Week of March 20, 2017 | Vol. 6, Issue 10
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CBO Sees 24 Million More Uninsured, $337 Billion Deficit Cut in Coming Decade With GOP Health Plan
Drop in number of insured would result in part because people would opt to go without coverage
The number of Americans without health insurance would grow by 24 million under a House Republican proposal to topple most of the Affordable Care Act, according to a nonpartisan report that is likely to complicate GOP lawmakers' efforts to unite around the plan.
The report, released Monday by the Congressional Budget Office, rattled some centrist Republicans in the Senate who have said they won't support legislation that leaves a large number of people without coverage. House Republicans hoping to push the legislation through both chambers by early April
already face a revolt from conservative GOP lawmakers
who assert that the proposal doesn't do enough to roll back the ACA.
The CBO also found the legislation would reduce the federal deficit by $337 billion over the next decade and would lead insurance premiums to increase at first, then shrink.
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William Ackman's Pershing Square Sold Stake in Valeant
Ackman, Pershing Square's Stephen Fraidin to leave Valeant board
William Ackman's Pershing Square Capital Management LP sold its stake in struggling drugmaker
Valeant Pharmaceuticals International
Inc., taking a roughly $4 billion loss and bringing to a close one of the most tortured sagas in hedge-fund history.
The sale ends Mr. Ackman's quest to rescue the worst bet of his investing career. Valeant, once beloved by investors for its strategy of buying smaller rivals and boosting their drugs' prices, has lost more than 95% of its value in less than two years following questions about its accounting and business practices.
Mr. Ackman once predicted Valeant would be the next
Berkshire Hathaway
Inc.,
saying its shares could hit $330. The stock closed Monday at $12.11. At that price, the 8% stake Mr. Ackman parted with would be worth about $330 million, down from what had once been worth about $5 billion and more than wiping out the roughly $2.2 billion he made by joining with Valeant in 2014 for a hostile attempt to buy Allergan Inc., the maker of Botox. The Valeant saga illustrates the risks of Mr. Ackman's strategy of placing big bets on only a handful of companies at the same time. While his funds have generated substantial returns over the years, Mr. Ackman has drawn criticism for some high-profile flops. Losses on retailer J.C. Penney Co. and his long-running bet against supplement maker Herbalife Ltd. have offset big gains on Canadian Pacific Railway Ltd. and once-bankrupt mall developer GGP Inc.
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Below are summaries and charts with the past week's transactions from the different healthcare sectors. For a detailed table showing data for each industry transaction click on any of the charts or use the download link above. Total transaction values are provided in USD millions.
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Pharma & Biotech
16 transactions totaling $721
million
Supplies, Equipment & Services
16 transactions totaling $2,064 million
Healthcare IT & Managed Care
4 transactions totaling $170 million
Healthcare Facilities & Distributors
14 transactions totaling $412 million
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Pharma & Biotech
17 private placements totaling $310 million
Supplies, Equipment & Services
17 private placements totaling $253 million
Healthcare IT & Managed Care
10 private placements totaling $75 million
Healthcare Facilities & Distributors
1 private placement totaling $3 million
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Pharma & Biotech
6 public offerings totaling $224 million
Supplies, Equipment & Services
2 public offerings totaling $150 million
Healthcare IT & Managed Care
3 public offerings totaling $1,007 million
Healthcare Facilities & Distributors
0 public offerings
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 Each week, w
e provide updated trading
comps for leading comp
anies from numerous healthcare subsectors.
To the right you will see a high-level breakdown of median revenue and EBITDA multiples for each of the specific subsectors
For a complete trading comp analysis (including the individual equities that comprise the subsectors), click on the table to the right or use the download link from the top of this newsletter.
Note: data reflects prior week close.
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RECENT INDUSTRY HEADLINES
A Sampling of Relevant Industry Headlines from the Last Week
Below are snippets from relevant industry news articles from the past week presented in chronological order. For additional information or the article's complete text, click the headline link to view the original publication.
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March 14, 2017 -
Wall Street Journal
Rather than a bonanza, a faster U.S. Food and Drug Administration would be a double-edged sword for battered generic drug stocks. Fortunately, there are some glimmers of hope for investors in the sector.
Scott Gottlieb, the Trump Administration's
pick to run the FDA
, has been vocal in his belief that government policy is somewhat culpable for high prices of old drugs that don't have enough competition. He
wrote in The Wall Street Journal
last year that the rising costs and complexity of filing a generic drug application with the FDA has helped prevent new competition for certain drugs from coming online.
Simplifying the application process would be good news for patients and payers. Such a policy would help push drug prices generally lower-likely reducing the incidences of now-familiar exponential
price increases on older drugs
that lack sufficient competition. Welcoming a lighter regulatory touch, the Association for Accessible Medicines, a generic drug industry trade group,
has indicated its support
for Dr. Gottlieb's nomination.
Marathon, under heavy fire for Emflaza pricing, makes surprise deal to sell drug for $140M-plus
March 16, 2017 -
Fierce Pharma
Marathon Pharmaceuticals is in plenty of hot water after its brazen $89,000 pricing on the old-turned-new Duchenne muscular dystrophy drug Emflaza-a decades-old product available overseas for $1,000 per year. Now, it's scored a quick payoff by
selling the med to PTC Therapeutics in a deal potentially worth more than $190 million.
But if Marathon thinks it can pass off the controversy to PTC with the sale, it likely has another thing coming.
Indeed, news of the sale came less than 24 hours after Sen. Bernie Sanders and Rep. Elijah Cummings-who've already come out gunning for Marathon itself-challenged the FDA and the policies that allowed Marathon to quickly push Emflaza (deflazacort) through agency review and win seven years of orphan drug exclusivity at minimal effort compared with other rare disease drug development.
Now, PTC will take charge of the Emflaza rollout, which Marathon "paused" as the pricing backlash heated up. During a
conference call
about the deal, execs said they plan to "re-examine" the price Marathon had set.
March 17, 2017 - Wall Street Journal
For insurance companies, drug stock investors, and the president, price matters. Amgen served as a reminder on Friday. New clinical data from the biotech giant show its anti-cholesterol drug Repatha, when used in combination with statins, caused a 20% reduction in deaths, strokes and heart attacks, compared to traditional statin therapy. However, the data do not show a meaningful reduction in cardiovascular mortality rates for patients on Repatha. The data are strong in an absolute sense, but left investors disappointed. Amgen shares were down more than 7% Friday morning, after having rallied by about 23% this year. Smaller biotech companies developing similar drugs fell as much as 20% Friday. One reason: insurers will weigh the data against Repatha's price. The drug costs more than $14,500 annually before rebates and discounts. A statin, meanwhile, has a minimal cost. That dynamic has weighed on Repatha sales since the drug's launch in 2015. To help win over those insurers, Amgen made an unusual public offer of refunds if patients on the drug suffer a heart attack or stroke. That is a sensible step to boost sales given Friday's data and the rising pressure that drug makers are feeling on prices from insurers and from President Donald Trump.
March 16, 2017 -
Fierce Biotech
President Donald Trump's first budget will take $5.8 billion away from the National Institutes of Health (NIH), around 20% of its total, with FDA user fees also set to rise as biopharmas should "pay for their share."
The budget cut to the NIH, the leading state-backed medical research body that had around $30 billion in funds last year, also comes as the Department of Energy's Office of Science is set to lose $900 million, which also comes out as a 20% burning of its $5 billion budget. This Office supports research for around 300 universities and 10 national labs.
This is according to the White House
budget
(called a "blueprint" and seemingly subject to change), obtained last night by WaPo and now live, and comes after Trump recently pledged in a
speech to Congress
to help stop more diseases.
But Trump also made it clear during his campaign in 2016 that he wanted to cut back on government spending (outside of the military, which is in line for a major boost), and also comes as he is pledging to try and lower drug prices, and potentially remove some regulatory hurdles from the FDA.
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As an international, healthcare-focused merchant bank and financial advisory firm, we provide world-class services and capital to middle-market healthcare companies around the globe. We aim to keep our clients well-informed of healthcare news and events. With this additional insight in mind, together, we can recognize trends and opportunities that benefit our clients. We hope that you will reach out to Bourne Partners to help execute your healthcare operational and transactional needs. To learn more about our firm, visit our website or utilize the links below to engage with us on social media.
Sincerely,
The Bourne Partners Team
Bourne Partners
550 South Caldwell Street
Suite 900
Charlotte, NC 28202
704-552-8407
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