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Hey there. This is Matthew Herper. It was a little chillier in San Francisco this morning, and you can feel many JPM attendees dragging a bit from trying to pack a month into a day. It doesn’t help that, a day after J&J, Eli Lilly, and GSK all announced deals that gave some observers hope of a resurgence in M&A, Lilly, the mightiest drug company in the land — or at least the biggest by market cap — announced an earnings miss. But we’re all still here, and we have an exclusive podcast interview with Lilly CEO Dave Ricks at the bottom of this newsletter. Stay tuned.
A biotech legend’s advice
Joe Edelman, a billionaire hedge fund manager, sat down with STAT’s Adam Feuerstein at our in-person event on Monday evening with a bit of a hard lesson: “No one ever got really rich shorting stocks.”
Edelman cited the example of Cassava Sciences, the Alzheimer’s company whose former executives have been charged by the Securities and Exchange Commission with making misleading statements. The company’s bad news kept coming, but the valuation didn’t shrink, Edelman said. Part of the problem is that timing a short sale, where investors bet a stock will go down, is just hard.
When Edelman told stories of his favorite trades, they were longs: trades where an important new medicine drove shares way up. Read more here.
Vets of the first Trump administration game out the second
Also at our event, held before a packed audience in a grand, converted banking hall, I was lucky to sit down with Scott Gottlieb, who ran the Food and Drug Administration in the last Trump administration, and Seema Verma, who ran the Centers for Medicare and Medicaid Services.
Gottlieb has publicly opposed the nomination of Robert F. Kennedy Jr. as President-elect Trump’s health secretary because he believes empowering Kennedy, who has been critical of vaccines, would endanger children. He laid out a recipe for how RFK Jr. could do harm. But Gottlieb and Verma also laid out a series of reforms that could play out in the incoming administration — including some involving pharmacy benefit managers and the Medicare Advantage program.
The pair also discussed the overregulation of AI and counseled the next heads of FDA and CMS to be humble and work with career government officials. Read more about the panel.
Inside the Pfizer machine
Pfizer CEO Albert Bourla thinks you’re underestimating his company. “Pfizer is the same company that saved the world two years ago because we had operational excellence and scientific processes,” Bourla told a group of journalists at a lunch Monday.
Bourla opined on what a Trump administration could mean — he recognizes what others have described as the threat RFK Jr. might pose to vaccine confidence and the FDA, but thinks the potential positives outweigh the negatives. He also talked up Pfizer’s experimental cancer medicines, and said that both political parties are awakened to the threat China poses to the U.S. pharmaceutical industry.
New details on what may have happened with Oxbryta
Last year, Pfizer recalled Oxbryta, a drug for sickle cell anemia, saying there was a high risk of severe safety events, including deaths, in patients in clinical trials.
Some of those studies were in sub-Saharan Africa, and, at that same lunch, Chris Boshoff, Pfizer’s new chief scientific officer, hypothesized that increased vulnerability to malaria might play a role in what went wrong. He said that the analysis of the data, which are still not public, would be completed soon, and even seemed to suggest Oxbryta could return to the market. Bourla squashed that speculation, urging caution.
Some JPM partying, with ambivalence
All the usual swank JPM parties raged Monday night, complete with expensive drinks and arguments about science and jockeying for position in research and industry. But the tone of the sometimes boozy, spirited arguments — at least as judged by this correspondent — wasn’t really optimistic or pessimistic: It was neutral and muted.
Too many of the most important decisions for the industry are happening not in San Francisco, but in Washington, D.C., and regardless of whether JPMers seemed to be putting a positive or negative spin on what is playing out there, they mostly seemed to be just reveling while they wait to find out what will happen next.
Health care developments back east
Speaking of things happening in Washington: The incoming Trump administration seems to have lined up an appointee for an important CMS role, the Federal Trade Commission took issue once again with PBMs, and the HHS Office of Inspector General cited the accelerated approvals of Sarepta’s Exondys 51, the recalled preterm birth drug Makena, and Biogen’s Aduhelm as problematic.
Eli Lilly misses for 2024
Eli Lilly expects sales in the fourth quarter of last year to miss forecasts, driven by lower-than-expected sales of its diabetes and obesity drugs Mounjaro and Zepbound. The pharma giant expects to have brought in $13.5 billion in revenue, less than the $13.9 billion that analysts polled by FactSet had forecast. Mounjaro and Zepbound are expected to have brought in $3.5 billion and $1.9 billion, also less than expected.
And speaking of Eli Lilly…
Lilly CEO Dave Ricks spoke about the company’s earnings miss at a live recording of STAT’s biotech podcast, “The Readout Loud,” just a short time ago. He did not sound shaken. “We’re in pretty early days here, we’re just lapping year one on Zepbound, and a lot of things are happening that we haven’t seen at this scale or growth rate before so the forecasters are having a hard time,” he said. He noted that many factors, including issues with the inventory held by pharmacy wholesalers, are affecting the company’s sales.
The GLP-1 business, he said, is annualizing at $25 billion a year, growing at 60%. “We’ve never seen a medicine like this,” Ricks said.
“I don’t know any company our size in this sector, or many others, growing at that rate,” he said. Still, he emphasized, “It’s our job to give reasonable guidance in the Street and then try to hit that and we earnestly were trying to do that.”
Give the full conversation a listen here.
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