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Bristol-Myers Squibb Co.’s BMY, +1.03% decision to hold off launching Zeposia, its newly approved multiple sclerosis treatment, underscores how disruptive the COVID-19 pandemic is to a trillion-dollar industry that relies heavily on collaborative work and meeting milestones that satiate investors.
Excluding the companies working on vaccines and therapies aimed at preventing or treating COVID-19 infections, many of which have seen their share prices spike over the past two months, drug manufacturers such as Eli Lilly & Co. LLY, -0.18% and Vertex Pharmaceuticals Inc. VRTX, -3.23% have halted most new clinical trials. The merger between Pfizer’s PFE, -2.68% generics business, Upjohn, and Mylan MYL, -4.25% has been pushed back, in part due to regulatory delays, they said.
Medical meetings have been canceled, postponed or taken online, as is the case for the American College of Cardiology’s annual world congress, to be held virtually this weekend rather than in Chicago, and the American Society of Clinical Oncology’s annual meeting, which will be moved to a virtual format in May. It, too, had been slated to take place in Chicago. In some cases, pharmaceutical sales representatives are no longer allowed to visit health-care facilities, like the CommonSpirit Health hospital system, which is trying to limit the number of people who may be exposed to COVID-19 on its premises.
“We see drug development as being in the crosshairs as the health-care system seeks to prioritize resources,” Mizuho Securities’ Mara Goldstein wrote in a note to investors on Friday. “Not surprisingly, development-stage biotechnology companies are being hit with delayed clinical trial initiations and postponement/cancellation of conferences which may lead to alterations in time lines for data disclosure. These factors could impact cash runway, as clinical data is a common catalyst for financing, thereby placing pressure on companies with shallow cash balances.”
That said, most of these changes are temporary. Hospitals need to free up resources to care for and prepare for COVID-19 patients, and social distancing has put an end to the in-person meetings, whether for the purpose of sales or science, common to medicine and pharmaceuticals.
At the same time, some experts question whether the temporary changes enacted during the pandemic will lead to longer-term shifts in how pharmaceutical companies conduct their clinical and commercial businesses.
“I don’t think things will go back to status quo after this,” Pratap Khedkar, a principal at the consulting firm ZS, said by email. “Some are beginning to think through shifts they must make … more digital, more telehealth, lower rep access, virtual meetings. Or if COVID-19 becomes the new flu and keeps recurring in waves.”
Some experts predict that intermittent social-distancing measures may remain in place through 2022, according to preprint research published by Harvard T.H. Chan School of Public Health researchers this week. (A preprint is research that has not been peer reviewed and is not intended to be incorporated into clinical practice.) Once social-distancing measures are lifted, as in places like Hong Kong, case counts increased.
The path to FDA approval is well trodden. Companies gather clinical data in the three phases of clinical trials, those results are shared with investors and at medical meetings, advisory committee meetings are held in advance of a decision date, and then the FDA decision comes. Toward the end of that process, drug makers prepare their sales, marketing and advertising strategies. They set pricing strategies and talk to insurers about coverage and formulary positions. Once a drug is approved, sales reps are sent into the field to talk with doctors and administrators. Direct-to-consumer ad campaigns air.
Right now, that process is changing in its nuances. The Food and Drug Administration, which has postponed all routine domestic plant inspections, is considering virtual advisory committee meetings, a key element in the FDA approval process that’s also known as adcomm. The regulator told Mark Senak, a lawyer and FDA expert, that “where possible, the agency will leverage technology to host meetings allowing for remote participation.”
Intercept Pharmaceuticals Inc. ICPT, -3.88% this week had an adcomm meeting for its experimental nonalcoholic steatohepatitis treatment postponed, from April 22 to June 9. The delay, however, still means the meeting will take place before the FDA decision date on June 26. SVB Leerink analysts wrote that the “tentative nature of the rescheduled adcomm date suggests the possibility for further delay, depending on the evolution of the COVID-19 pandemic. However, it is also possible that the FDA may have in place virtual AdComm procedures by early June.”
Research centers have also suspended enrollment in some trials; the Fred Hutchinson Cancer Research Center last week said that policy excludes studies with demonstrated efficacy. That is a stance also taken by Drs. Mary McDermott, a professor at Northwestern University’s Feinberg School of Medicine, and Anne Newman, an epidemiologist at the University of Pittsburgh Graduate School of Public Health. This week, in a JAMA viewpoint, they wrote that trials should be halted during the pandemic if the therapies they are testing don’t provide an “immediate clear benefit to enrolled participants.”
“In contrast, sustaining ongoing trials could help millions of people realize substantial, durable health benefits that will be important once the coronavirus pandemic ends,” they also wrote. “Therefore, efforts and resources should be dedicated to support continuing randomized trials using creative and thoughtful methods and proactive planning.”
But what happens if the FDA still approves drugs?
Some new and already approved drugs may have slow starts, which can negatively impact revenues for the quarter or for the year. Treatment plans for patients with non–COVID-19 conditions or diseases may be disrupted, and co-pays may become a concern given rising job losses — “all of this together could lead to an impact on current pharma revenues of 10% to 30% in [the second and third quarters] depending on portfolios,” according to ZS’s Khedkar.
Other experts have taken a rosier view.
“Programs with high-touch health-care interaction and/or settings with lower unmet need have the greatest risk of disruption,” SVB Leerink analysts told investors in a note on Thursday discussing the makers of oncology drugs. “We believe many investors anticipated development slowdowns and the sector reset reflects delays.”
Thus far in 2020, the Health Care Select Sector SPDR Fund XLV, -2.14% is down 14%, while the SPDR S&P Biotech Exchange-Traded Fund XBI, -2.90% has dropped 17%.
