation of Schedule I substances. Vitality is currently overseeing preclinical studies of its proprietary prodrugs that were reviewed and approved by the FDA. “We are excited to scale up our research and to aggressively pursue clinical testing of our compounds, and this approval greenlights that work,” explained Dr. Brandon Zipp, director of research and development and scientific co-founder of Vitality Biopharma, in a recent press release.
This news comes during the stock’s latest bull rally that began earlier in December. In fact, shares of Vitality have not traded this high since October and a recent uptick in trading volume has become noticeable compared to previous months. Last month, Vitality announced it filed an international PCT (Patent Cooperation Treaty) application that includes 79 patent claims and almost 200 individual compounds. No new developments have surfaced regarding the progress of this application.
Likewise, Calithera Biosciences Inc. (CALA, Financial) has found itself gaining more attention in the market. The company recently announced a clinical trial collaboration to evaluate Bristol-Myers Squibb’s (BMY, Financial) Opdivoin combination with Calithera’s CB-839. Calithera’s drug is designed to target a pathway that would starve tumor cells of glutamine and could actually reverse tumor resistance to checkpoint inhibitors.
In combination with Opdivo, the companies are looking to achieve improved and longer lasting efficacy in patients with clear cell renal cell carcinoma who have cancer that is stable or possibly increasing on a PD-1 inhibitor therapy. PD-1 normally acts as a type of “off switch” that helps keep T-cells from attacking other cells in the body. When PD-1 binds to PD-L1 (a protein on some normal and cancer cells), it basically tells the T-cell to leave the other cells alone.
Some cancer cells have large amounts of PD-L1, which helps them evade immune attack. Because Opdivo was the first PD-1 immune checkpoint inhibitor to actually receive regulatory approval anywhere in the world a few years ago, it would seem that Calithera is aligning itself responsibly with a proven therapy for its combination strategy. Susan Molineaux, CEO of Calithera, said in a press release the company believes that “by blocking glutamine consumption in tumors, and redirecting this key nutrient for cell growth and proliferation to T-cells, CB-839 could enhance the effects of Opdivo. With support from Bristol-Myers Squibb, Calithera is excited to advance this combination into the Phase 2 portion of CX-839-004, our ongoing study in ccRCC patients."
Other drugmakers are seeing advanced phase trial successes, which could bode well and play off of what the government has begun putting into place. Just this week, biomedical company Prima BioMed (PBMD, Financial) announced positive AIPAC (Active Immunotherapy PAClitaxel) Phase IIb trial results for its IMP321 therapy for breast cancer. Data from a 15-patient study confirmed previous trial results that showed IMP321 is safe and well tolerated. In anticipation of the confirmation of the dose escalation committee, the company looks to begin the randomized phase of this trial next month.
IMP321 is Prima’s lead product that works to build T-cell responses. Its current trial status is through a chemoimmunotherapy for metastatic breast cancer as well as metastatic melanoma (which is in Phase I). Though the stock has been relatively flat over recent weeks, this news has certainly excited the market.
In a previous release, the company stated that it expects to report interim data from the first group of patients in the Phase I TACTI-mel trial of IMP321 for melanoma patients “in late December.” Considering the timing right now, it could be expected sooner rather than later as well. This is certainly something for investors to chew on during the latter half of this month. Suffice it to say that the expected randomization phase in January could be another catalyst pending the escalation committee review.
In sum, the act put in place by President Obama as well as the move for a government push to get new drugs to market faster could bode well for companies like these, not just heading into 2017 but into the next presidential term as well.
Disclosure: The author of this article owns ZERO shares of any stock mentioned within this article.
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