Epoch 52: 2023 in Review and Projections for 2024

Year in Review and a Look Ahead

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Hello Avatar! Welcome back for another week of biotech analysis. This week we are going to revisit the past year as well as look ahead and make some bold predictions for 2024.  

As a reminder our current lineup has expanded to 4-5 editions per week:

• Mondays: BioBucks: Stock Analysis & Biotech Catalysts

• Wednesdays: CRISPR Corner: Monthly gene editing news (monthly)

• Thursdays: Insiders Track: Public & Private Biotech Markets

• Fridays: Sweat Equity: Your Weekly Biotech Fix

• Sundays: Building Biotech: Strategic Talks

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2023 IN REVIEW: THE 10 MOST IMPACTFUL EVENTS FROM BIOPHARMA

To begin the discussion we will look back at 2023 and explore the biggest themes and headlines from the past year. The themes/events will be bucketed into the following categories:

• Scientific breakthroughs

• Industry trends

• Regulatory and policy changes

• Unexpected events

Drop a note in the comments if you feel we missed anything!

Scientific Breakthroughs:

#1 GLP-1s emerge as potential $100B/year obesity treatments: Clinical trials for GLP-1 receptor agonists like Eli Lilly's tirzepatide and Novo Nordisk's semaglutide demonstrated remarkable efficacy in weight loss, potentially revolutionizing obesity treatment and reaching a blockbuster market size. This breakthrough could not only improve the lives of millions struggling with obesity but also generate significant economic benefits for the healthcare industry.  The story recently has shifted into the oral GLP space with readouts from $PFE $GPCR and $ALT  - you can access our full analysis here.

#2 Gene editing advances continue with successful in vivo trials: CRISPR gene editing made a splash with the HISTORIC approval of the first product from this space from CRISPR Therapeutics and Vertex for treating beta-thalassemia and sickle cell disease, paving the way for future clinical applications of this transformative technology.  For those of you that looked to trade around this event we had a full write up in October which can be accessed here.

#3 Alzheimer's research: While initial results for some new Alzheimer's drugs proved disappointing, Eli Lilly's donanemab trial success, despite its controversy, revived hope for the field and sparked renewed research efforts. Biogen also had their AD readout this year around LEQEMBI - for those you that looked to take a position we had a full analysis which can be seen  here.

Industry Trends:

#4 M&A resurgence signals renewed confidence in promising drug candidates: After a slow 2022, mergers and acquisitions returned in force in 2023. Deals like Takeda acquiring Nimbus Therapeutics for its anti-inflammatory drug showcased a return to M&A activity, indicating confidence in the potential of innovative therapies and potentially shaping the future landscape of the industry.  The largest M&A of the year goes to the $PFE acquisition of $SGEN, with rumors swirling around $SGEN early in the year (allegedly $MRK) we had you covered - our write up can be accessed here.

#5 Focus on affordability and access remains a pressing concern: Rising drug costs and unequal access to essential medicines continued to be major challenges in 2023. Initiatives like Gilead's HIV patent donation and Pfizer's low-cost insulin for developing countries addressed these concerns to some extent, but the quest for broader affordability and equitable access remains ongoing.  For those of you passionate about drug pricing issues we had an excellent write up on the topic in April which can be accessed here.

#6 AI adoption in drug discovery accelerates innovation: Artificial intelligence continues to gain traction in biopharma, with companies like DeepMind collaborating with pharma giants to streamline drug discovery processes, personalized medicine, and potentially revolutionize the way new drugs are developed.  This being one of the hottest topics in drug discovery we had numerous write-ups throughout the year.  One of our favorites was a forward looking reflection of the role of AI in 2050.  Those interested to have a read can access the newsletter here.

Regulatory and Policy Changes:

#7 US Inflation Reduction Act's Medicare drug price negotiation provision: The act's inclusion of this provision signaled a potential shift in US drug pricing policy, raising concerns and sparking debate within the industry about its potential impact on drug development, innovation, and affordability.   If you follow us, you know this is a topic we cannot resist to comment on.  It is clearly a massive negative to the industry and the full effects are not well understood.  Our most recent writeup on the topic was in October, in that newsletter you can find links to our numerous other write-ups on the topic - see here.

#8 EU Medicines Agency reforms aim for streamlined approvals and enhanced transparency: Evolving regulations in Europe focused on streamlining drug approvals and enhancing transparency, potentially impacting global drug development strategies and ensuring stricter safety and efficacy standards.  We had an excellent thread covering this on X which can be accessed here.

#9 Biden administration's recent rhetoric on march-in rights: The Biden administration in December 2023 released a draft framework outlining its plans to utilize its "march-in" authorities under the Bayh-Dole Act. This act allows the government to intervene if drug prices developed with federal funding are deemed unreasonably high or the drug is unavailable to the public, potentially forcing companies to license their inventions to third parties at lower costs. This move could significantly impact drug pricing, access, and the balance of power between the government and pharmaceutical companies. Our recent Thursday update went into detail on this, sharing disturbing commentary from many of the leading voices in biopharma - you can access this newsletter here.

Unexpected Events:

#10 Silicon Valley Bank (SVB) collapse disrupts financing for smaller biopharma startups: The bank's blowup in March 2023 significantly impacted smaller biopharma companies that relied on its specialized services and deep understanding of the industry. This led to funding disruptions, increased risk aversion among investors, and a push for diversification of financial partnerships for many startups in the biopharma landscape.   What a crazy weekend this was!  We had you covered of course with a few write-ups on the topic which can be accessed here, here, here and here.

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2024 PROJECTIONS

Now to the fun stuff -the forward looking. Literally everyone is making 2024 projections!  Rather than re-write the book, we will provide a few broad views and then share some specifics from Leerink, Mizuho, Guggenheim, and JPM.

While 2023 painted a subdued (if not painful) picture for the biotech sector, 2024 signals a potential resurgence. Key data and regulatory catalysts, a resurgence of M&A activity, and a favorable macro environment fuel this optimism for beaten down investors.