[music] Welcome to this week's episode of The Read Out Loud, a weekly biotech podcast from STAT. I'm Allison DeAngelis. I'm Elaine Chen. Adam Forstein is out this week. It's Thursday, April 9. And this week we're going to talk about a new hope for an old theory on treating Duchenne muscular dystrophy. Jason Masch joins us to detail the clinical testing underway. But first, a word from our sponsor and a recap of this week's news. [music] I'm Jesse McCordor's editor of STAT.RAN Studio, and I'm joined today by Priti Hector, Senior Vice President and Global Head of Research at Kite, a Gilead Company. Priti, can you tell me a little bit about the multitude of platforms that you're working in? In most companies, the scientific teams engage in one platform or the other, very, very fortunate at Gilead and Kite, where we have access to expertise in small molecules, we have expertise in large molecule development, and we have expertise in cell therapy as well. And so the question here is, what is the right scientific question for the right modality and bringing them together is what ultimately will result to transform to benefit for patients? [music] All right, Elaine, it is just us ladies this week. We kicked out Adam. He has vacated the premises, and we are taking over the podcast. It's so refreshing. It really is. We will have Jason Masse on the podcast to bring a little male energy. But for right now, how are you doing? I'm good. It's always nice without him. I'm kidding. [laughter] I feel like I'm sounding good, but I should put out an exclaimer or a disclaimer to listeners that I do have a little bit of a cold, so if my voice sounds atrocious, don't let me know. I don't want to hear it. [laughter] Elaine, should we kick off the news? Yeah, so the M&A streak that we've been seeing the past few weeks, it has continued. This week, Gilead Sciences said that it's going to spend more than $3 billion to buy the German biotech tubulus. It's Gilead's attempt to boost its oncology pipeline. tubulus specializes in antibody drug conjugates, and it has no variant cancer, and non-small cell lung cancer treatment in early clinical testing. Gilead's move also comes just a few months after it said it would acquire Arcelix in a deal worth $7.8 billion. Those two companies had already been working together on a multiple myeloma carty therapy that could be approved later this year. And last month, Gilead announced that it was buying aurotheraputics, which is focused on drugs for autoimmune diseases for up to $2.2 billion. So Gilead is emptying those coffers. They're on a spending streak. Also this week, neurocran biosciences said that they're going to buy Salinotheraputics and its treatment for a Prater-Willie syndrome for $2.9 billion. Salino's drug was approved last year to treat hyperfagia, one of the defining features of Prater-Willie syndrome, which causes relentless hunger and leads patients to overeat. All of this M&A news must be making investors happy, and so I want to turn to you, Allison. You published an article this week detailing the challenges that biotech VCs have been facing. Tell us about what's going on. Yeah, well, there is a bit of optimism in the venture capital industry right now because we're seeing these exits. We're seeing acquisitions like this. We are seeing biotech IPOs, and that gives investors some long overdue opportunities to return money to their investors. But I took a little bit of time over the last couple of months to sit down with a bunch of VCs. I think I talked to about two dozen investors, venture capitalists, and limited partners, the folks who work at pension funds, family offices, high net worth individuals offices to invest money. And I wanted to hear a little bit more about how things are going in the biotech venture capital space. And I learned that this year, knock on wood, it looks like we're going to see a lot more firms going out to raise new funds this year, which is good. That's a good sign of a healthy industry. But there are big questions that they're facing as they're going out to raise money from outside folks about their strategy and what kinds of impacts that they're seeing from the rise of China and all of the drugs that are coming out of that nation. And also, they're trying to fight for investors' attention. Investors are really being wooed by things like artificial intelligence. And these big, really fast step-ups and valuation and good investment returns that we're seeing so far from the AI field. Yeah, so I'm curious about that. What exactly can VCs do when they're faced with these stressors? Like you said, the rise of China biotech, the rise of AI investors wanting to shift more money into AI, like what can biotech VCs do to adapt? And are they adapting? Yeah, the folks that I talked to generally, the sentiment was that there are these shifts that happen in markets, every once in a while that really take firms and their leadership and make them think about their strategy. And they have to adapt. They really, I mean, somebody that I spoke to, one venture capital, has basically said that you have to evolve or you're at risk of kind of going extinct or kind of falling by the wayside in the investment community. This is just something that happens every once in a while and we are in one of those eras right now. And I think one of the big things that you're seeing that has been happening for the last year or two, that firms are kind of leaning even more heavily into is actually kind of going, doing licensing deals out of China, setting up their own offices there if they don't already have them, sending their folks out there on scouting trips to go and find interesting drug candidates that they can build companies around. Now how AI comes into play, I got a little bit of disagreement, a little, there wasn't much consensus of around how that's directly impacting the industry. One, I talked to some folks who were not convinced that investors' interests overall in AI was kind of pulling them away from investing in biotech. I did talk to firms who said that yes, they are seeing as they've been out fundraising that investors are putting some money into biotech but they're putting more money into tech. If they used to put in $15 million in a fund, they're putting 10 into biotech and they're putting their money into AI. They're much more excited about that. So there's a lot of very concerted conversations, I think happening between venture capitalists and their investors to try and shore up those relationships. And then there's kind of the trend that we've been seeing over the last couple of years that investors, if you've got a VC firm that is kind of playing in this space, you're doing biotech but you're really interested in or you're adapting AI into your investment thesis. You've got companies that are using machine learning programs to do drug development. That's actually something that investors are getting interested in and that is something that is a selling point to them. I am also hearing though that there are firms who are kind of resisting the drive, the call to adapt, the call to evolve and that is causing some tension within some firms. Okay, Allison, I want to go back to what you said earlier which is that we are seeing more firms going out to raise funds this year. Tell me what you've learned there. Yeah, that's something I've been tracking during my years at Staten even beforehand because we saw this big boom in fundraising around COVID and then it really dropped off, dropped off actually quite precipitously. And the data shows that last year was a bad year for fundraising for VC fundraising. It was the lowest amount of new funds in a decade. And these are venture capital firms raising pools of money to invest in biotechs. And this year I'm seeing that both through a mixture of who's been kind of filing, who has been putting out paperwork that they are going to be fundraising, who has actually announced that they have raised funds. And then through my sources, who is planning on raising but hasn't disclosed it yet. We're actually that that tally is larger than what we saw last year. So that's a point of optimism for the industry that okay, venture capitalists are going out to raise new funds and they don't usually start out on that endeavor if they don't think that there's a solid chance that they can raise money. So we will see how the year turns out. Okay, but Elaine, I am going to turn the table, turn the spotlight over to you if you will. You dove behind the scenes this week on Ksar Life Sciences, this company that I remember writing about them once or twice but I really have not followed closely and behind the scenes they've had a lot going on. They have spent the last seven days.
years developing a treatment for a liver disease, a rare liver disease. And they over the last year have run into trouble with the FDA that the CEO said has become a pattern across the industry causing trouble for biotechs and it's caused trouble for KZAR. Tell us more about what's going on there. Yeah, it's interesting because I feel like just talking to biotechs in general, people are talking, have talked about delays with the FDA, the FDA, maybe delayed this one meeting, blah, blah, maybe for a lot of biotechs or pharma companies, it's not a huge deal in the moment, but they always like are saying it's it's kind of an ominous sign. Like at some point these delays, these cancellations are going to add up and have real effects. And I feel like that's kind of what happened with the small biotech KZAR. So they were developing a treatment for autoimmune hepatitis, this rare liver condition, it causes patients, it's it's quite debilitating, it causes patients to feel extremely fatigued, joint pain, there are no approved treatment specifically for autoimmune hepatitis. So patients have to be on, you know, broad acting immunosuppressants or high doses of steroids, which come with a bunch of side effects like weight gain, diabetes, things like that. So KZAR had done an early phase two study in autoimmune hepatitis, I'm going to call it AAH. And it showed a promising signal, it wasn't a large study, it was quite small, wasn't powered for statistical significance, but there was a positive signal. I talked to one patient for my story who was able to get her steroid dose down, which she had never been able to do before in her entire time being diagnosed with AAH. So they had this positive signal, they wanted to go to the FDA to discuss, okay, how can we continue the development? Because again, there's no approved drugs for this disease, so there's no precedent for like what the regulatory pathway looks like. So they wanted to get clarity from the FDA, like how can we do our next trial, what can we do? And they had this meeting scheduled for October of last year, but then the FDA abruptly canceled the meeting without explanation. And the company tried to schedule a new meeting, they tried to call the division director, none of that, you know, got them anywhere. The FDA instead sent them a letter, basically making several requests that the company felt, you know, we're basically a non-starter for continued development. They were just very stringent requests that the company was like, okay, this isn't going to work out for us anymore. So investors were like, we can't invest anymore, so the company basically had to start the process of winding down and figure out like what their next alternatives are. Okay, I did see a reader comment to this point. I think it's a really valid question. Yeah, this was just one canceled meeting. I mean, how much of KsR's troubles can really be traced back to this issue with the FDA? Yeah, it's like a complicated story because it's the small queue that they have for AAH. They initially were testing it in a different disease, Lupus nephritis. They did see a few deaths in that trial for Lupus nephritis, though there are a lot of complicating factors because patients often come in very sick. It was a global trial and the deaths that were of most concerned were outside of the US where the trials may not have been as tightly controlled. Ultimately, the company believes that the deaths were not directly caused by their molecule, but that was a big overhang for the company. You know, I might have been like part of maybe why FDA staff had initially asked for all these stringent requirements, but to finish my story, sorry, that it's so long-winded, KsR, even after they got the canceled meeting, even after they started winding down, they still tried to get in meeting with FDA. They wanted to still figure out if there's a path forward for the drug. So they eventually secured a meeting after a lot of efforts, a lot of lobbying. They eventually got a meeting with FDA in this year, February. And it was a positive meeting. They didn't really share details of specific details of what the FDA said. They said it was a productive positive meeting. They were able to agree on a plan that they could reasonably move the drug forward into a new trial with, whereas before again, it was like a non-starter. The fact that the FDA staff eventually was like, we can reach a compromise here, we can have an agreement. It's kind of an indication that, you know, had the meeting occurred when it was supposed to occur, had the company been able to talk to staff and like work out these questions, like the company could have possibly have a path forward and they possibly could have raised enough money and not had to start winding down. I want to zoom out for a second because like if we look at, if we look beyond KsR, it feels from my perspective, like we are hearing the industry talk more openly about how difficult or how they are feeling, it's difficult to interact with the agency these days. And the issues that they're running into, I mean, this time last year, even six months ago, I was talking to folks who were kind of saying, yeah, well, you know what, like the FDA still approving drugs, so we're not concerned. There were a couple of examples, but it feels like we are hearing companies speak out more openly. And I'm not to like, sure, fully what the motivations behind that are, but what do you think from your perspective, Elaine? Yeah, I mean, I think for KsR, they are a company where, I mean, they had to wind down. They're going to be bought by another company that was unclear if what the future of that drug would be, whether it would still be continued to be developed. But, you know, for KsR, they kind of didn't have much to lose by speaking out about what happened to them. But yeah, you're right, like even when, you know, we had Rod Wong on last week to talk about how, you know, industry has sent a letter expressing concerns about what's going on at the FDA. There definitely are more people speaking out. And I think maybe it's just like a build up of frustration and growing concern that what's the volatility that's happening will really impact drug development. And I think what's the thing about the KsR situation that I think is important is that this wasn't a meeting, and this wasn't a situation where they were like getting ready to have their drug approved. They were still in the development stage and people are looking at drug approvals. But there's so much that happens before the drug approval process that's so important in drug development. You have to have these meetings along the way to figure out to get clarity to figure out how can we design trials, especially for a disease that you don't have any regulatory precedent for. And all of these meetings may seem small, you know, individually, but they are important for drug development. And if they get messed up, they can severely impact the trajectory of a drug and the company. And another aspect of the story is like how severely these disruptions affect small biotechs in particular. Yeah, that's a good point. Because KsR is it's like many other small biotechs. They said that they operate from one fan and it's into another. They don't have enough cash to be able to weather through a canceled meeting like this. They say, so it's very disruptive and it's, you know, disproportionately affecting the small biotechs that really just don't have the cash. All right, here's the time to plug. If you have a story, listeners of how your interactions with the FDA have changed over the last couple of years, reach out to us, reach out to stat. And should we wrap it up a line with some news out of the trade group, pharma? Yeah, so we learned this week that longtime chief executive Steve Gu-Bull is stepping down from the organization after a decade helping to steer healthcare policy. He'll remain in his position until a new leader is found. It will be interesting to see where pharma goes from here. This is, I mean, to this very point that we're talking about with KsR and more broadly in the drug industry, there is a lot of work to be done for these trade groups, these industry advocacy groups in this new administration. Yeah, we've got FDA. We've now got the overhang of potential tariffs. There's going to be a lot for whoever the new head is to navigate. Is it possible to fix a broken gene by breaking it just a little bit more? It's a controversial idea called exonskipping that's floated around the drug industry for the last few decades, particularly as a way to treat Dushan muscular dystrophy. Data from a startup that was recently acquired by Novartis is giving credence to the exonskipping approach. That's the crux of our colleague Jason Masse, latest article, which he joins us to discuss. Jason, welcome back. Thanks so much for having me. Jason, can you briefly explain to us what exonskipping drugs are? I know it's complicated. Let me try my best here. Most patients with Dushan muscular dystrophy have a kind of mutation that's known as a frame shift mutation. Basically, this happens when there is often when there is a stretch of the genetic code that is missing. The problem, at least in most cases of DMD, is not that that stretch of code is essential, but that it breaks it interrupts what's known as the reading frame. The sort of three by three by three letter cadence that the cell reads in order to know what proteins, or what amino acids to put in order to build the protein. The cell goes three letters at a time. It always goes three at a time. There's no punctuation, there are no spaces, there's no periods. And so if you are missing, say four letters or one letter, or basically any letter, any combination that is not a multiple of three, I am in then sometimes depending on where this deletion
is you will, uh, your code that's supposed to build this orderly structured protein will become basically nonsense because every single three-letter combo, every single kind of genetic word here will be thrown off after it. And what X-Line's skipping does is that scientists really realize that you can, even if you can't fix a replace that missing part of the gene or respel it or whatever the hell, what you can do sometimes is you can block another part of the gene. And depending on where the relation is and where else you block, you can restore that three-letter cadence. And so there, you'll have a smaller gene, but the cell will still be able to read it from start to finish and build some kind of smaller but still functional or, or mostly functional protein. I hope that was vaguely coherent and understandable. Yeah, so what you're saying is that like if you have, um, if you're missing two parts of the gene, the idea is that to treat it, you get rid of a third part, you know, you get rid of another one. And you get back on that three by three by three by three pattern essentially. Yes, exactly, exactly. Okay. Yeah, you, you're not going to part of the genes that you can, even if you have less of the whole gene, you still have something that the cell can read from start to finish and can put together in some functional way. It's like for, for those of us who remember CDs, if your CD was scratched in a certain part, you're just like, well, we're going to skip over that track because it always gets messed up when I play it. So we're just going to skip. Exactly. That's it. Beautiful. Uh, these drugs have had a troubled past though. As you say in this story, they've sparked a bit of a civil war inside of the FDA. Describe what's been so controversial about them? Yeah. So basically, I mean, this idea emerged in the early 90s. And by the end of the 90s and the early 2000s, it had become a leading idea for how you want treats this terrible and deadly condition in part because so many other other approaches either didn't seem feasible or had in quite worked out. And there's also excitement. There's this amazing lab work that shows that this is possible. There's some really early promising studies where you inject patients directly into their muscles and just see, you know, what activity you get in this little part of the leg or whatever. Um, and there's great mouse work. The issue that that happened was that when you tried to give this drug and there were two major candidates and two major companies that did this, when you tried to give this drug systemically so that it went throughout the entire body, it didn't actually enter muscle cells at a high level. And as a result, although you saw some effect, it was a very, very nominal amount of distrafan, which is the key protein here production, something in the range of 1% of what a healthy person makes are possibly even, even significantly less than that. The methods here to measure are complicated. And so there was a big fight at the FDA where basically advocates and companies were saying, look, even this really nominal amount is would be beneficial because we know it's the cause of the disease and we know that like having more will be helpful. And the FDA was saying, look, this is such a nominal amount and so small that we have no idea whether or not this is actually going to slow this disease or not. And you know, treated so few patients in trials. And so there was a big, a big fight that lasted, you know, a couple of years and resulted ultimately in a few of these drugs being approved over the objections of staffers. And those were made by Srepta. Yes, those approved drugs were made by Srepta Therapeutics. There were two different companies that had come before the FDA. One was rejected in part because of safety issues. Srepta's drugs seemed safe, even if it like only worked nominally and so. Srepta got the approval and then subsequently was able to get two, two similar drugs approved based off of similar evidence. Okay. So as you said, this old generation of treatments were not really able to get into muscle. What about this new wave of treatments that you write about in your story? Yeah. So I mean, after that first approval in 2016, a few different things happened. One Srepta got different versions of the same drug approved for other mutations basically. And a bunch of folks started working on, between therapy that seemed very exciting. And then there were some scientists, both that Srepta and elsewhere, that kept working on figuring out new ways of getting this into muscle. Like we know this works in a cell. How do we make sure that it actually works in humans? How do we get this into into muscle? And there were a variety of strategies that were tried. If you want to either put these drugs in viruses to get into the right cell, people wanted to tack on peptides to this. And really what ended up being the most promising strategies were either tying them to an antibody that drives them to this one receptor that is present on much of the body, but it's retweeted to your present on muscle cells, are quite possibly tweaking the chemistry in such a way that they, for whatever reason, the scientists don't fully understand, slide much more easily into muscle. Jason, I want to circle back to the legacy of Srepta and that controversial decision about a decade ago to approve Srepta's first drug, which has continued to raise questions every time that Srepta has had a new drug approved. In that case, the patient advocacy groups were such a huge part of that story. So Jason, you really focused the article on a patient named Hawkin and his mother, Deborah, who are behind this organization called Cure Duchenne, which is a patient advocacy group. And patient advocacy groups, particularly in the Duchenne-Mustular District of the community, have a bit of a mixed reputation. There are those who think that they push too hard to get Srepta's drug approved nearly a decade ago. And I wonder with this new generation of exonskipping drugs, which has been this debated science, are we at risk of kind of history repeating itself and these drugs being pushed to approval because patients want them? I mean, I think I didn't really ask people directly, like do you think 2016 was a, that the FDA's move in 2016 was a, was still a good move. But I think people advocates would still stand by the work they did there. And the effect, however small, that that drug has had, I don't think we're likely to see something similar again at the FDA when a vidity, which now, you know, on by Novartis, goes up for approval. The key thing there is that the levels of district that are being produced are so much higher. And the precedent has sort of art, it must have, much, much smaller amounts. Lead to efficacy, that much, much more amounts are grounds for approval that I don't think we're going to see the same level of controversy around this. There's also some really compelling functional data that is largely single arm. So you know, take it for what it is. But some pretty compelling functional data, including from Hawking himself, that suggests this drug is really having a benefit that older drugs were not. And so I don't expect the same battle. Is it possible? Yes, I don't know if I would find that as a mistake. I don't, I don't really want to weigh in one way or the other on that. But is it possible? Yes, we have a new leadership FDA. There's been quite a bit of a turnover as any one who's listened to this podcast will know. But I don't, I don't know if we're going to see the same, the same battle that one saw a decade ago. Jason, this is just a, you know, question from my money side of things here at stat. What do you think it is about whether it's a Vity's Duchenne drug or something else it's doing that made it worth $12 billion to novartus? Because as you note in the story, what a Vity's doing, they're focusing on a subset of Duchenne patients. This is a, you know, we're talking like hundreds of patients. They will probably be able to charge a lot of money for this drug if it's approved. But that still is only so much revenue that this isn't, you know, a kind of universal blockbuster drug in my assessment. Yeah, no, it's a great question. It is for this particular drug, which has known the most striking results is for a very small subset of patients around 900 in the US out of roughly 15,000 in the estimates vary. And they're both to have a mild disease and are for whatever reason, it seemed to be the most amenable of any patients to this type of scientific approach. Is the Vity's going to make money off of this drug? Yes, are they going to make enough money to be worth $12 billion off of this drug? I am not an actuary. I don't work in Vity. I assume the answer is no. The thing that they really found compelling in this drug or inability is that they thought that this drug and the data that they had generated off of these, the small group of patients. They suggested that they had found a way more broadly of unlocking muscle and of getting drugs to muscle to have an impact across
a number of different diseases. And so that can look like applying the same tech to other mutations in DMD and sort of expanding the franchise streptom makes currently somewhere in the neighborhood of $1 billion a year off of their exonskipping drugs. More potentially lucrative. There's two conditions, DM1 and FSHD, that affect upwards of 50,000 people collectively in the US. And if you can get a drug for that, and there's a lot of companies that are currently racing to do it, so Novartis is not by itself out there. They do not have a clear lane to seize that market or that patient population. But if you can get a drug for that, then you have something that is very, very lucrative. And so I think that is sort of what they saw. They saw this particular group of mutations, this particular group of patients, and the effect that this drug was having as a broader turnkey into muscle diseases writ large. - Well, Jason, thank you so much for joining us on the podcast. - Thank you guys, we'll appreciate it. (soft music) - That does it for another episode of The Read Out Loud. - Thank you to Highest and Pampanato for producing this week's episode. - Our senior producer, Isalisa Ambrose, our executive producer is Rick Burke, and our theme music is by Brian Joel. - We'd love to hear from you. Tell us what you like about this week's episode, what you didn't like, and who you think should be the next head of Pharma. You can do all that by sending us an email at
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