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John S. Linehan is an attorney in the Health Care and Life Sciences practice group of Epstein Becker Green. He can be reached at jlinehan@ebglaw.com

Pharma manufacturers may need to upgrade their coupon programs to accommodate for the emergence of copay accumulators and related benefit mechanisms.

Coupon-Program Pivot: Meeting New Legal, Operational Hurdles

Taking a closer look at the evolving legal treatment of coupons and copay accumulators. 

Drug Manufacturers May Need to Upgrade their Coupon Programs to Meet New Legal and Operational Challenges

Significant uncertainty surrounds the future of drug pricing reform, causing industry observers to take a closer look at the policy views of the president-elect, state and Congressional lawmakers, and the general public.

Politics, Populism, and the Future of Prescription Drug Pricing Reform

The practice’s emerging-if improbable-cost-saving potential.

Drug Compounding: A Cause and Cure for High Drug Prices?

Just as insurers and regulators have sought to tamp down compounding costs and utilization, observers have begun to acknowledge that the practice may serve as an antidote to spiraling drug prices. John S. Linehan reports.

Drug Compounding: Cause and Cure for High Drug Prices?

AbbVie Pedro Valencia ADCs

PE: How is AbbVie using novel cancer biomarkers to develop potential first-in-class ADCs for the treatment of advanced solid tumors?

We're constantly looking for biomarkers that can help us to do two key things. The first is to tackle cancer cells. and spare normal cells. We’re looking for specific antigens that are over-expressing tumor cells, and you see limited expression in normal cells. We want to make sure that target that’s over-expressed is critical for the survival of the cancer cell. Once you block it, you can actually drive a cancer cell death. That’s what we're looking for. In that perspective, c-Met is one of those biomarkers that is over expressing multiple tumor types such as lung, colorectal, gastric, and other GA tumors. We as an industry have tried to tackle c-Met in the past but have been unsuccessful. It would actually be successful to tackle what we call met, which is a gene inside the cell.

There’s this thing called met amplification, where the cancer cell produces multiple copies of the gene, and around 30% of patients have it. We can actually tackle that with small molecules. But once the gene becomes a protein and gets over-expressed in the cell, that over-expression is something we haven’t been able to target. For example, we know that on lung cancer, c-Met over-expression is about 25% to 50% in colorectal cancer, and it could be anywhere from 30% to 70% depending how you measure it, so it’s quite prevalent.

With ADCs, we’re trying to tackle c-Met over-expression on the surface of cancer cells. That was novel, and we can do it through ADCs. 706 has a target called SEZ6, and it’s a target that is over expressed in neuroendocrine cells or neuroendocrine neoplasms. When you think about it, multiple tumor types kind of have a subset of cells that are neuroendocrine driven. Small cell lung cancer is one of the few that has everything driven by neuroendocrine cells. The beauty of SEZ6 is over-expressing those cells and limited expression in normal cells. So, we can tackle it with an ADC and drive the results that we're seeing today.

PE: ADCs have redefined the treatment of cancer in recent years. Can you please discuss the promise of this emerging class and what the future may hold?

At the end of the day, ADCs work like a trojan horse. You have a good antibody that cancer cells are happy to receive, but once you hook into the cancer cell receptor, you deliver the payload, which is pretty much chemotherapy. It’s actually a highly potent version of the regular chemotherapy cancer patients are given on a regular basis. So, from that perspective, our goal is to replace chemotherapy. Our grand goal with ADCs is to replace good old, decades old chemotherapy that is really toxic for some patients. That’s how we see the redefinition of cancer treatment in the future with ADCs. So, what do we see in the future? Well, if you think about it, chemotherapy is being given in combination with other agents. In the future, we see ADCs being given in combination with chemotherapy. There will be one with other agents such as immuno-oncology agents. So, if you combine the ADC and the PD1s, you can start seeing that synergy come together and kind of start really dreaming about cures for the patients. All in all, we're super excited about ADCs replacing chemotherapy. 

In an interview with Pharm Exec Associate Editor Don Tracy, Pedro Valencia, VP, Solid Tumor Pipeline Strategy & Execution, AbbVie, discusses using novel cancer biomarkers to develop potential first-in-class antibody drug conjugates (ADCs) and the promise that they offer. 

Utilizing Biomarkers to Develop First-in-Class Antibody Drug Conjugates to Treat Advanced Solid Tumors

The pharmaceutical industry has seemingly fully embraced artificial intelligence. While there are many companies out there that are simply looking to incorporate existing AI systems into their operations, some of the most exciting developments have been coming from organizations that are building their own AI platforms. The technology is incredibly useful in a variety of ways, which means that AI platforms built from the ground up can be designed to perform specific tasks very well.

This is a particularly valuable channel for pharma and biotech companies that are focused on developing treatments for individual conditions or diseases.

Ann Beliën, PhD, is the founder and CEO of Rejuvenate Biomed, a biotech focused on developing treatments for age-related conditions. The company’s approach to this is developing combination medications of existing drugs so that they can be applied to complex diseases and conditions.

“I decided to establish Rejuvenate Biomed after a very personal experience dealing with my father who was aging really fast,” says Beliën. “Each time when we were trying to help him with one age-related disease, another would pop up. I didn’t understand what happened, why this cascade of health problems seemed to have been initiated. As a researcher, I wanted to understand this and learned about the hallmarks of aging that describe the biology of aging.”

According to Beliën, no medication to date had been developed with this information as a base.

“My parents taught me that if you want to make a difference, you don’t complain that other people are not doing it. You do it yourself,” she says. “So, I got all of my courage together and started Rejuvenate Biomed with the aim to make a difference in age-related diseases. I figured out how we could do that in a different way than I had been doing drug development in the past—by taking into account the knowledge of the biology of aging.”

In order to achieve these goals, Rejuvenate has developed two integrated AI-driven and 

platforms. This technology is used to explore data and find ways to treat multiple conditions by identifying unique combinations of medications that impact complex dependent processes, something which is impossible for the human brain to do, explains Beliën.

“AI was absolutely instrumental to allow us to do what we do today,” she says. “We only develop combination drugs, and this is because of the complexity of the diseases that we deal with. The biology of aging has very neatly laid out the hallmarks of aging. Typically, there are 12 general processes (called hallmarks) where you see that damage is occurring while aging. Within these processes, there are a lot of pathways and genes that are being dysregulated. What we want to do is have combination drugs that can have an impact on multiple pathways and genes simultaneously.”

Beliën adds that it is important to ensure these combinations are safe for different patient populations; therefore, there is the need to work with compounds that have human safety data already available.

“You only have human safety data for compounds that have been used a lot in humans,” she says. “As a result, we only use products that have been around for quite a while, for which we know that they are safe for a chronic use in the older patients. The biological knowledge that you have about these compounds is very broad, so to map that knowledge to all the biological knowledge that we have on the hallmarks of aging, creates a multi-dimensional space that we cannot decipher with our normal brain.”

According to Beliën, the process of developing the AI platforms initially focused mostly on data collection, digestion, and linking. As the amount of data in their library grew, Rejuvenate started to incorporate machine learning into the platform to study the interconnection at the next level of interaction. Eventually, AI was added so that it could identify multi-dimensional connections between data, analyze them, detect previously unrevealed patterns, and then provide users with an output that they can comprehend.

“It’s a lot of different technologies that we bring together into the system so that it can make connections that we would typically not see by traditional means of looking at the information,” she says. “The system can now give us a deep understanding of the information and predict which compounds can have an impact on multiple hallmarks simultaneously. It can also help us to predict for which indication certain combinations are best positioned, and that’s how we identified, amongst others, our lead compounds.”

Beliën sees these platforms becoming much common in the coming years. The reason why is simple: the pharma industry is built on data and these platforms can make utilizing that data much easier.

“Everybody needs to have AI tools,” she says. “There’s so much information out there and the complexity of the information will never allow us to identify new patterns like machine learning and AI can do. Of course, as human beings, we will need to do the validation of the output and the interpretation of all the information that comes out of the AI. So, we must understand where we can use AI-tools and, just as importantly, where we cannot use them.”

To distinguish between the two, Beliën stresses the importance of leveraging people that have strong biological knowledge and the scientific background to interpret and validate these tools when used in the pharmaceutical setting. Those individuals can include data computational biologists, data engineers, and machine learning experts.

“We also need people to make any additional adjustments to the algorithms that are being used in that setting, because the system will basically do what you ask it to do,” says Beliën. “You can make it smarter to learn from its own analysis by telling the system what is correct and what is incorrect. There’s always the human factor that plays a role, but having this ability—it’s tremendous. Now you can search rooms full of data in seconds, where before you could only do smaller things like look at publications to find information.”

Platforms like these can be used to identify new potential targets within diseases, to expand insights in diseases, and to discover new indications for existing molecules. According to Beliën, the technology is equally capable across all these processes. This is due to the fact that while the technology can make predictions, it’s ultimately on the people using it to make the actual determinations on which questions need to be answered.

“The way we have set up our system is to help us identify new combinations for age-related diseases, but we also use it to identify new targets, pathways within disease, and unidentified interactions between compounds, which can lead to identification of unique characteristics,” she explains.

That includes using AI to prioritize an organization’s own individual portfolio. “Imagine you have five different compounds for one target,” says Beliën. “You create data in the lab, you put that back in your system, and now your system can tell you which of these five has the biggest potential to impact the target. It’s really a multi-applicable tool: depending on the need, a human will interrogate broadly the system and refine the questions to get to a validated answer. So it’s not a standalone tool where you just ask one question and it gives you the definitive answer. It’s like an interaction between human beings and AI, enabling technologies and validation in labs.”

By using these platforms, Rejuvenate is able to look at information and find patterns in ways that, Beliën says, the human brain would never be able to do on its own. By combining these new insights with knowledge that researchers already have, the solutions are starting to become predictive, she adds.

“What I envision is that in the future, you will have a personalized approach. This will allow you to understand what is happening in your body when you grow older,” says Beliën. “It is important to understand your personal health data and make observations of what goes wrong in your case, so that you can preemptively get on the right medication or prescription drugs that will prevent you or your organs from deteriorating.”

Ann Beliën, PhD, founder and CEO of Rejuvenate Biomed, discusses how AI is being used to find new ways to treat age-related conditions.

Drilling in on Disease Hallmarks: New Tricks to Solve Age-Old Problems

The 2020s have been a tumultuous decade so far, so it’s a good time for companies to look back at the previous five years and see what lessons can be learned to improve working environments and build stronger processes. Every industry has been rocked from world-shattering events, such as the COVID-19 pandemic, while also having to adapt to new technologies, particularly around artificial intelligence (AI). As a result, the ways that employees and employers approach work has changed, and not always in ways that everyone is comfortable with.

One of the major challenges from this decade has been the rise of remote work. During the pandemic, companies were forced to incorporate this practice in order to keep employees safe. Since then, many organizations decided to keep the remote work structure in place, while others are pushing to bring employees back to the office.

I recently spoke with Renee Gala, president and chief operating officer of Jazz Pharmaceuticals, about her transition from chief financial officer (CFO) to her new role. For her, the impact of remote work is a big part of her story at Jazz.

“I joined the company in 2020,” says Gala. “It just so happened that my very first day was the day that the entire company went fully remote for COVID. That seems like ages ago now, but I was part of the very first class then of new Jazz trainees, where we were trying to adjust to training and onboarding people to join the company remotely. It was a really interesting way to join as the company’s new CFO.”

Aside from remote work, recent years have also seen a rise in the importance of diversity, equity, and inclusion (DE&I) and a stronger view on creating a positive company culture. For Gala, this and remote work have played a huge role in the way that she approaches her leadership style.

“One of the things about Jazz that I think is remarkable is that when Jazz was formed over 20 years ago, it was founded based on being focused on patients—putting patients first,” she says. “This is not typically the way most biotech companies are formed, which is you start with a compound or a product. This was formed based on putting patients first and being a great place to work, and those two foundational elements of the company’s formation have stayed with us.

“We have stayed true to those two elements of our values,” continues Gala. “With respect to being a great place to work, we strongly believe that valuing diversity, equity, inclusion, and belonging is foundational to being a great place to work.”

Further, she explains, that the company is evolving to become more of a remote-first workforce. However, this doesn’t mean that Gala and other senior leaders don’t focus closely on making sure that everyone who works at Jazz feels included.

“While we are remote first, we do take the opportunity to purposefully and with intention come together with our employees as a matrix organization and in different locations to ensure that we maintain that underlying trust and connection,” she says. “If you look at our leadership team, it’s more than 50% female. We have a well-diversified board of directors, and that extends down to multiple layers within the organization, in terms of what you see as the composition of our employees. That is based on having a commitment to diversity and the underlying high-performance behaviors that are built on a foundation of trust. That includes constructive challenge, transparency, and a speak-up culture. We do believe that is incredibly important to ultimately getting to better results as a company.”

Biopharma organizations, today, must also navigate the increased disruption from AI—the pluses and minuses.

“We’re an industry that does face several challenges in terms of the importance of innovating for patients,” says Gala. “We’re also an industry that has many opportunities, such as the opportunities we have to incorporate artificial intelligence into research, development, and how we operate on a daily basis. Anything that we can do to speed up the rate of innovation for patients to be able to ensure we are as effective and efficient in delivering medicines to patients as possible.”

In balancing the adoption of AI and remote work, and strengthening practices in DE&I, not every company is going to have the same responses to each, nor should they. Often the best approach, according to Gala, is to simply hear the needs and desires and not try to force solutions from a top-down approach.

Mike Hollan is Pharm Exec’s Assistant Managing Editor. He can be reached at mhollan@mjhlifesciences.com.

Decisions and strategies related to remote work, AI, and DE&I are especially evolving.

Navigating the Current Landscape for Pharma Leaders

Jeffrey Bernstein is the director of cybersecurity and data privacy for Kaufman Rossin’s risk advisory services. He recently spoke with Pharmaceutical Executive about the various risks pharma companies are facing and the ways they can protect themselves.

Pharmaceutical Executive: What are the main mistakes that healthcare companies make when building their software?


 One of the most significant errors is neglecting security-by-design and privacy-by-design principles. These approaches ensure that security and privacy are integral to the software development process. The 2017 Equifax breach is a cautionary example of the consequences of not embedding security into design, where a failure to address a known vulnerability led to the exposure of sensitive data of 147 million individuals. Systems need to be thoroughly tested not only for compliance but for actual security–using penetration, red team and purple teams to test security, and including effective bug-bounty programs to prioritize finding and eliminating or mitigating possible threats and data leaks. It is also critical to perform secure code reviews and to review code modules for functionality updates to any specific application prior to software being put into live production situations. At each step of the design, programmers must also consider whether access to data sets are necessary, and how such access may impact not only patient care, but patient privacy.

Healthcare organizations often fail to map data flows accurately, leaving gaps in understanding how and where sensitive information is stored and transmitted. This oversight can lead to vulnerabilities, flaws, and other deficiencies. You cannot protect data if you do not know where that data is. Moreover, pharmaceutical and healthcare entities rely on dozens if not hundreds of third-party applications, vendors, suppliers, hardware developers, etc., through which sensitive data flows. Robotic and tele-medicine, EHR’s and increasing reliance on predictive systems which use artificial intelligence (including large data sets) only complicate the problem.

A significant mistake is not thoroughly understanding and controlling third-party access to systems and data. Many recent healthcare breaches have been attributed to phishing attacks on third-party vendors, highlighting the risks of insufficient oversight. You are only as secure as your weakest partner that has access to your data. While healthcare entities may be diligent in requiring third parties to execute business associate agreement (BAA’s), they frequently do not police or enforce the terms of the BAA’s. Moreover, most entities simply do not know who has access to data or systems or maintain an adequate list of all of their vendors–from insurers, accountants, regulators, to HVAC providers, cleaners, and food services. Anyone who touches the network or data must have adequate security and auditability.

Many pharmaceutical and healthcare organizations fail to require regular security audits for third-party vendors, partners, and consultants. This often introduces vulnerabilities and other exposure points. Many security compromises are the result of a third-party vendor’s compromised access. This underscores the importance of enforcing strict security audits of these sources. Many providers take a set-it-and-forget-it approach to vendor management. True security requires constant vigilance.

While AI and automation can enhance operational efficiency, over-reliance without proper oversight can lead to significant risks. For instance, IBM Watson faced challenges in cancer diagnosis accuracy, demonstrating the potential pitfalls of over-relying on AI in healthcare. The same is true for automated billing systems, robotic surgery, telemedicine, remote access, and embedded software in everything from drug manufacturing equipment, oxygen delivery systems, and blood pressure monitoring devices. Modern healthcare often looks and feels less like a patient provider than an IT system that happens to deliver healthcare as a product.

Human error, often due to insufficient training, remains a leading cause of cybersecurity incidents. Most expert sources say that approximately 90% of data security compromises involved a human error. Many recent high-profile healthcare breaches involving disruption to operations highlight the importance of comprehensive cybersecurity education for all users. This challenge is exacerbated by several factors–physicians’ resistance to change, overreliance on predictive models and insurance models to determine the appropriate procedures, an understandable desire to put patient care above all other priorities (including privacy and security), and a general failure to understand the nature of the risks. When it comes to drugs and healthcare, providers often place a priority on ease of use and access. Unfortunately, ease of use and access often comes at the cost of security.

A lack of redundancy and resilience can lead to severe operational disruptions, as seen during many recent high profile pharmaceutical and healthcare compromises including several recent compromises which led to prolonged outages and impacted patient services. Recent hacks of this kind included those that targeted blood providers resulting in supply chain disruption and the activation of emergency protocols at hundreds of hospitals. One of the reasons healthcare providers are so vulnerable to ransomware attacks is the lack of truly resilient systems that back up critical data to offsite and security locations.

Offshoring critical components introduces additional risks, particularly when offshore vendors do not adhere to the same security standards as the parties that they serve. The 2020 SolarWinds breach, which affected multiple sectors (including pharmaceutical and healthcare), exemplifies the dangers of offshoring without stringent oversight. In fact, in most enterprises, IT directors may not even know the identity of the hundreds of companies upon which the entity relies for day-to-day operations.

A common issue in healthcare is the lack of clear individual accountability for cybersecurity. Many breaches from the pharmaceutical and healthcare sectors where sensitive data was exposed may be credited to the actions of a single employee. This emphasizes the importance of establishing clear accountability. This is particularly a problem where healthcare personnel have competing demands for their time and priorities. Having documented security policies and socializing them among staff can help these organizations better govern security internally.

Pharmaceutical and healthcare organizations often retain large amounts of data for extended periods, increasing the risk of breaches. This may be understandable since information that may be decades old may be relevant to diagnosis or treatment, and information relevant to family history that may be even older may similarly be relevant. As a result, healthcare providers tend to retain massive amounts of data permanently.

PE: What unique threats does the healthcare industry face when it comes to cybersecurity?


 Ransomware remains a significant threat due to the critical nature of healthcare services. Many ransomware attacks on healthcare have caused widespread disruption, demonstrating the sector’s vulnerability. Threat actors target healthcare entities for ransomware attacks because the data and availability are both time and mission critical. Lives are also at stake and therefore, they are much more willing to pay ransom to get data returned and maintain healthy operations.

Business email compromise (BEC) frauds have become a significant threat to the healthcare industry, often leading to misdirected payments and substantial financial losses. In BEC schemes, attackers typically gain access to or spoof legitimate email accounts of executives or financial personnel, using this access to deceive employees into transferring funds to fraudulent accounts. Healthcare organizations, with their complex billing processes and numerous transactions, are particularly vulnerable to these types of attacks. The consequences can be severe, as funds intended for critical operations or payments to vendors can be diverted, leading to operational disruptions, financial strain, and reputational damage. Additionally, the sensitive nature of communications in healthcare means that BEC frauds can also expose confidential patient information, compounding the impact of the breach. This highlights the importance of implementing stringent security measures on email and other communication channels, thorough verification processes for financial transactions, and regular employee training to recognize and prevent such fraudulent activities.

Insider threats are particularly challenging in healthcare, where employees often have access to vast amounts of sensitive data. Many recent publicly disclosed breaches have shown to be the result of an employee improperly accessing patient records, exemplifying this kind of risk.

The growing use of connected medical devices introduces new security challenges. The FDA’s recall of certain Medtronic insulin pumps due to cybersecurity vulnerabilities highlights the risks associated with IoT devices in healthcare.This is particularly true for robotic medicine and remote medicine (telemedicine) which permits access to sophisticated medical technology remotely. Moreover, providers may not know or have access to information about how these systems work and may inadvertently expose these systems when they place data or access online.

State-sponsored groups often target healthcare organizations for their valuable research data, particularly in areas such as drug development and disease research. The increase in cyberattacks on vaccine research facilities during the COVID-19 pandemic emphasizes the strategic importance of this data.

PE: What sort of data are hackers looking to steal?


 Personally identifiable information (PII) and protected health information are prime targets due to their value on the dark web. Many recent high-profile healthcare and hospital system breaches have resulted in the exposure of the PII and PHI of many millions of individuals, highlighting the high stakes involved in protecting this type of information. This permits threat actors to impersonate patients, access other patient accounts, commit identity fraud or identity theft, and other types of criminal fraud.

Healthcare organizations manage significant amounts of financial data, making it a target for cybercriminals. Many recent breaches of pharmaceutical and healthcare organizations have resulted in the theft and/or leakage of sensitive financial data alongside medical records and other sensitive information. This illustrates the risks involved. In addition, hackers may use this data to commit medical insurance fraud, piggybacking medical care off the insurance information gleaned from a data breach or data theft.

Hackers target medical records for their potential use in fraud and blackmail. Many recently disclosed healthcare network breaches demonstrate the importance of securing medical records. These records may be used for extortion, blackmail, research, and other fraudulent exploits.

Research data and intellectual property related to medical advancements are highly sought after by cybercriminals, especially those backed by nation-states. Hacks targeting COVID-19 vaccine research data during the pandemic demonstrates the critical importance of protecting this information.

PE: How important is it for companies to stay up to date on their cybersecurity systems?


 Staying up to date with cybersecurity systems is essential for compliance with regulations like HIPAA, GDPR, and HITECH. Failure to comply can result in severe penalties, as seen in multiple recent HIPAA settlements which followed many recent security breaches.This means not only keeping up with regulations but understanding your threat environment. As of June 2024, the U.S, Department of Health and Human Services’ Office for Civil Rights (OCR) has imposed 145 cases related to HIPAA. As mentioned within the introduction section of my response, settlements have resulted in approximately $150,000,000 being paid. This data may be found on the OCR Breah Portal which is also known as the OCR Wall of Shame.

Cyber threats are continually evolving, requiring healthcare organizations to keep their cybersecurity systems updated to defend against new threats. Many security compromises may be credited as the result of failing to apply critical security patches. AI and other cutting-edge technologies are being used by threat actors to further sophisticated attacks, including virtual impersonation of personnel, predictive attacks, and constant probes.

Healthcare data is incredibly sensitive, and maintaining up-to-date cybersecurity systems is crucial for its protection. Many recent ransomware attacks against healthcare systems compromised many millions of patient care and data records, underscoring the importance of maintaining current defenses. Patient data remains a valuable target for hackers and the results of a loss can be catastrophic.

A strong cybersecurity posture is vital for maintaining trust with patients and regulators. Many breaches have led to significant reputational damage and regulatory scrutiny. Moreover, reputational damage and losses may not be fully covered by cyber insurance policies, and may persist years or decades after a breach.

Building redundancy and resilience into healthcare systems is crucial for ensuring continuity of operations during and after a cyberattack. The Scripps Health ransomware attack in 2021 highlighted the consequences of insufficient resilience and redundancy in critical healthcare systems. For healthcare entities, it is critical that data and services remain online and available, and that there are robust and redundant backup systems.

Pharma companies are facing a higher number of incredibly destructive cyber-threats than ever before.

Digital Protection: Q&A with Jeffrey Bernstein

The biotech XBI index has broken out from a four-month narrow trading range with a deciding win for President-elect Trump, an initial rate cut of 50 basis points, and the more modest cut of 25 yesterday. The recent strength in macro data, and outlook for inflation, has investors in a wait and see mode on when/if and how much rates might fall from here.

Investors look to M&A as the most likely path to higher valuations in the sector. Lundbeck’s recently announced acquisition of Longboard for $2.5 billion is clearly a positive, but the fact is we are still well off of last year’s pace; at 10 deals over $1 billion thus far in 2024, vs. 20 last year. That said, eight of the 20 deals last year came in the fourth quarter and six of them came in December, so investors are hoping for a strong fourth quarter.

According to EY, the largest pharma companies now have a record $1.6 trillion to fund M&A and as most are approaching large patent exclusivity losses, which will create a growth gap; acquiring external innovation will be necessary to achieve targeted growth expectations.

With Trump now having decisively won the Presidential election, the biotech sector has traded up to recent highs, despite a bit of concern/uncertainty surrounding the potential for Robert F. Kennedy to play a significant role in influencing the FDA and CMS. According to an analysis by Brian Gleason, managing director at Raymond James, and his team, biotech investors are having a solid year with most crossover investors ahead 15% (in a range of down 12% to up 28%)—lagging the S&P 500, which is trading near all-time highs with a gain of 22% year-to-date.

Raymond James’ recent survey work indicates "sentiment continues to be steady with the vast majority of investors:"

More bullish on biotech vs. beginning of the year.

Believe generalist capital is either beginning to return or will return in 2025.

View the Presidential election largely as a non-event for biotech.

Believe that issues in the IPO market during the first half of 2024 were primarily related to companies going public too early.

That the shift in acquisition volume to more clinical stage companies is a function of higher quality post-POC assets and pharma wanting to acquire prior to valuations getting too rich.

Are currently most focused on rare disease and targeted oncology opportunities and less in CNS and metabolic disease.

Believe that the market has become asset -centric in terms of how biotech companies are evaluated.

The IPO market reemerged this year with positive momentum. The post Labor Day IPOs are all trading above launch price with a median performance of 25%, according to Gleason. Several more are expected before year end and it is anticipated that 2025 will be a busy year.

Capital raised so far this year remains on pace to approach record levels achieved in 2020, with 199 transactions priced with an aggregate of gross proceeds of roughly $35 billion.

A continued high level of innovation underpins the flow of capital into the sector and the positive performance.

The biotech market remains a tale of the “haves” and the ”have-nots.” According to Tim Opler, managing director, Stifel Investment Banking, the population of $1 billion-plus biotechs (“the haves”) has doubled this year, while in contrast, the population of “have-nots” with market caps of less than $100 million has fallen only slightly. The sixty-four percent of biotech companies(about 125) with market caps of less than $100 million (“micro-caps”) remain undercapitalized with less than 12 months of cash. These companies are potential merger partners for private companies seeking a public vehicle. It is encouraging that aftermarket performance of these reverse mergers has been positive—with 10 of the past 12 successfully closing on a PIPE (private investment in public equity) in excess of $40 million. Strategic reviews, restructurings, and liquidations have also become pervasive among this group, and these trends are expected to continue. 

In SMID cap, generally restructurings and cost cutting announcements are historically high, with 81 new initiatives already this year.

Barbara Ryan is Founder, Barbara Ryan Advisors, and a member of Pharm Exec's Editorial Advisory Board

The sector's XBI is up 15% year-to-date; rate cuts, election outcome, and M&A are viewed as tailwinds.

Biotech Investor Sentiment Climbing Steadily, with Growing Enthusiasm Heading into 2025

AstraZeneca's Shubh Goel, head of immuno-oncology, gastrointestinal tumors, US oncology business unit, AstraZeneca, discusses:

Results of the NIAGARA trial in bladder cancer

The significance of the five-year overall survival data from the HIMALAYA trial, specifically the long-term efficacy of the STRIDE regimen for unresectable liver cancer

In this episode of the Pharmaceutical Executive podcast, Shubh Goel, head of immuno-oncology, gastrointestinal tumors, US oncology business unit, AstraZeneca, discusses the findings of the NIAGARA trial in bladder cancer and the significance of the five-year overall survival data from the HIMALAYA trial, particularly the long-term efficacy of the STRIDE regimen for unresectable liver cancer. 

John S. Linehan

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