Melinta Therapeutics Successfully Completes Financial Restructuring

Company is well-positioned for success as it emerges from chapter 11

NEW YORK, NY, April 20, 2020—Commercial-stage antibiotics company Melinta Therapeutics (“Melinta”) and healthcare investment firm Deerfield Management Company, L.P. (“Deerfield”), announced today that Melinta has successfully completed its financial restructuring and has emerged from Chapter 11. 

In accordance with the pre-negotiated Chapter 11 plan of reorganization, Melinta is now privately owned by affiliates of Deerfield and has eliminated its debt obligations, resulting in a well-financed and strongly positioned anti-infectives company with plans for future growth. 

Melinta will continue to actively supply, distribute, and support its four marketed products for the treatment of certain antibiotic-resistant infections:  Vabomere® (meropenem and vaborbactam), Orbactiv® (oritavancin), Minocin® (minocycline) for Injection and Baxdela® (delafloxacin). In addition, with its new, solid financial footing, Melinta expects to enhance its portfolio with the addition of new commercial and clinical-stage pipeline candidates in support of its mission of serving the critical needs of patients in the hospital and hospital ecosystem.

“We welcome this partnership with Deerfield in continuing to best serve the needs of patients in the hospital and look forward to the new opportunities for innovation and growth that this partnership will bring,” said Jennifer Sanfilippo, Interim Chief Executive Officer and Director of the reorganized company. “Our antibiotics will remain a central component of Melinta’s portfolio, including our core brands Vabomere® and Orbactiv®, and we are excited at the prospect of augmenting this important portfolio with products that address high-need therapeutic areas.”

In partnership with the Melinta team, Deerfield intends to leverage its operational, business development, data analytics and market research expertise in order to continue to accelerate the growth and expansion of Melinta’s product portfolio.

“The Melinta team has demonstrated an ability to successfully deliver important antibiotics to treat serious infections and has shown resilience and dedication during the most challenging of times,” said Deerfield Partner Jonathan Leff. “Covid-19 is a wake-up call regarding the dangers of infectious diseases and the need for innovative anti-infective products to serve the public health. We are delighted to join Melinta in this journey.”

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About Deerfield Management 

Deerfield is a healthcare investment management firm committed to advancing healthcare through investment, information and philanthropy.

About Melinta Therapeutics

Melinta Therapeutics, Inc. is dedicated to saving lives threatened by the global public health crisis of drug resistant bacterial infections through the development and commercialization of novel antibiotics that provide new therapeutic solutions. Its four marketed products are Vabomere® (meropenem and vaborbactam), Orbactiv® (oritavancin), Minocin® (minocycline) for Injection and Baxdela® (delafloxacin). This portfolio provides Melinta with the unique ability to provide providers and patients with a range of solutions that can meet the tremendous need for novel antibiotics treating serious infections. For additional information, including product information, visit www.melinta.com.

Contact:
Deerfield Management
Karen Heidelberger, 212-692-7140, [email protected]


Melinta Therapeutics

Susan Blum, 312-767-0296, [email protected]

Large-Scale Cell and Gene Therapy Contract Development and Manufacturing Organization to Launch in PA

The Center for Breakthrough Medicines expected to relieve the industry’s production constraints, providing patients better access to treatments

(King of Prussia, PA, and New York, NY, January 22, 2020)—The Discovery Labs and Deerfield Management Company have formed The Center for Breakthrough Medicines, a Contract Development and Manufacturing Organization (CDMO) and specialty investment company, to alleviate the critical lack of capacity that is preventing patients from accessing critically needed cell and gene therapies. The CDMO is occupying over 40 percent of The Discovery Labs’ 1.6 million square foot biotech, healthcare and life sciences campus in King of Prussia, PA.

The CDMO provides preclinical through commercial manufacturing of cell and gene therapies and component raw materials. It offers process development, plasmid DNA, viral vectors, cell banking, cell processing, and support testing capabilities all under one roof. The immense $1.1 billion facility will provide instant capacity as the largest known single source for accelerating the delivery and affordability of lifesaving and life-changing therapies from the bench to the patient’s bedside.

The Company has initiated a substantial hiring effort targeting the best and brightest of the life sciences community including, experts in CGMP manufacturing. The Company expects to hire over 2,000 team members within the next 30 months.

The CDMO has retained Nucleus Careers, a cloud-based specialty life sciences human capital recruiting and retention management expert, to buildout the entire team. Nucleus has proprietary recruiting and retention software designed for large scale human capital buildouts of high growth companies.

In addition to developing the world’s largest single-point cell and gene therapy manufacturing facility, The Discovery Labs is establishing THE COLONY which will provide custom built discovery labs, breakthrough funding, sponsored research agreements, housing and relocation for the world’s leading iconic experts in cell and gene therapy.

THE COLONY will seek to work hand in hand with scientists from both academic and pharmaceutical institutions to unlock and expedite groundbreaking therapies.

Marco A. Chacón, Ph.D., Founder of Paragon Bioservices and Chairman of The Discovery Labs states, “musicians, artists, members of religious communities and great thinkers throughout time have formed colonies where freedom of thought and expression combined with unlimited dreams and potential have resulted in the world’s greatest accomplishments. The United States of America is a perfect example.” Dr. Chacón went on to say, “the goal of THE COLONY is to unshackle the potential of the world’s greatest scientific minds.”

The ability for the industry’s greatest scientists to cohabitate, collaborate, cooperate, and communicate via technology and in person will create an exponential therapeutic “X FACTOR.” THE COLONY seeks to unlock institutional barriers prohibiting the world’s greatest scientists from moving at a pace necessary in today’s ever-changing therapeutic revolution. THE COLONY will partner with the institutions where the scientists currently work by providing equity, license fees, and revenue sharing.

“The Center for Breakthrough Medicines will be serving companies from the earliest stages through commercialization. Its exceptional scale and offering will quickly relieve the production bottleneck for advanced therapies by reducing the time, complexity, and cost of commercializing vitally needed gene and cell therapies,” noted Audrey Greenberg, Board Member and Executive Managing Director for The Discovery Labs.

The addition of this end-to-end manufacturing capability is expected to significantly enhance the offerings of The Discovery Labs in an area that has become one of the largest life sciences hubs in the world. Renovations are underway to construct a total of 86 plasmid, viral vector production, universal cell processing, CGMP testing, process development and cell banking suites. The viral vector and cell processing suites will be fully compliant with both U.S. Food and Drug Administration and European Medicines Agency standards. All suites will offer the flexibility to meet client-specific workflows and will be able to adapt quickly to meet demand. The Company is in the process of reserving capacity now for late 2020.

“Today brilliant scientists are advancing an unprecedented number of gene and cell therapy drug candidates. The real tragedy, however, is a scarcity of manufacturing know-how, which is complex and expensive,” said Alex Karnal, Partner and Managing Director of Deerfield Management and a Board Member of the Discovery Labs. “With its visionary business model, it is hoped that The Center for Breakthrough Medicines will help realize the promise of cell and gene therapies in time to treat the many patients who need them.”

The Discovery Labs provides a central campus where the world’s greatest scientists can collaborate on new therapeutic discoveries to eradicate diseases affecting small and large segments of the global population. The Center for Breakthrough Medicines will work with these leaders, life sciences companies, large pharmaceutical companies, and academic and government institutions.

This new manufacturing capability is a transformational addition to The Discovery Labs market offering and dovetails with The Discovery Labs biotech incubator, Unite IQ. Unite IQ offers immediate space to emerging life sciences companies and scientists giving them the ability to grow from startup to enterprise company on one campus. The incubator and accelerator space at Unite IQ provides a comprehensive home for startups with every resource needed to initiate business operations. Unite IQ tenants are expected to utilize the discovery, development, testing, and manufacturing capabilities of the Center for Breakthrough Medicines with seamless forward integration of processes and analytics, and seamless tech transfer from research lab to large scale production

The Emerging Field of Cell and Gene Therapy in Pennsylvania

The demand for clinical and commercial manufacturing capacity is acute and expected to remain that way. The current shortfall in manufacturing for cell and gene therapies is severely underserved with few approved products. There are currently approximately 1,100 advanced therapies in the pipeline pending FDA approval. This will greatly increase highly skilled manufacturing demand. Dr. Peter Marks, Director of the FDA Center for Biologics Evaluation and Research, states, “what keeps me up at night is will we be able to manufacture these on a scale that will allow us to bring the benefit of these therapies to patients?” He further added that “if we can help see cost of goods and ability to manufacture reproducibly improve, I think that’ll be a big thing.” All of this adds up to a supply constrained market that The Center for Breakthrough Medicines aims to help address.

With the potential to treat and even cure disabling, and deadly diseases, gene and cell therapies are ushering in a new era of medicine. These therapies may eventually be able to cure genetic conditions, such as cystic fibrosis, hemophilia A, and a range of cancers. The Philadelphia area has become the epicenter for the flourishing field of gene and cell therapy. Research from CBRE currently ranks the market among the top biotech clusters for medical research and health services. The cluster has become known worldwide as “Cellicon Valley” for its leadership in research and development of this rapidly evolving field. The Discovery Lab’s suburban Philadelphia location offers a talent rich environment due to the area’s preponderance of large pharmaceutical companies and the Philadelphia region’s position boasting the top 10 universities and primary school systems in nation.

Over the past three years, multiple Philadelphia companies have received approvals for major breakthroughs in cell and gene therapy. In 2017, the U.S. FDA approved the first-ever CAR-T cell therapy, Novartis’s Kymriah, which originated at the University of Pennsylvania. Shortly thereafter, the FDA gave landmark approval for the first-ever gene therapy to treat a genetic blindness condition to Spark Therapeutics, a start-up founded by researchers at Children’s Hospital of Philadelphia. These discoveries and others in the pipeline are attracting billions of dollars of venture capital. The Greater Philadelphia Region set a recent record in venture capital financing.

The Discovery Labs Center for Breakthrough Medicines joins more than 25 healthcare, life sciences and tech-enabled companies that already call The Discovery Labs King of Prussia home.

Contact Audrey Greenberg at [email protected] for more information about development services, manufacturing capacity, incubator space or leasing information at the property.

About The Discovery Labs

Part of MLP Ventures, The Discovery Labs is a global provider of world-class cGMP manufacturing, turnkey laboratory solutions, critical materials and office space that support therapeutic products and services to the biotechnology and pharmaceutical industry so that groundbreaking medicines get to the patients that need them. The location in eastern King of Prussia is a prototype for a global rollout of The Discovery Labs, providing Big Pharma, emerging life sciences, consumer and technology companies flexible, end-to-end technical real estate and business infrastructure for the customer’s entire lifecycle from discovery to delivery, including manufacturing capacity. It is the first fully integrated environment that merges technology and life sciences under one roof to drive innovation.

About Deerfield Management

Deerfield is a healthcare investment management firm committed to advancing healthcare through investment, information and philanthropy.

Media Contact:
Tony DeFazio, DeFazio Communications
(o) 484-534-3306 (c) 484-410-1354
[email protected]

Karen Heidelberger, Deerfield Management Company
212-551-1600
[email protected]

Operations Team

New and growing enterprises face the challenge of simultaneously executing complex business strategies, building world-class operating teams, creating partnerships, and a wide range of other critical functions with limited resources. The Deerfield Operations team partners with newly formed, and existing management teams, providing a suite of services designed to enhance company success and growth while reducing timelines to value-creating events and overall costs.  While many companies require significant support early in the life cycle, the Operations team is structured in a manner that allows Deerfield to be a long-term partner, offering services and assistance to businesses across all stages of maturity, from formation to a successful monetization event.

Services provided by the Deerfield Operations team, include:

  • Human Resources and Talent Acquisition
  • Accounting and Financial Management
  • Real Estate Sourcing and Negotiation
  • Risk Management
  • Information Technology
  • Sales, Marketing and Other Commercial Support
  • Business Strategy and Development
  • Contracting Support
  • Marketing/Branding/Public Relations
  • Investor Relations

Break Into The Boardroom Speaker Rallies Women At Annual Meeting To Play Nice

They came from far and near, all with similar purpose and ambition.

These women were a force to be reckoned with, including highly skilled strategic thinkers in the life science and healthcare sectors, from R&D to commercialization, operations, and regulatory affairs/compliance for both small and large cap companies.

Yet despite the high aptitude of this representative sample of female leaders, the stark reality is boards are only made up of 20% women.

The venue was the fourth annual meeting of Breaking into the Boardroom™ (BiB) held this past April. Deerfield, a co-founder, aims to change these statistics.

Speaker Jan Berger, MD, boiled the problem down to this when she addressed the crowd: “It used to be that the only diversity in the Boardroom was whether the male only members were sporting black, blue or grey socks.” Berger is president and chief executive officer of Health Intelligence Partners, a healthcare consultancy she founded.

The goal of BiB is to promote greater representation of female healthcare executives on boards within the public, private and non-profit sectors. Covering such topics as how to get a board seat, the role of governance, spectrum of board opportunities and legal and regulatory duties—the event lured 45 women from across the country, representing a broad cross section of experience from throughout the healthcare ecosystem.

Studies suggest that female-led companies are better run and bring greater returns[1], which begs the question why then are women still commercializing less and acquiring less venture capital when they do. On the upside, event speakers noted that men with daughters who have skin in the game tend to come around, suggesting their potential adaptability for change.

Among the reasons to account for the low number of female board members are a shrinking pool of candidates by the time the c-suite is reached with an upside down male to female ratio. In addition, stereotypes, unawareness, and unconscious bias amplify the problem, creating more barriers, said the presenters.

“We’re at the intersection of two industries—healthcare and finance—with bad statistics and must do better.”

Jim Flynn, Deerfield’s Managing Partner.

This issue may, in part, be reflected by other instructive statistics about women in the workplace, in general. According to Vicki Gaddy, Head of HR Strategy and Talent Acquisition at Deerfield, women tend to apply to jobs when they possess 100 percent of the skills required; men throw their hats in the ring when they have only 60 percent.

“The one lesson I learned too late was to advocate for myself.”

Conference attendee, Mariana Nacht, PhD, chief scientific officer of Vivid Biosciences and president of the board of WEST, Women in the Enterprise of Science and Technology, a non-profit focused on supporting women in STEM.

Approximately 60 percent of those surveyed who attended the event reported that they have been searching for a board seat between six months to one year. All respondents indicated an interest in being connected with a mentor who could advise them on best practices for securing a board seat, a majority of which also expressed wanting advice on how to negotiate salary.

And among the greatest challenges cited to securing a board seat were finding opportunities and a lack of experience, contacts, as well as the time needed to put into it.

As for feedback to an open-ended question in the survey, there was an interesting range of responses to this scenario:

Q: When a male board member exits the board meeting early to catch his son’s little league game, it’s respected. Historically, women haven’t received the same response. What could we do now to help inspire change and alter perceptions over the longterm?

FROM THIS

The more we normalize that both men and women have responsibilities outside the workplace, the less women would have to deal with this stigma.

TO THIS

My initial reaction to this scenario above was: Really? There are a handful of board meetings a year and someone (man or woman) is deciding to leave early for a ball game?

All of the event’s speakers stressed the importance of networking and letting everyone know your interest: No one is going to come knocking at your door for doing a good job, advised the group.

Companies are looking for board members who can demonstrate value to their investors. It’s important to let people know you are looking for a board seat and to show a willingness to share your knowledge and experience by networking or participating on industry panels.

Deerfield Partner Adam Grossman, who participated in a BiB panel discussion on how to get a board seat.

Grossman added that anyone seeking a board seat should choose wisely. “Executives may be tempted to jump at any board seat. Your time is limited, make the most of what you have to give.”

Know your gifts and see how you might pair them up with an organization’s mission. Look outside of healthcare and think about how you could take your talents and apply them in a different industry where you could make a difference.

Presenter Bridget Duffy, MD, chief medical officer of Vocera

Speaker Claire Pomeroy, MD, president of the Albert & Mary Lasker Foundation, cautioned this should not be about getting a board seat, but focused on getting the right board seat.

“I’m not a rubberstamp kind of gal,” said Berger. “Ask yourself these questions: Am I going to learn something new? Can I make a difference? How do they handle conflicts and balance responsibility? Will I be compensated fairly? Look at the financials. Talk to the CFO. Look at Glassdoor.”

All in all, the speakers recommended doing one’s due diligence and sitting in as an observer before signing. One speaker decided not to commit after witnessing a fist fight at her sample board meeting.

“Anyone who’s going to join a board and think it’s easy, you need to be prepared for whatever comes your way,” said Berger who once had to skype at 3am from an African safari.

Pomeroy and other speakers suggest trying one’s hand at a non-profit board first. These are generally considered more flexible and less demanding compared to corporations that have year-round schedules. Though one speaker warned that one may be expected to contribute from his or her own pocket and to take a financial risk.

“Executive search firms will deliver the most diverse board candidates,” offered Pomeroy. Despite this view, representatives from Oxeon Partners, a healthcare executive search firm and co-founder of BiB, reported that men return calls much more frequently than women, who rarely do.

As for the best approach of newcomers to any board, Berger said, “Gently lean in, but listen closely and don’t speak until you get the rules of the road. Likewise, be thoughtful how you exit a board.”

Duffy emphasized the importance of women supporting other women, which she said is often not the case.

Pay it forward and backward. Replace female board members with females and recommend females for board seats. Break into other networks that are often male dominated, and do so under your terms.

Presenter Bridget Duffy, MD, chief medical officer of Vocera

Duffy continued, “not all networking has to happen fly fishing or on a golf course! Many male executives tell me they don’t know where to find top female talent – let’s be proactive and get out there and advocate and nominate each other. Let’s make a charter from this meeting: How Do We Mentor and Support the Next Generation, So That They Don’t Go Through What We Did.”

Breaking into the Boardroom is only one of several programs that Deerfield runs through which it is looking to make an impact. In addition to BiB, Deerfield also sponsors the Deerfield Fellows programs and plans to sponsor the Women in Science program.

To date, the Fellows program, for which only students who attend the gender and ethnically diverse CUNY system are eligible to apply, has engendered 9 fulltime associates at Deerfield.

CUNY students and alumni currently make up nearly 10 percent of Deerfield’s staff, including Fellows . “We pay them to learn about healthcare finance. This program increases the number of applicants and the best way said Flynn. “We could fight over a pool of scarce resources with all the other firms striving for diversity, or we could be proactive and increase the pool itself.”

The Women in Science program, slated to make its debut with an inaugural session this winter, will focus on female scientists and best practices toward commercializing their scientific discoveries.

“Bringing gender and ethnic diversity to the room will bring with it cognitive diversity. This will get you to the best results and answer,” says Leslie Henshaw, Deerfield Partner and BiB co-director.

“Providing voice to a diverse set of stakeholders introduces new ideas. And, in the case of healthcare, it could spark more inclusive and creative solutions to the intricate and complex set of issues associated with the industry’s intractable set of challenges.”

Leslie Henshaw, Deerfield Partner and BiB co-director.

Nacht says that she enjoyed this year’s BiB event but yearns for a time when it will no longer be needed.

[1]   https://www.ivyexec.com/career-advice/2017/women-led-companies-outperform-competitors/

Stelexis Therapeutics Closes $43 million Series A to Expand Novel Platform Focused on Cancer Interception

Stelexis is a Deerfield founded and solely funded company

New York, NY – January 7, 2019 – Stelexis Therapeutics, LLC announced that it closed a $43 million Series A financing to expand its proprietary platform to discover and selectively target pre‐cancerous stem cells. Deerfield established Stelexis in 2017 together with scientific founders, Ulrich Steidl, Evripidis Gavathiotis, Amit Verma, and Roman Perez‐Soler of Albert Einstein College of Medicine, Montefiore Health, New York and Derrick Rossi of Boston Children’s Hospital, Harvard Medical School. Patrick Doyle serves as the founding CEO, and Keren Paz is the CSO of Stelexis.

Stelexis’ proprietary drug discovery platform identifies the earliest definable pre‐cancerous stem and progenitor cells that lead to the formation of human primary and recurrent tumors for therapeutic intervention and relapse prevention. Stelexis’ mission is to develop novel cancer drugs that selectively target these critical pre‐cancerous events related to both hematopoietic and solid malignancies.

“The ability to identify, isolate, study and screen rare pre‐cancerous stem cells, from within bulk tumors, is an enormous breakthrough that has the potential to change how cancer patients are treated” stated Dr. Steidl. “Our thesis is that targeting cancer at its very origin should not only be effective as first line therapy, but should also lead to long‐lasting remission for patients,” said Dr. Rossi, who, prior to co‐founding Stelexis, has also co‐founded numerous other successful biotechnology companies.

Utilizing Deerfield seed funding and operational support since 2017, Stelexis has established its labs in Albert Einstein College of Medicine facilities, hired key management and is poised to deliver clinical trial data that validate its platform using the proceeds of this Series A round.

“We are thrilled to announce the formation and funding of Stelexis, which has the platform technology to explore the role pre‐cancer conditions play in cancer development and recurrence. The team has an outstanding track record and we look forward to a stream of transformative cancer medicines,” stated Dr. Robert Jackson, director at Stelexis and partner at Deerfield Management.

“Deerfield’s holistic approach to forming, funding and providing operational support to Stelexis has been instrumental in creating a leadership position in a novel targeted approach to treating cancer,” said Patrick Doyle, CEO of Stelexis. “With these funds we are now positioned to execute on our potential to transform patients’ lives.”

About Stelexis

Stelexis is a New York‐based cancer therapeutics company, utilizing its proprietary platform to selectively target pre‐cancerous stem cells to discover and develop transformative therapies.

For more information, please visit www.stelexis.com

About Deerfield

Deerfield is an investment management firm committed to improving healthcare through investment, information and philanthropy.

For more information, please visit www.deerfield.com

Contacts

Deerfield Management Company
Karen Heidelberger
212‐551‐1600   
[email protected]

Stelexis Therapeutics
Patrick Doyle
[email protected]

Dana-Farber Cancer Institute and Deerfield Collaborate to Create the Center for Protein Degradation

  • The Center for Protein Degradation will build upon the work of Dana-Farber researchers Nathanael Gray, PhD and Eric Fischer, PhD
  • Deerfield Commits up to $80 million as well as Operational and Managerial Support

Boston, MA and New York, NY – November 13, 2018 – Dana-Farber Cancer Institute and Deerfield Management announced today an up to $80 million collaboration to create the Center for Protein Degradation at Dana-Farber. The goal of the Center for Protein Degradation is to interrogate and advance a large portfolio of advanced targeted protein degrader targets while creating a next-generation protein degrader platform. The platform will utilize knowledge created while interrogating the targets and will continue to advance the science of targeted protein degradation of additional members of the proteasome for therapeutic benefit.

The new Center for Protein Degradation will be led by Dr. Nathanael Gray and Dr. Eric Fischer, both world-renowned scientists, while operational support, management expertise and initial funds will be contributed by Deerfield. Additional funding for therapeutic targets will be provided by Deerfield upon successful proof-of-concept studies.

Current targeted protein degraders work by directing a protein of interest to the proteasome where it is broken down into smaller polypeptides. Protein degradation serves multiple purposes and can be used to interrogate basic biology or eliminate a protein that is implicated in disease initiation or progression from a cell for an extended period of time. This approach may provide more robust therapeutic effects due to complete elimination of protein function as compared to classical small molecule protein inhibitors that target a particular catalytic activity. The Center for Protein Degradation will focus on development of efficient approaches for discovering and optimizing new small molecule degraders and in identifying the biological targets most tractable for this approach.

The Center for Protein Degradation will solicit collaborations from the Dana-Farber and Harvard Medical School community to explore degradation concepts across a wide range of targets and disease settings. Projects will move through a tiered system from proof of concept, to validation in preclinical models and towards clinical development.

“We are excited about exploring the promise of protein degradation with Deerfield and appreciate the substantial commitment it is making to this enterprise,” said Laurie H. Glimcher, MD, president and CEO of Dana-Farber. “This new Center for Protein Degradation will be a critical focal point in a vibrant community of accomplished scientists and investigators.”

“In creating the Center for Protein Degradation, we can advance science and identify multiple novel therapeutics targeted at ending cancers. We are thrilled to be collaborating with Dr. Gray, Dr. Fischer and the entire Dana-Farber team in this first of its kind collaboration,” stated James Flynn, managing partner at Deerfield.

“Protein degradation is potentially a key to unlocking cures for cancer,” commented William Slattery, partner at Deerfield. “The examination of targets with this expertise will create a pathway that goes beyond the normal confines of drug development.”

Paul Hastings, LLP acted as legal counsel to Deerfield. Dana-Farber Cancer Institute was represented by Wolf, Greenfield and Sacks, P.C. and McDermott Will & Emery.

About Dana-Farber

From achieving the first remissions in childhood cancer with chemotherapy in 1948, to developing the very latest new therapies, Dana-Farber Cancer Institute is one of the world’s leading centers of cancer research and treatment. It is the only center ranked in the top 4 of U.S.
News and World Report’s Best Hospitals for both adult and pediatric cancer care.

Dana-Farber sits at the center of a wide range of collaborative efforts to reduce the burden of cancer through scientific inquiry, clinical care, education, community engagement, and advocacy. Dana-Farber/Brigham and Women’s Cancer Center provides the latest in cancer care for adults; Dana-Farber/Boston Children’s Cancer and Blood Disorders Center for children. The Dana-Farber/Harvard Cancer Center unites the cancer research efforts of five Harvard academic medical centers and two graduate schools, while Dana-Farber Community Cancer Care provides high quality cancer treatment in communities outside Boston’s Longwood Medical Area.

Dana-Farber is dedicated to a unique, 50/50 balance between cancer research and care, and much of the Institute’s work is dedicated to translating the results of its discovery into new treatments for patients locally and around the world.

About Deerfield

Deerfield is an investment management firm committed to advancing healthcare through investment, information and philanthropy.

For more information, please visit www.deerfield.com

Contacts

Dana-Farber Cancer Institute
Ellen Berlin, 617-632-4090
[email protected]

Deerfield Management Company
Karen Heidelberger, 212-551-1600
[email protected]

Deerfield and Stan Rowe Create a Next Generation Therapeutic Device Incubator, NXT Biomedical

Up to $275 million committed to the development of cutting edge technologies.

New York, NY and Irvine, CA – September 20, 2018 – Deerfield Management and Stan Rowe announce the creation of a next generation therapeutic device incubator, NXT Biomedical. NXT Biomedical expects to invest up to $25 million in cutting edge technologies over the next 5 years.  Deerfield has allotted up to an additional $250 million for the formation and development of five to eight startup companies that emerge from the incubator. 

NXT Biomedical will develop and advance novel therapeutic devices in diseases with significant unmet needs.  Using innovative medical technology development processes, the incubator is designed to develop and de-risk technologies in a highly capital efficient manner.

Prior to cofounding NXT Biomedical, Stan Rowe was Chief Scientific Officer at Edwards Life sciences.  At Edwards, Stan developed and led the Advanced Technology group, which is focused on rapid device iteration, novel research and projects to enhance the pipeline of the Edwards patient-focused innovation portfolio and discovery efforts.  In his new role, Stan will continue as a consultant to Edwards.

“I am thrilled to be leading this incubator with a broad mandate for development of varying types of therapeutic devices, which brings together the expert skill sets of the founding contributors and provides an environment for creativity, innovation and professional management. I have worked with Edwards over the last several months to ensure a smooth transition from my role as CSO at the company to my next chapter leading NXT Biomedical, and I believe this collaborative effort engaging many bright and experienced innovators may spark the success of many technologies,” stated Stan Rowe, CEO of NXT Biomedical.

Stan will be joined by Robert Schwartz, MD, an interventional cardiologist who has been a prominent inventor as well, and a team of experienced engineers with unique expertise in early stage device design and development. 

Andrew ElBardissi, MD, Principal at Deerfield said, “In an era of dwindling medical device early stage investment, we continue to see major unmet needs that can be optimally treated with next generation medical technologies.  We are elated to join Stan and his team to develop and advance clinically meaningful devices that are poised to improve outcomes and reduce cost to the healthcare system.”

Steve Hochberg, Partner at Deerfield said, “NXT Biomedical provides an exciting new pathway for exceptional science to be incubated with the world-renowned leadership of Stan Rowe and Robert Schwartz, MD.  In addition, given some of the therapeutic areas of interest to NXT Biomedical, we are also exploring potential collaborations with unnamed strategic partners.  As we advance these opportunities, we are looking forward to supporting each project with financial, operational and managerial expertise.”

NXT Biomedical is based in Irvine, California at the Cove @ UCI Applied Innovation.

About Deerfield

Deerfield is an investment management firm committed to advancing healthcare through investment, information and philanthropy.

For more information, please visit www.deerfield.com

Contacts

Deerfield Management Company
Karen Heidelberger, 212-692-7140
[email protected]

Deerfield And Oxeon Cohost Third Annual Break Into The Boardroom Program

On April 11th and 12th, Deerfield and its co-sponsor, Oxeon Partners, hosted the Third Annual Break into the Boardroom (BiB) program in New York City. This day-and-a half-event is the cornerstone of BiB, which was formed three years ago to help promote and cultivate greater gender diversity within boardrooms throughout the healthcare ecosystem.

We featured the 2017 edition of this event in a prior newsletter (March, 2017) but would like to refocus attention on this important initiative and report on the program’s increasing traction and impact.

As it did last year, the 2018 BiB program brought together over 40 accomplished female speakers and board-ready senior executives from across the healthcare universe to discuss important fundamentals of governance, to explore key strategies for identifying, securing and evaluating board opportunities and to network among an elite group of female leaders. Participants brought an array professional experiences including roles as CEOs, CFOs as well as executive level marketing, regulatory, clinical, legal and human resources leaders. The women came from a similarly diverse range of industry subsectors, representing companies from the pharmaceutical, biotechnology, payer, provider, and HCIT spaces. This mix ensured a great cross section of perspectives and created exciting conversations among members of the healthcare ecosystem that don’t ordinarily get to interact. Above all, the experience, commitment and enthusiasm emanating from the group affirmed their board readiness.

As we recap this year’s event, three years into our BiB initiative, several things are clear. First, there remains an imperative to drive change – we are still a long way from our objective of more heterogenous boardrooms. For instance, across the 20 biotech industry start-ups that raised the most venture capital dollars during the first six weeks of this year, 87% of the collective board members were male. Six of these start-ups had no female board members at all. Second, our participants are deriving value from the content and networking opportunities associated with our program, and by promoting greater awareness of the issue across our broader group of stakeholders we are seeing equally important, albeit less direct, benefits. Just getting a CEO or board to stop and realize that their leadership team or boardroom lacks diversity can be an important catalyst for change. Third, we are starting to see some tangible evidence of impact. Our program is directly or indirectly responsible for 10 new female board roles. In the coming year we plan to develop some more concrete metrics of success to hold ourselves accountable and we look forward to communicating increasing evidence that we can make a difference.

In closing, we credit many of our CEO relationships with having helped to identify and sponsor travel for our BiB nominees, which helps ensure a high caliber participant group with engaged mentors willing to support and nurture the women’s governance aspirations going forward. As many of our readers may be in a position to help identify and sponsor candidates in the future, we encourage you to reach out with any recommendations for the 2019 edition of our BiB program. Similarly, we welcome the opportunity to connect our BiB alumni with board opportunities outside of our own portfolios, and would be happy to provide suggestions for board openings where you may be in a position to influence the slate of candidates. Please send BiB inquiries to Leslie Henshaw at [email protected].

Rethinking The Sales Force Business Model In A Dramatically Changing Environment .

Pharma sales representatives (reps) are one of the most integral components to a manufacturer’s commercialization plan. They have long been the voice in determining and shaping the adoption curve of a new drug. However, the “good ol days” are in the rearview mirror for reps as there have been efforts to curb dollars and gifts that reps can shower upon physicians and their staffs, as well as both fewer and lower quality touch points with the decision makers with purchasing power and/or authority on drug choice, particularly when there are multiple options in the same therapeutic category. Here, we will try to put the role of the rep in context and provide some perspective, conceptually, on where the sales model may migrate in the future, and what issues will need to be addressed.

Companies spend significant amounts of time, energy and resources dedicated to planning and building out the sales force optimization plan. Specifically, the commercial team oversees multiple teams to plan the success of the sales rep. Activities that contribute to this success include:

  • Market research to quantify the opportunity and understand the behaviors and triggers of doctors to prescribe:
    • Identify potential points of push back from doctors
    • Segmentation of doctor mindsets that can drive training of the sales reps – i.e. identifying high vs low likelihood to prescribe and pyschological drivers that sales reps can use to trigger prescription activation
  • Sales training to ensure the rep is knowledgeable and help drive rep performance
  • Analytic teams analyze physician productivity to ensure reps are calling on doctors that will yield the greatest return:
    • Spending time with doctors who are loyalists to the therapeutic class and/or may have affinity to a certain type of therapy within a therapeutic area
    • Identify high density geographic areas that may require heavy sales force deployment
  • Sales leadership teams develop:
    • Incentive compensation plans (performance-based plans above base salaries) to further drive excellence
    • Determine call planning strategies (who to target, and at what frequency)
    • Ensure operational effectiveness and execution is in line with overall strategy
  • Managed care teams drive appropriate reimbursement coverage and facilitate sales training around reimbursement-centric adoption strategies:
    • How to combat doctors wary of reimbursement issues
    • Selling the value of the drug in relation to reimbursement coverage
    • Help the doctor navigate the prescription journey from their office to the pharmacy counter for their patients

In the past, the sales rep had many tools at their disposal to engage and sell their products to physicians:

  • Dinner meetings
  • Grand Rounds (sponsored lecture series in the hospital setting)
  • Lunch and learns
  • Golf outings
  • Literature leave behinds
  • Sampling

The rep had the ability to access the majority of not just physicians, but importantly those with autonomy and decision-making authority, and the nature of the detail (industry lingo for reps providing doctors with the details of a drug, including approved scientific information, benefits, adverse events, etc) evolved around the clinical efficacy and utility of the product. Reps were trained on the mechanism of action of their product as well as competitors, all the key clinical data in the therapeutic area, and how to convey their product’s differentiation. This last part is significant as training also focused on breaking down clinical studies, with successful reps well-trained in how to handle any objections raised by doctors around use of their product (ideally identified ahead of time by the manufacturer’s market research), and able to rattle off why one product may have a better p-value (measure of statistical significance used in clinical trials) or better efficacy at symptom resolution, among other product features.

Simplified schematic of common commercial team structure

Level and types of rep-doctor interaction have changed

Reps historically had an environment that was for the most part without many restrictions, which is increasingly no longer the case. The ability of the sales rep to develop a relationship with doctors they called upon was easy and simple due to the tools at their disposal. However, over the past two decades, there have been considerable changes in both the ability to access and the types of activities the reps can use to engage with doctors. These changes have come about in an effort to clamp down on what has been viewed as inappropriate influence over docs by industry reps.

Any payments made to physicians by drug and device companies must be reported under the Physician Payment Sunshine Act, signed into law in 2010 along with the Affordable Care Act, and the data is made public by the Centers for Medicare and Medicaid. While these payments can be as seemingly benign as research grants, it can also include things like travel and accommodations around medical conferences and scientific or advisory board meetings, food and beverage, and consulting fees. Details on the types of payments are included in the public data set. Now the public can see if physicians are receiving what might be perceived as healthy sums of money, which whether innocently or not, can be perceived as doctors being “in the pocket” of big pharma, and a potential PR concern for their institutions.

Physician access has been on the decline due to consolidation of independent physicians into heath systems

Most academic medical centers do not allow reps to call on their physicians on site, though there may still be some level of doctor-rep interaction if the doctor maintains an off-campus practice location. One industry report from ZS Associates found that 56% of physicians in the US have either restricted or severely restricted who can visit them, with some specialties even more restrictive. Integrated delivery networks (IDNs), systems where the provider network is also the payer, and group practices, are also increasingly locking out reps. Further, physicians’ prescribing autonomy in IDNs and group practices is not the same as in an independent practice, with decisions around drug purchase and utilization instead made by higher level management.

This trend is likely to continue as cost pressures have made it more and more difficult for independent physician practices to remain financially viable. Independent physician practices have been on the decline since 2000, according to a 2016 analysis by inVentiv Health Consulting. While 57% of physicians were independent in 2000, this decreased to 37% in 2013 and was expected to continue sliding to 33% by the end of 2016.

The sales call has migrated from a pure clinical sell to addressing reimbursement

When reps are still able to get interactions with doctors, the nature of the sales call has shifted from a clinical sell to putting the rep more in the role of a reimbursement navigator. Price never came up as a major topic of the sales detail, whereas now it may be the primary focus of the conversation, as it is often easier for a doctor to simply pick the drug that is cheapest for their patient – “is it covered by insurance and how much will the patient need to pay?” The use of co-pay cards, which reps can drop at the physician office to reduce financial burden for patients (discussed in a past issue of this newsletter), was largely unheard of until more recent years. Still, co-pay cards are not a panacea, and doctors remain skeptical of the overall utility of these cards. Patients often encounter issues at the pharmacy when they try to use these cards, and may ultimately abandon any attempts to get the drug they were prescribed in the first place. These co-pay cards are off-limits to Medicare patients by law (but fair game for those with private insurance), and so might only benefit a fraction of the doctor’s patients.

Put this all together, and reps now have less time to discuss more complicated topics like reimbursement during their detail. The question now to ponder is how will the rep model evolve with the environmental dynamics at play. Specialty reps in the device sector that are required to train docs in the surgical area will continue their business as usual, but there will be a need to evolve the model overall in many sectors.

There is probably not a one size fits all strategy, and that current strategies in the therapeutics sector need to be adjusted to address some of the key challenges outlined below.

  • The model needs to pivot from a single point of contact between rep and doctor to one where the sales team has a multi-touch point strategy to various customers in the ecosystem.
    • Customer will be cross functional, including buyers and influencers, not just the physician:
      • Administrators
      • Business/purchasing mangers
      • Chief medical officers
      • CFOs
  • The ability to both articulate what constitutes value for patients, doctors, and their institutions, and to create a more holistic approach that drives value throughout all key customers will inform overarching strategy.
    • What services, tools, and business offerings can the commercial team offer to doctors and institutions to drive pull through and adoption of their products?
    • How to generate a more ambitious patient-centric approach?
  • Realignment of commercial organizations and build out of the talent pool in key functionalities and responsibilities will take on added significance.
    • Need to create cross-functional business operational teams vs. more independent/siloed groups
      • Re-calibration of the managed markets and sales force groups to more of an account management team that can foster relationships with all key stake holders
      • Ability to trouble shoot and bring customized approaches to physician groups
    • More sophisticated sales rep that can work with a cross functional team and have stronger business acumen:
      • Upgrade to drive toward more sophisticated approach to independent docs
      • Move away from reliance on business-to-business like model that some pharma companies have started to adopt (while acknowledging there are some specific areas where this may still have utility)

Hypothetical schematic for business management-centric approach to commercial organization

A more integrated team overseen by a district business manager who drives business planning, data analysis, insight mapping, and touch point strategy

Where are we in the continuum with the shift to a more holistic approach? Our observation is that manufacturers acknowledge and discuss that we are at a tipping point, with some having piloted various more integrated approaches to drive behavioral change. Some of these pilot approaches have yielded positive returns but we have not yet seen a full migration over to a new model. What we do believe, however, is that the environmental factors at play will eventually force a significant change for all pharma.

Perceptions And Realities Of The Drug Pricing Debate

The issue of drug pricing is neither simple nor straightforward, but here, we will break down the status quo and shed some light on the costs of doing business. We do not argue that pricing concerns are unfounded, but want to bring some transparency to the discussion. While we will not propose a fix, we hope to elucidate there is no panacea to the drug pricing conundrum as it exists given the multitude of complexities, but provide a better understanding of the current state of play.

First, it is important to have an understanding of who the players are and what they do:

  • Manufacturers: pharma and biotech companies who make the drugs
  • Distributors: ship and supply those drugs to…
  • Retailers like pharmacies, hospitals, and doctors offices, where patients physically obtain those drugs
  • Managed care organizations (MCO) provide insurance coverage to the patient for those drugs, and for some payers, the process of deciding which drugs to cover and at what cost is contracted out to Pharmacy Benefit Managers (PBM) rather than being handled by the MCO itself

The core of the drug pricing conversation tends to revolve around how manufacturers increase list prices year over year. Based on historical precedent, there is some expectation for list prices to increase once or twice a year, with an average rate of 5-10% per increase. When viewed in relief of a yearly 2-3% inflation rate, this can quickly look unreasonable. And yet, despite these sometimes double digit price increases, there has actually been a decrease in the estimated net price growth since 2010, according to a 2015 analysis by IMS.

This decrease is due to the multiple points along the chain in which manufacturers must either directly pay or provide a discount to different players. Reasons that contribute to this at times significant delta include:

  • The list price may be an indicator of what companies constitute as “value” for their drug, and by proxy, their shareholders. Payers may have a different view of the value of the same drug.
  • Manufacturers are under increasing pressure to negotiate discounts with commercial insurance to secure a favorable reimbursement environment i.e. preferred formulary tier status, excluded drug lists.
  • These negotiated contracts typically last for a three year period and have a price protection clause for that length of time – so while list price may go up multiple times in that time period, the contracted negotiated rate does not correspondingly change.
  • Some payers simply will not contract with manufacturers for products that have multiple double digit price increases. Many will put utilization management (UM) controls in place to drive usage toward generics or less expensive branded agents instead of the offending products.

There is a wide spectrum of both list price increases and the types of discounts that are given to payers and PBMs, vis-à-vis the negotiated discount, depending on the therapeutic category. While the public may see a list price increase of 5-10%, behind the scenes there may actually be negotiated discounts anywhere from 10-50%. The average discount is about 30%, and can be as low as single digits or as high as 50% in categories like hepatitis C antivirals.

The negotiated discounts are a way for manufacturers to secure optimal formulary placement, which also serves to minimize barriers for both health care providers and patients to obtain the drug. Depending on the drug class, the discounts also:

  • help facilitate the removal of UM controls (called step edits and prior authorization) that can be used to force physicians to prescribe alternative cheaper agents preferred by the plan
  • drive competitive pricing among players (e.g. maximize the discounts among all products)
  • ensure there is no abuse in off-label prescribing

Despite the aforementioned benefits to discounting, some manufacturers continue to pursue significant list price increases even in the face of the apparent risk of sub-optimal, if not total lack of reimbursement, as certain payers simply do not attempt to contract at all. Thus, there will be some segment of payers with which manufacturers can capture their actual list price, which then gives manufacturers more financial leeway to contract with other payers who have placed barriers up for their products. Taking together the two extremes of no contracting and deeply discounted rebates should still average out to some profitability.

On the Medicare side, manufacturer discounts for pharmacy-based agents (e.g. Part D) may need to be more aggressive because of the nature of budget available to cover those agents. In many cases, for a manufacturer to be successful in obtaining formulary coverage for a Medicare Part D plan, a 40-50% discount may be required to achieve a favorable status – whereas the same therapeutic area might only need a 30% discount for commercial plans. For Medicaid, price decreases are mandated by law, but everywhere else, free market forces are very much in effect.

Figure 1: Flow of Pharmaceutical Funds, Products, and Services. Reproduced with permission from doi:10.1001/jama.2017.5607. Copyright © 2017 American Medical Association. All rights reserved.

Payers do note that there is “abuse” in certain therapeutic areas that occurs with price increases over the norms. One trend occurring to address these so called “abuses” in the payer community is to expand their formulary exclusion lists, adding more new, high-cost drugs to those lists. Many times payers are forcing these agents to be excluded because employers are becoming more adamant on cost-efficiencies, as well as reluctance on the part of the plan to reimburse for an agent that is no more efficacious as an older, less expensive branded or even generic agent.

As we witness more specialty products come to market, which tend to be accompanied by high price tags, high deductible plans continue to increase premiums, and employers are indicating that they cannot sustain those increases. In turn, more cost must be borne by the patient. This “financial toxicity” to patients can result, for example, in poor prescription drug compliance and intentional skipping of doses, or waiting between refills to help manage their own out of pocket costs.

While the increasing use of discounts for payers does allow the plan to offer lower prescription costs for clients and plan members compared to list price, patients still bear the brunt of co-pays associated with the list price rather than discounted price. Patients who have commercial insurance will have out of pocket costs, which can range from $25 – $100 per prescription, depending on the type of branded product. To offset the higher co-pay, manufacturers can offer coupons to patients that, depending on the size and scope of the program, can quickly and substantially add up for the manufacturer. There are certain camps within the sector that promote the idea that co-pay card program costs require the manufacturer to increase price to recoup these extra costs. But for the most part, the impact on gross to net of these programs is in reality quite small and not the sole reason a manufacturer increases the price of an agent. Yet, there are some manufacturers that take a greater hit on co-pay program costs due to greater demand. Also of note, these co-pay cards only work for commercial plans, and not Medicare or Medicaid plans.

There are still several other dynamics at play that drive price increases, with distributors and PBMs also culprits to the pricing conundrum. When a drug company distributes their agents they use wholesalers that are paid based on a percentage of the list price, and depending on the agreement with the manufacturer, often also some percentage of sales or volume. Paradoxically, manufacturers are forced to drive higher prices on their agents because lower prices are penalized as many wholesalers will not stock or distribute a drug that does not yield a sufficiently healthy ROI. Manufacturers are somewhat stuck to price on the higher side simply to appease the wholesalers.

PBMs also are part of the problem when it comes to higher list prices. PBMs make money through various administrative fees and rebates, where the bigger the negotiated rebate, the bigger the benefit to their bottom line. Lower price products simply have less room for the negotiation of deep discounts, but a deep discount on a big ticket specialty drug is a nice win that PBMs can bring to their clients and employers. It is also advantageous for manufacturers to entertain these deep discounts with PBMs as it can secure optimal placement on formulary exclusion lists and keep out competitors in their therapeutic category. Again, in what feels like a pay to play scenario, manufacturers are forced to drive up list prices to both give themselves negotiating power but also to appease another stakeholder.

We started this article by noting this system is neither simple nor straightforward, and should rightfully sound complicated after all that we have laid out. Figure 1 depicts the various players and the relationships between them.

With all of that being said, some manufacturers are starting to take more proactive steps to neutralize the pricing conversation, rather than get stuck putting out fires in the press as has happened of late. Allergan’s CEO has committed to limiting price increases to single-digit percentage increases. Novo Nordisk has said it will not raise drug prices by more than 10% in a year, and Eli Lilly has made a similar pledge. Other large players like Novartis and Amgen have started publicly engaging in value-based pricing arrangements, where they will be responsible for costs when patients do not respond as anticipated to drug. Recently Optum, the health services business of UnitedHealth Group, and Merck announced they will collaborate on outcomes-based arrangements for Merck drugs. Current pay-for-performance deals in specialty categories exist in MS, PCSK9s, oncology, diabetes, and anticoagulants. Pay-for-performance systems assess the quality and efficiency of a drug by looking at surrogate markers like blood pressure or cholesterol. These actions and others are scratching the surface at creating a more transparent pricing environment, along with finding new ways to build, demonstrate, and monetize drug value.

The key questions we are pondering and trying to solve for related to the US reimbursement and pricing are:

  • Have we reached a tipping point whereby we will see a ground swell around price re-calibration and new mechanisms to deal with this issue?
  • How will the influx of novel mechanisms in a myriad of therapeutic areas impact drug pricing overall?
  • With the advent of biosimilars and more generics, will this help with budget management overall by freeing up dollars for other novel therapies?
  • With manufacturers still needing to grow revenue with existing product portfolios, what will be the new norm by way of accepted price increases and how will other US stakeholders take part in this new modality?

As discussed in a previous issue of this newsletter, gene therapy products will also likely force more creative pricing and reimbursement strategies given anticipated high costs with unprecedented value from a single dose. There are many different levers that can be pulled that can and do affect cost – in the next article, we will explore some legislative options that have and continue to be explored to reign in drug pricing.