Understanding the payer perspectives and incentives can lead to a more commercially viable development strategy across the innovative spectrum from gene therapies to value-add therapies

by Ralph Hughes, Vice President, PharmaVentures.

In his book, The Price of Global Health, Ed Schoonveld provides a brilliant analogy of what a payer is. He describes a dinner party in which one person orders the meal (the physician), another person eats the meal (the patient) and a third person picks up the cheque (the payer). This analogy does a great job of capturing the essence of the health system and enables us to see the how perverse incentives and behaviours might emerge from such a setup.

In reality, the payer system is orders of magnitude more complicated and so are the incentives and behaviours. Understanding what drives different types of payers and the different funding flows that they must contend with, helps us to build a picture of how an asset might be paid for or reimbursed. This can have a big impact on the value and price of a development asset.

Payers are not a homogeneous group:

There are many ways of characterising payers, e.g., by the regions they cover, or the populations they cover or the perspectives they take. There are so many different types of payers in the US as it is such a fragmented health system, but what is important is the risk that payers take, what they can do about that risk and therefore the view they take on drug coverage:

  • The insurer view: Payers like managed care organisations, manage the risk of a patient primarily in the outpatient setting through a pharmacy benefit manager and will leave the management of an inpatient up to the hospital and fund them through fixed fee payments.
  • The value-based view: Payers like Integrated Delivery Networks or Accountable Care Organisations, own the total risk of the patient from end to end as they manage a network of providers. Through this network, they can deliver care as inpatients and outpatients in the most efficient way possible, this enables them to think about the total cost of care.
  • The provider view: The provider will only be responsible for their own centre or hospital; this means that they will be focussed on the value coming from reimbursement via the insurer versus how much they must spend to deliver care.

Understanding the difference between these key groups helps us understand the incentives at play and how they might impact on a drug in development.

Different payers have different views:

A payer conveyed to me a compelling illustration of the significance of getting different views. One of the major challenges with gene therapies in the US is the portability of patients under outcome-based or amortisation schemes. This means that an arrangement for spreading the high, one-time cost of a gene therapy over several years with one insurance company may be made, but in the US, people typically switch insurance companies every 1-2 years, making it difficult for the scheme to follow them to the new insurance provider. However, with the prevalence of accountable care organisations, the frequency of switching is much less, occurring only every 4-5 years, which makes patient portability a lesser concern and makes these types of payers more willing to enter into amortisation agreements.

Another instance that showcases all three perspectives well is the recent launch of an antibiotic that requires weekly dosing, eliminating the need for daily IV administration of vancomycin by a nurse through Outpatient Parenteral Antibiotic Therapy (OPAT) and demonstrating similar effectiveness for severe infections. When speaking with payers, I encountered three vastly different views on the value of this product and how the incentives are structured:

  1. A hospital payer stated that they wouldn’t prescribe it for inpatients because its efficacy is the same as a daily generic and they’d rather have the patient return to the outpatient clinic the day after discharge to receive the drug, passing the cost onto the insurer and avoiding adding to their fixed fee episode cost.
  2. A Pharmacy Benefit Manager (PBM) informed me that they would only approve the prescription if it was a continuation from the hospital, and if it was a new script, they would apply a prior authorisation if the price was too high. The price could also factor in the cost savings from avoiding OPAT.
  3. An Accountable Care Organization (ACO) payer stated that there was a massive potential for system efficiencies as it could facilitate early discharge, decrease the need for skilled nursing facilities, and OPAT. Taking a value-based approach, they were able to consider inpatient and outpatient as a seamless continuum.

It’s not to say that payers always disagree. There are many aspects that payers consistently agree on, and this applies across the innovative spectrum from gene therapies and 505(b)(2) products and across the geographical spectrum from Australia to the USA. One such issue is the importance of choosing the right comparator for an asset: what is your price and efficacy compared to?

A good example of this is with the gene therapies for muscular dystrophy compared with those for haemophilia. An insurer explained that for muscular dystrophy; certain assets have been launched with weak data on surrogate endpoints with no comparator “only adding new costs”. These are contrasted with assets launching for haemophilia that will replace the extremely expensive blood clotting factors, which can cost up to $1 million annually. “Ultimately, you can divide gene therapies into two categories: those that bring new costs and those that can offset costs.” It was clear that there was a much higher willingness to pay for assets that avoid significant existing cost. This is highly relevant for drug developers, as the comparison and offset costs are crucial for the acceptance of a price by payers and potential partners.

Why is this important to do early?

Whether you’re developing a gene therapy or a value-added drug, it’s crucial to consider the various payer perspectives as it can help you evaluate the significance of these issues to your asset, the potential blockers to progress and the ways to overcome them. From these examples alone we can see:

  • The ability to add certain cost-offsets to our price to drive value with specific payer types.
  • The likelihood of getting value based contracts and spreading the price.
  • The importance of developing the right endpoints.
  • The importance of considering the right comparators in your trials.

It is certain that major pharmaceutical partners will understand these barriers. For early developers looking to get deals with those pharmaceutical companies, taking steps early on to reveal obstacles and the method for overcoming them can result in better-than-expected pricing outcomes. It enables smaller biotechs to enter important negotiations on a more equal footing with larger pharmaceutical partners and add value to their asset in the mutual valuation.

Find out more about Pricing and Market Access from our website or contact us.

The importance of Pricing and Market Access in licensing, partnering and early-stage development

by Ralph Hughes, Vice President, PharmaVentures.

A prominent biotech Venture Capital (VC) firm recently told me: “Insurance companies are the real movers and shakers in health care at the moment, they are the sharp end of the spear.” And he went on to say that we need to understand what they are thinking if we are going to develop drugs that are marketable.

Drug developers sometimes struggle to see the value that pricing and market access insights will bring at an early stage. Many believe it is too early, that the deal partner will do their own analysis, or they simply don’t understand it.

The VC I spoke to reflected this sentiment, but put a different spin on it: “It’s not us or even the small biotech who has to deal with pricing and access; it’s the larger partner; they get it right in the teeth.” He went on to say it is incumbent on VCs and biotech developers to do the work as it can “pave the way if they do or build barriers if they don’t.”

 This was mirrored by a comment from a pharmaceutical exec who said, “We will only look at assets where we can see the path to market for and that includes market access.”

With all this in mind, we spoke to several US payers to try to understand how payer perspectives can impact early development decisions in key areas of development from across the innovative spectrum from gene therapies to repurposed drugs. In these discussions there were some clear lessons that drug developers can learn from payers, even at the very early stage, such as:

  • Understanding incentives, perspectives and funding flows can lead to better pricing and development strategies.
  • Creating a cost offset narrative is essential for assets with infrastructure issues.
  • Understanding payer perspectives can help you define market positioning and pricing.
  • Targeting drug development at payers, as well as the regulators, can ensure adoption.
  • Payers can become advocates, not blockers, given the right data and narrative.

I have developed a series of short articles from these insights to help early-stage drug developers understand the value that payer insights can bring to early development and deal making.

The first, Understanding the payer perspectives and incentives can lead to a more commercially viable development strategy across the innovative spectrum from gene therapies to value-add therapies is available here.

The second, Creating a cost offset narrative early is essential for deal making in assets with infrastructure issues such as Psychedelics and Cell Therapies is available here.

Find out more about Pricing and Market Access from our website or contact us.

PharmaVentures advises Wellmarker Bio on their Clinical Trial Collaboration with MSD to evaluate WM-A1-3389 in combination with KEYTRUDA® (pembrolizumab)

London based deal experts are the exclusive advisors for this and the ongoing partnering efforts for WM-A1-3389.

London, UK, 08 February 2023: PharmaVentures is pleased to announce that it acted as exclusive advisor for Wellmarker Bio Co., Ltd (WMBIO) on its collaboration with MSD (Merck & Co., Inc., Rahway, NJ, USA) to evaluate WM-A1-3389 in combination with KEYTRUDA® (pembrolizumab), MSD’s anti-PD-1 therapy.

Under the agreement with MSD, WMBIO will sponsor the Phase 1 (or Phase 1b) clinical trial for WM-A1-3389, a novel therapeutic antibody for Non-Small Cell Lung Cancer (NSCLC) patients with low or no PD-L1 expression, in combination with KEYTRUDA. Some NSCLC patients with low or no PD-L1 expression have shown limited response to treatment with immunotherapies and there is a high unmet need in these patient populations. WMBIO is also planning to expand the target patient group to other solid tumour indications.

 Adrian Dawkes, Managing Director at PharmaVentures, said “We are pleased to have assisted WMBIO in establishing this collaboration with MSD. We have been working with Wellmarker Bio for some time now and it is gratifying to see this collaboration come to fruition. We look forward to helping Wellmarker with more partnerships as their pipeline progresses.”

Dong-Hoon Jin, CEO of Wellmarker Bio, said “This clinical trial collaboration with MSD holds great significance for WMBIO as it allows us to evaluate a first-in-class drug with a novel mechanism in combination with KEYTRUDA. We engaged PharmaVentures as our advisors for this collaboration and continue to work with them in partnering for WM-A1-3389.”

Fintan Walton, Founder and CEO of PharmaVentures, said “We are delighted to be supporting our client WMBIO in their collaboration with MSD. PharmaVentures has an extensive industry network and the specialist expertise to connect the Korean and Western Biopharma industries and vice versa, enabling them to collaborate through licensing and M&A deals.”

 KEYTRUDA® is a registered trademark of Merck Sharp & Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, NJ, USA.

– Ends –

 

For further information, please contact:

Lisa Holloway
Senior Marketing Manager
Phone: +44 (0) 1865 332700
lisa@pharmaventures.com

Distributed by PR Newswire (Cision)

 

About PharmaVentures

PharmaVentures is a premier transaction advisory firm and a leading international company in partnering, M&A deals and strategic alliances.

For over 30 years, PharmaVentures has acted as advisor on over 1000 deal related projects covering licensing, mergers, acquisitions, divestments, and joint venture activities for companies worldwide.

PharmaVentures’ deep bank of specialist experience, deal analytics and network of contacts among innovators and large pharma makes it uniquely placed to support business in all aspects of deal making and strategic planning.

PharmaVentures is well known for its deep insight into deal structures and its success for generating partnering interest.

PharmaVentures’ services include:

  • M&A (divestments, mergers, acquisitions, and strategic transactions)
  • Licensing (in and out licensing)
  • Fundraising Support
  • Strategy (commercialisation, deal strategy, due diligence, market entry)
  • Valuations (licensing, M&A, and fundraising)
  • Pricing and Market Access

PharmaVentures is based in London, UK, and employs over 30 professionals and has associates in Europe and Asia-Pacific.

NOTE: This Press release is issued by PharmaVentures Limited, whose wholly owned subsidiary PharmaVentures Capital Limited is authorised and regulated by the Financial Conduct Authority (741356). This communication is for information purposes only and does not constitute an offer or solicitation to purchase or engage in any investment products, securities or services and should not be deemed as such.

For more details, visit https://www.pharmaventures.com

About Wellmarker Bio

Wellmarker Bio Co., Ltd (WMBIO) is the first company to be spun out from the renowned Asan Medical Center, Korea’s largest hospital. It focuses on the development of novel anticancer drugs derived from comprehensive biomarker analysis. Since it was founded in 2016, WMBIO has developed 9 first-in-class drugs for solid tumor indications. Having access to a wide array of patient samples from Asia and using predictive biomarkers to guide therapeutic development in innovative ways have allowed WMBIO to rapidly move its assets from exploratory to preclinical and then into early clinical stages. WMBIO’s R&D strategy is to focus mainly on drug discovery and early-stage development of lead compounds to build a deep and wide pipeline of products, with the most advanced assets in phase 1 clinical trials. Once a drug candidate is at that stage, WMBIO would seek to find global pharmaceutical companies to partner with for co-development or licensing.

 

About WM-A1-3389

WM-A1-3389 is a novel therapeutic antibody targeting a new immune checkpoint protein discovered by Wellmarker Bio. WM-A1-3389’s novel target is abundantly expressed in a variety of cancer types and has demonstrated efficacy across different PBMC humanized models. An additive benefit of WM-A1-3389 and anti-PD-1 antibody was evidenced in preclinical mouse models including PD-1-resistant CT26 and LLC-1 mouse models.

 

 

 

Robust Valuations of Life Science Companies, Assets and Licensing Deals

PharmaVentures Podcast Series, Edition 4


Listen as Stephen Waterman and Kyriakos Tzafestas describe how PharmaVentures’ real-world experience is combined with valuation models, in-depth commercial insight including rigorous pricing, and best quality data sources to value companies, assets and pharma licensing deals to give their clients the confidence to negotiate the most robust and defensible positions in deal making to secure the most impactful financial terms.

 

About the Presenter:

Adrian Dawkes is a Managing Director at PharmaVentures and has been with the company since 2007. Adrian has led multiple consultancy, licensing and M&A mandates.

During his professional career, Adrian has significant multi-discipline expertise spanning research and development through to sales, marketing and business development. Adrian has over 30 years’ experience in the pharmaceutical, biotechnology and consultancy services sectors. Adrian holds a BSc in Biochemistry and a PhD in Immunochemistry.

 

About the Interviewees:

Stephen Waterman is a Managing Director at PharmaVentures.

He joined PharmaVentures in 2012, after a long career in Healthcare Investment Banking. At PharmaVentures, Stephen has originated and worked on a number of strategic advisory, licensing and M&A mandates, assisting his clients find the optimal solutions to their challenges and opportunities.

Kyriakos Tzafestas is a Director at PharmaVentures.

Prior to joining PharmaVentures, Kyriakos was a life sciences consultant working with biotech companies and early-stage technologies on projects encompassing market analysis, competitive intelligence, opportunity assessment, commercialisation roadmaps, patent landscaping, valuations, and business development for research collaborations and licensing opportunities. Before commencing his professional career, Kyriakos completed a Master of Biotechnology (Distinction) at the University of Glasgow and obtained a PhD in Molecular Biology from the University of York.

PharmaVentures advises IntoCell on Development and License Option Agreement with ADC Therapeutics

London-based deal experts are the advisors for this collaboration and the ongoing partnering efforts for IntoCell’s platform technologies and its lead programme, B7-H3 ADC.

London, UK, 05 January 2023: PharmaVentures is pleased to announce that it acted as exclusive advisor for IntoCell on its agreement with ADC Therapeutics (NYSE: ADCT).

 

IntoCell, a South Korean biotech developing novel antibody drug conjugate (ADC) platform technologies, has signed a Material Transfer Agreement (MTA) with option to license with ADC Therapeutics. Under the agreement, IntoCell will provide proprietary drug-linkers developed using its Ortho-Hydroxy Protected Aryl Sulfate (OHPAS™) system and payload modification technology (PMT). ADC Therapeutics, a commercial-stage biotechnology company developing next-generation ADCs, will conjugate its antibody to IntoCell’s drug-linker and perform in vitroin vivo, and toxicology experiments.

 

Stephen Waterman, Managing Director at PharmaVentures, said “We are pleased to have assisted IntoCell with this agreement, in addition to multiple research collaborations and MTAs previously executed, and we look forward to seeing the results of combining IntoCell’s linker-payload with ADC’s antibodies.”

 

Tae Kyo Park, Founder and CEO of IntoCell, said “We are pleased to be collaborating with ADC Therapeutics, one of the leading companies in the ADC area. We hope to leverage ADC Therapeutics’ experience with the development and commercialisation of its own ADC ZYNLONTA®. We have been working closely with PharmaVentures for the last few years, during which time PharmaVentures has been supporting our partnering efforts for our OHPAS and PMT platform technologies and our B7-H3 ADC.”

 

Fintan Walton, Founder and CEO of PharmaVentures, said “We are delighted to be supporting our client IntoCell with partnering advice. IntoCell is a great example of the emerging highly innovative Korean biotech sector. This latest deal highlights PharmaVentures’ success in helping Korean and Western Biopharma companies in forming alliances.”

 

– Ends –

 

For further information, please contact:

 

Stephen Waterman
Managing Director
Phone: +44 (0) 7931 144 097
stephen@pharmaventures.com

Distributed by PR Newswire (Cision)

 

About PharmaVentures

PharmaVentures is a premier transaction advisory firm and a leading international company in partnering, M&A deals and strategic alliances.

For over 30 years, PharmaVentures has acted as advisor on over 1000 deal related projects covering licensing, mergers, acquisitions, divestments, and joint venture activities for companies worldwide.

PharmaVentures’ deep bank of specialist experience, deal analytics and network of contacts among innovators and large pharma makes it uniquely placed to support business in all aspects of deal making and strategic planning.

PharmaVentures is well known for its deep insight into deal structures and its success for generating partnering interest.

PharmaVentures’ services include:

  • M&A (divestments, mergers, acquisitions, and strategic transactions)
  • Licensing (in and out licensing)
  • Fundraising Support
  • Strategy (commercialisation, deal strategy, due diligence, market entry)
  • Valuations (licensing, M&A, and fundraising)
  • Pricing and Market Access

PharmaVentures is based in London, UK, and employs over 30 professionals and has associates in Europe and Asia-Pacific.

NOTE: This Press release is issued by PharmaVentures Limited, whose wholly owned subsidiary PharmaVentures Capital Limited is authorised and regulated by the Financial Conduct Authority (741356). This communication is for information purposes only and does not constitute an offer or solicitation to purchase or engage in any investment products, securities or services and should not be deemed as such.

For more details, visit https://www.pharmaventures.com

About IntoCell, the OHPAS linker and PMT technology

IntoCell has developed a state-of-the-art linker technology comprising of a novel self-immolative group based on Ortho-Hydroxy Protected Aryl Sulfate (OHPAS) chemistry that works with a wide variety of phenolic and non-phenolic payloads. The OHPAS linker was designed to accommodate a wide variety of functional groups and triggering groups. The OHPAS Linker can be triggered by methods that include enzymes (i.e., lysosomal), light, and pH. The resulting ADCs have shown high stability, solubility, and very fast payload release profiles. IntoCell has also devised another ADC platform technology called Payload Modification Technology (PMT) in which temporary modifying groups have been incorporated into traditional payloads. PMT has improved therapeutic index of ADCs with significant reduction of normal cell’s uptake, resulting in normal cells being minimally affected. By utilising PMT and OHPAS linker technologies, IntoCell has successfully delivered a preclinical candidate in the B7-H3 ADC program. ITC-6146RO is the lead candidate that shows strong and long-lived potency in a variety of murine xenograft and PDX models with excellent safety.

For more information, please visit http://www.intocell.co.kr/