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U.S. Biomanufacturing Surge, Arena BioWorks Fallout & GLP-1 Rumors | Making Medicine Podcast · Making Medicine

• 0:00
  Speaker 1: At Making Medicine. We're reporting on the headlines, not making
• 0:03
  Speaker 1: medical recommendations. For personal health questions, always consult a doctor.
• 0:08
  Speaker 1: Nothing in this episode constitutes investment, financial, or legal advice,
• 0:12
  Speaker 1: and please consult your own advisors before making decisions. Hello everyone,
• 0:23
  Speaker 1: and welcome back to the Making Medicine Podcast, where science,
• 0:27
  Speaker 1: policy and innovation meet. As always, I'm your host, John Stanford.
• 0:32
  Speaker 1: This week, we're covering a leadership shakeup at the FDA,
• 0:35
  Speaker 1: fresh regulatory moves on biosimilars and gene editing, the sudden
• 0:39
  Speaker 1: shutdown of Areno Bioworks, a new manufacturing talent hub taking
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  Speaker 1: shape in Virginia, and we'll visit the rumor mill about
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  Speaker 1: an upcoming White House drug pricing announcement and possible other
• 0:50
  Speaker 1: administration actions. So lots to cover with that, let's get
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  Speaker 1: into the show. Our first headline today is a leadership
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  Speaker 1: shakeup at the Food and Drug and Miministration. The Center
• 1:01
  Speaker 1: for Drug Evaluation and Research Director CEDARS director George Tidmarsh
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  Speaker 1: abruptly resigned after being placed on leave amid an HHS
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  Speaker 1: review and a lawsuit alleging misconduct. Director Tidmarsh had reportedly
• 1:14
  Speaker 1: raised concerns about the legality of the Commissioner's National Priority
• 1:18
  Speaker 1: voucher concept that we've talked about on previous episodes, and
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  Speaker 1: the broader FDA direction under the new administration. He says
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  Speaker 1: he's being retaliated against and plans to contest the exit.
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  Speaker 1: We won't weigh into the legal battle that's coming from this,
• 1:32
  Speaker 1: but instead one to focus on the broader impact of
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  Speaker 1: these changes at FDA, This leadership shakeup, this isn't the
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  Speaker 1: first follows the saga from vine Prosad where he left
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  Speaker 1: and came back, and comes at a challenging time for
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  Speaker 1: fdaight navigating a shutdown, and there are reported concerns over
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  Speaker 1: slowdowns and reviews mispadufidates and the shutdown possibly exacerbating the issue. October,
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  Speaker 1: for example, logged only two novel drug approvals out of
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  Speaker 1: the agency. That's down from five and September and ties
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  Speaker 1: for this year's low in twenty twenty four. Four drugs
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  Speaker 1: came out in October and six and twenty twenty three.
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  Speaker 1: Moving past the reasons for tid Marsh's departure and contest
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  Speaker 1: and lawsuit, and even looking past Vene Prosad's departure and return,
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  Speaker 1: the broader question is is fdaight giving investors and biotech's
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  Speaker 1: clear certainty for them to move forward with their products.
• 2:24
  Speaker 1: Three things that we're watching predictability risk where industry can
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  Speaker 1: depend on standard timelines. This is critically important because every
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  Speaker 1: day that gets added to a PADUFA date actually represents
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  Speaker 1: tens of thousands of dollars. It's forcing small biotechs to
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  Speaker 1: go back and possibly fundraise more in an environment that's
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  Speaker 1: incredibly challenging. This is impacting the ability for people to plan.
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  Speaker 1: You're timing these pivotal milestones years in advance. It's guidance
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  Speaker 1: given not just to the investor community, but to patients
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  Speaker 1: and to scientists. It all runs smoothly when the FDA
• 2:59
  Speaker 1: is running smoothly. And lastly, all these changes make engaging
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  Speaker 1: with the FDA really challenging. We were talking just last
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  Speaker 1: week with some biotech executives who, through no fault of
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  Speaker 1: the FDAs, were dealing with entirely new people in the
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  Speaker 1: review of one of their applications, and they said it
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  Speaker 1: was really starting back at square one when they were
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  Speaker 1: so close to the finish line. Now, no one wants
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  Speaker 1: to see the FDA speeding ahead without prioritizing safety and efficacy.
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  Speaker 1: But these leadership transitions are yet another cautionary tale that
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  Speaker 1: might have people scared to move further in biotech because
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  Speaker 1: they're not certain how the regulatory agency will respond to
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  Speaker 1: their needs. But credit has to be given to the
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  Speaker 1: FDA that they're also making moves on other fronts to
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  Speaker 1: possibly speed up the development of new medicines and create
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  Speaker 1: broader access and affordability. The FDA recently moved on two
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  Speaker 1: fronts that do provide more clarity and investor support, in
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  Speaker 1: this case for biosimilars and gene editing mentioned on last
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  Speaker 1: week's episode. While we were recording, the FDA and HHS
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  Speaker 1: more broadly were releasing new draft guidance that aims to
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  Speaker 1: speed the development and lower costs for biosimilars, proposing fewer
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  Speaker 1: comparative clinical efficacy studies when robust analytics can already establish biosimilarity.
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  Speaker 1: This is something that on its surface last week, we
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  Speaker 1: along with a number of other folks, wanted to hear
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  Speaker 1: how they could be confident in the idea that a
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  Speaker 1: biosimilar works as well as its underlying biologic drawing parallels
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  Speaker 1: to generics and small molecules from a scientific perspective, isn't
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  Speaker 1: always appropriate. The FDA announcement got into greater detail here
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  Speaker 1: that we're happy to share. The FDA says it's utilizing
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  Speaker 1: evidence from seventy six prior biosimilar approvals over the last decade.
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  Speaker 1: They're using that information to say that streamlining won't compromise
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  Speaker 1: safety or effectiveness. Biosimilar developers spend tens of millions of
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  Speaker 1: dollars and as long as a decade conducting clinical trials
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  Speaker 1: to prove that their version is just as safe and
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  Speaker 1: effective as the original. FDA Commissioner Marty McCary shared at
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  Speaker 1: the announcement that he expects this new guidance to have
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  Speaker 1: the timeline and cut down on cost. Biosimilars could be
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  Speaker 1: and should be a crucial way to lower drug prices.
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  Speaker 1: So this is possibly a welcome move that can aid
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  Speaker 1: in efforts that importantly doesn't weaken patent protections that drive
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  Speaker 1: the novel innovations to begin with. It's great to see
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  Speaker 1: the FDA, and more broadly, the conversation of how we
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  Speaker 1: bring lower cost biosimilars to market. Developing a biosimilar has
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  Speaker 1: been described as some as effectively developing a whole new
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  Speaker 1: drug based on the guidance they have, so we will
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  Speaker 1: see how the FDA moves forward on this biosimilar guidance
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  Speaker 1: and the impacts it has in potentially bringing market based
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  Speaker 1: competition to drive down cost and increase affordability. The FDA
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  Speaker 1: also announced progress on gene editing on the advanced therapy side.
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  Speaker 1: Vinet Prossad signaled that the FDA will soon publish a
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  Speaker 1: paper outlining a faster, quote, extremely flexible path for personalized
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  Speaker 1: gene editing therapies. That follows the FDA release of three
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  Speaker 1: new draft guidance documents aimed at streamlining the development, approval,
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  Speaker 1: and post market monitoring of sellingen therapies. Those documents focused
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  Speaker 1: on facilitating clinical trials and small populations, expedited pathways for
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  Speaker 1: serious conditions, and strengthening post approval data collection. Together, the announcements,
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  Speaker 1: along with the upcoming paper, signal that the FDA is
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  Speaker 1: committed to accelerating safe and effective advancements for selling gene therapies,
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  Speaker 1: a welcome acknowledgment considering the recent pullback from sellingen therapies
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  Speaker 1: across the industry that we've covered in recent episodes. So
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  Speaker 1: what do we make of all of this? Well, the FDA,
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  Speaker 1: despite leadership transitions and some concerns that they don't have
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  Speaker 1: the people in place to review drug applications. Are moving
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  Speaker 1: forward with commitments to explore new regulatory pathways for two
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  Speaker 1: critical areas. We all know that the biosimilar marketplace has
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  Speaker 1: not developed the way it needs to to bring down
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  Speaker 1: costs similar to generics to small molecules, so this could
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  Speaker 1: be a welcome change as long as scientists concur that
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  Speaker 1: the safety and efficacy are still there. Selling gene therapies
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  Speaker 1: have had a troubling time. We have not developed the policies, reimbursement,
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  Speaker 1: and regulatory frameworks to let these be successful and garner
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  Speaker 1: more investment. We've chronicled company after company, large and small,
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  Speaker 1: stepping away from this space, and so it is good
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  Speaker 1: to see that the FDA is serious about making sure
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  Speaker 1: we don't lose ground to selling gene therapies. As we
• 7:41
  Speaker 1: covered in last week's episode, that is a particular place
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  Speaker 1: where China is investing more. We will change to some
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  Speaker 1: unfortunate news coming out of industry this week, and that's
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  Speaker 1: the shutting down of Arena Bioworks, the research institute that
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  Speaker 1: debuted in January twenty twenty four with five hundred million
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  Speaker 1: dollars for a day decade of R and D. They
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  Speaker 1: announced this week that they're winding down. There were numerous
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  Speaker 1: investors in philanthropists excited about Arena's capability to fund basic
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  Speaker 1: research and continuously spin out new startups to fund ongoing research.
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  Speaker 1: With the shutdown announcement, roughly fifty staff, including co founder
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  Speaker 1: Stuart Schreiber and CEO Harvey Berger, are being let go.
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  Speaker 1: It will stop conducting research and hand off its discoveries
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  Speaker 1: to the scientists to advance it independently. Why the abrupt stop,
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  Speaker 1: especially from something that was so promising only a year ago, Well,
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  Speaker 1: the press release quote in our mind says it all.
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  Speaker 1: Since the conception of Arena Bioworks, biotech macro conditions have
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  Speaker 1: changed dramatically and the rate of changes accelerating with no
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  Speaker 1: clear turning point amid policy uncertainty and weak funding. The
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  Speaker 1: challenging markets are nothing new. We've been talking about that
• 8:52
  Speaker 1: for the last five years, waiting for the biotech rebound
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  Speaker 1: to begin. But what stood out to us was the
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  Speaker 1: call out of policy and search and driving Arena's decision
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  Speaker 1: to close. This has to be maybe the tenth, twelfth,
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  Speaker 1: or even fiftieth canary in the coal mine, saying that
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  Speaker 1: Washington is not giving this industry the confidence to invest,
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  Speaker 1: whether you're a large manufacturer or a small biotech co
• 9:16
  Speaker 1: founder Stuart Schreiber said in retrospect, I would say that
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  Speaker 1: if you want to test the new model, you should
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  Speaker 1: do so in a period of time when venture investing
• 9:24
  Speaker 1: is at least on a level playing field with the
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  Speaker 1: other options that investors have. This is potentially a case
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  Speaker 1: study in timing private capital titans, even well connected institutes
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  Speaker 1: with marquee talent, will struggle, but it underscores a bigger
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  Speaker 1: point for US leadership in biotech. Philanthropy and billionaires can catalyze,
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  Speaker 1: but they're not a substitute for durable public sector science
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  Speaker 1: funding and a policy environment that attracts follow on private
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  Speaker 1: sector investment. Will reiterate what we've often said on this
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  Speaker 1: podcast and to Capitol Hill and to the administration. The
• 9:58
  Speaker 1: NIH funding is critical to establishing basic science, but predictable
• 10:03
  Speaker 1: paths that unlocked capital will need clear signals from policymakers
• 10:07
  Speaker 1: to underwrite the risk they're taking. All of these conversations
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  Speaker 1: about price controls are an anethema to that investment, and
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  Speaker 1: so it's actually with very little surprise that we see
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  Speaker 1: innovative ideas like arena bioworks not succeeding. One of the
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  Speaker 1: other concerns besides challenging capital markets and unclear policy is
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  Speaker 1: workforce and can the US truly build a workforce that
• 10:32
  Speaker 1: can deliver on next generation medical innovation. Well, some promising news,
• 10:37
  Speaker 1: or at least an announcement of it, came out of
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  Speaker 1: Virginia with a public private partnership between Astrosenica, Eli, Lilly,
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  Speaker 1: and Murk to stand up the Virginia Center for Advanced
• 10:47
  Speaker 1: Pharmaceutical Manufacturing. As the announcement noted, this center will be
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  Speaker 1: the nation's largest multi company industry led hub for drug
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  Speaker 1: substance manufacturing and related operations, strengthening US supply chain resilience
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  Speaker 1: and building a world class GMP ready workforce through collaboration
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  Speaker 1: among industry, academia, and government. Each of the companies are
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  Speaker 1: contributing about forty million dollars alongside the state and higher
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  Speaker 1: ed partners, creating a scalable training hub about ninety thousand
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  Speaker 1: square feet. This talent center doesn't exist in a vacuum.
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  Speaker 1: Billions have been announced for new facilities in Virginia. Lily
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  Speaker 1: is planning a five billion dollar plant near Richmond. Merk
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  Speaker 1: broke round on a three billion expansion in Elkton, So
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  Speaker 1: it's going to be critically important for the five hundred
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  Speaker 1: billion dollars in manufacturing investment that we have heard about
• 11:38
  Speaker 1: as part of the Trump administration's pushed onshore more. The
• 11:41
  Speaker 1: bio manufacturing bottleneck will be people, not buildings, So it's
• 11:46
  Speaker 1: great to see a public private model that pairs colleges
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  Speaker 1: and universities. North Carolina as a state has proved that
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  Speaker 1: this can work, and Virginia is using that playbook. So
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  Speaker 1: hopefully in the years to come, as these buildings do
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  Speaker 1: get erect and the factories are turned on, they'll be
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  Speaker 1: the people talented chemists and manufacturing workforce and able to
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  Speaker 1: make these manufacturing sites functional. It's an interesting dichotomy that
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  Speaker 1: we just come off the announcement that arena bioworks can't
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  Speaker 1: make it work, and yet there are significant manufacturing investments
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  Speaker 1: in brick and mortar sites that are onshoing. They're two
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  Speaker 1: very different things, and again policy is at the center.
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  Speaker 1: The Trump administration has made clear through policy and announcements
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  Speaker 1: that they want to see more US based pharmaceutical manufacturing,
• 12:35
  Speaker 1: the markets responding companies are making announcements and now we
• 12:39
  Speaker 1: have workforce initiatives. But at the same time, the administration
• 12:44
  Speaker 1: in Congress over the last several years have not sent
• 12:47
  Speaker 1: a signal that they're interested in the actual innovation and
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  Speaker 1: drug development to happen here in the United States. And
• 12:54
  Speaker 1: that's where the market's responding as well. And that's why
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  Speaker 1: in the very same episode you can hear about Arena
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  Speaker 1: Bioworks closing while more workforce and manufacturing facilities go up.
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  Speaker 1: It's critically important that we show not just the interest
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  Speaker 1: in onshoring, but that we also show the interest in
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  Speaker 1: keeping the innovation here. Finally, we'll visit the rumor mill
• 13:15
  Speaker 1: for our last segment. It wouldn't be another week without
• 13:19
  Speaker 1: another White House announcement, and we're recording this on Wednesday,
• 13:22
  Speaker 1: so we are yet to have all the details of
• 13:24
  Speaker 1: probably the biggest announcement yet, and that's possibly one or
• 13:28
  Speaker 1: two deals coming out tomorrow with major manufacturers. Multiple outlets,
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  Speaker 1: including the Wall Street Journal, are reporting that the administration
• 13:36
  Speaker 1: is close to drug pricing agreements with Lily and Nova
• 13:40
  Speaker 1: Nordisk that would expand medicare access for weight loss use
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  Speaker 1: companies aren't confirming the terms, and a White House spokesperson
• 13:47
  Speaker 1: called the chatter speculation while the talks continue. But these
• 13:51
  Speaker 1: are pretty serious reports with a lot of specificity that
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  Speaker 1: the lowest dose of their weight loss drugs would be
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  Speaker 1: available at one hundred and forty nine dollars per month.
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  Speaker 1: That would be a substantial impact to these companies for
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  Speaker 1: their most popular drugs. But if Medicare opens the door
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  Speaker 1: even partially to covering obesity for these drugs, it's a
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  Speaker 1: major access shift for a class of drugs now only
• 14:14
  Speaker 1: covered for diabetes, cardiovascular risk, and sleep apnea. The companies
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  Speaker 1: may see a significantly larger population for which the drug
• 14:23
  Speaker 1: will be covered, and in exchange, they get to where
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  Speaker 1: we think this is somewhere the administration always wanted to go.
• 14:31
  Speaker 1: Only a few episodes ago, we were talking that one
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  Speaker 1: possible off ramp and one big target for the administration
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  Speaker 1: is getting a GLP one into the approximately one hundred
• 14:42
  Speaker 1: to two hundred dollars per month range. It sounds like
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  Speaker 1: that might be exactly what we're hearing later this week,
• 14:49
  Speaker 1: While Less reported on another rumor that we're paying attention
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  Speaker 1: to is the idea of demonstration projects coming out of
• 14:55
  Speaker 1: CMMI at the Centers for Medicaid Medicare Services. This this
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  Speaker 1: is effectively HHS is experimental unit that can play around
• 15:04
  Speaker 1: with policy under the guise of saving money. One idea
• 15:08
  Speaker 1: that we saw in the first Trump administration but was
• 15:11
  Speaker 1: eventually thrown out for procedural reasons, is effectively a tax
• 15:15
  Speaker 1: on Part B manufacturers. For simplicity's sake, we think of
• 15:20
  Speaker 1: Part B as drugs infused by a doctor, so they
• 15:23
  Speaker 1: often happen to be biologics. We'll have to see the
• 15:26
  Speaker 1: specifics of this policy and if it really does come out,
• 15:30
  Speaker 1: but if this is an announcement, I think it's worth
• 15:33
  Speaker 1: flagging while people are working on it and before we've
• 15:35
  Speaker 1: seen it that this would be a mistake. It's another
• 15:39
  Speaker 1: assault on the bottom lines of companies that are already
• 15:42
  Speaker 1: exposed to significant headwinds. At some point it's just too much.
• 15:47
  Speaker 1: And if we look at Arena Bioworks or any of
• 15:50
  Speaker 1: the other dozens of companies and incubates investment life Science
• 15:54
  Speaker 1: tracker that have closed or shuttered programs because of price
• 15:57
  Speaker 1: controls and the lack of into this space, it would
• 16:02
  Speaker 1: be concerning to see effectively attacks put on one type
• 16:05
  Speaker 1: of manufacturer. We've already seen what the pill penalty did
• 16:09
  Speaker 1: to small molecule manufacturers, so it would be concerning to
• 16:12
  Speaker 1: see similar arbitrary attacks on Part B drugs. This is
• 16:17
  Speaker 1: certainly something we'll probably keep talking about, but while it's
• 16:21
  Speaker 1: there in the rumor mill, and we know that some
• 16:22
  Speaker 1: policymakers listen to the podcast, Before you move forward with
• 16:26
  Speaker 1: anything like this, think about what we learn from Arena
• 16:30
  Speaker 1: bioworks and from others about how challenging the environment is
• 16:34
  Speaker 1: and that they probably can't sustain yet another hit via
• 16:38
  Speaker 1: discretionary tax. At the end of the day, what we've
• 16:42
  Speaker 1: heard about proposals like these are effectively ways to increase
• 16:46
  Speaker 1: revenue at the Treasury Department. This is not something that
• 16:49
  Speaker 1: would impact patients. It is not something that would put
• 16:52
  Speaker 1: dollars back in American patients pockets, but instead is effectively
• 16:56
  Speaker 1: attacks on a specific type of drug manufacturer. It reminds
• 17:00
  Speaker 1: us a little bit of proposed ideas coming out of
• 17:03
  Speaker 1: the Commerce Department to increase and charge fees related to
• 17:07
  Speaker 1: intellectual property. Yes, these can be revenue raisers, but at
• 17:12
  Speaker 1: what cost? And so as the administration continues to explore
• 17:16
  Speaker 1: more ways to bring in revenue, similar to the tariffs conversation.
• 17:20
  Speaker 1: We hope that everyone can see that these are stacking
• 17:23
  Speaker 1: up and beginning to make not just the early stage environment,
• 17:27
  Speaker 1: but even the late stage manufacturing far more challenging. That
• 17:31
  Speaker 1: challenge will translate to less investment, which of course will
• 17:35
  Speaker 1: translate to fewer drugs down the road. So we're hoping
• 17:38
  Speaker 1: to have robust engagement with the Administration and Congress on
• 17:42
  Speaker 1: these kinds of ideas and make sure that incubates voice
• 17:45
  Speaker 1: and your voice remains heard when it comes to the
• 17:48
  Speaker 1: innovation ecosystem. That's all for this week's episode of the
• 17:52
  Speaker 1: Making Medicine Podcast. Have a thought or question about today's topics,
• 17:56
  Speaker 1: drop a comment and we'll feature it in next week's episode.
• 18:00
  Speaker 1: Get to subscribe on YouTube and follow us on LinkedIn,
• 18:03
  Speaker 1: x and Instagram using the links in the description. Thanks
• 18:06
  Speaker 1: for listening, and as always, keep innovating.