JPM 2021 (JP Morgan Healthcare Conference)

January 11-14, 2021; Virtual; Day #2 Highlights – Draft

Executive Highlights

  • In diabetes technology, Insulet led the day, with CEO Ms. Shacey Petrovic reiterating plans to launch Omnipod 5 in the first half of 2021; the company’s narrative on timing has been consistent for many quarters despite ongoing delays at the FDA due to the COVID-19 pandemic. We’re hearing about the delays throughout the field, and obviously those are challenging to anticipate. Notably, Omnipod 5 pivotal is now expected to read out at ENDO 2021, currently scheduled for March 20-23. There were a number of exciting updates in Insulet’s pipeline, both around Omnipod 5 and beyond. As well, Abbott CEO Robert Ford held court in a “fireside chat” – we were struck by multiple elements of the conversation, including detailed references to Libre 4 and Libre 5 and mentions of potential expansion into sensing other analytes, such as, we hope, ketone monitoring. Mr. Ford also gave an update on FreeStyle Libre 3: Abbott continues to work on securing reimbursement for the device, following its CE-Marking ~four months ago. Our own field checks suggest many PWD are elated with the new device.

  • In diabetes therapy, we caught presentations from all three major insulin manufacturers – Lilly, Novo Nordisk, and Sanofi, including a first-time JPM appearance for Novo Nordisk CEO Mr. Lars Jørgensen. While none of the trio discussed its insulin products, Lilly and Novo Nordisk spent significant time on future goals in diabetes.  New positive phase 2 data for Alzheimer’s candidate donanemab took center stage during Lilly’s presentation, but CEO Mr. David Ricks did not miss the chance to express his confidence in sustained growth for the GLP-1 class, fueled by next-gen products tirzepatide and Novo Nordisk’s Rybelsus. Mr. Jørgensen similarly highlighted growth potential for oral GLP-1 Rybelsus, despite slowed initial uptake due to the pandemic. Sanofi, however, said nothing about its diabetes portfolio, instead focusing on its immunology and oncology pipeline.

  • Check back in tomorrow for Day #3 of JPM, featuring Bayer, Vifor Pharma, Daiichi Sankyo, and more. For Bayer, we’ll keep our fingers crossed to hear commentary on DKD candidate finerenone, which just received Priority Review from FDA

Onwards to day #2 of JPM 2021. Tuesday was a major day for diabetes therapy, featuring presentations from all three “major” insulin manufacturers – Lilly, Novo Nordisk, and Sanofi. Read on for our top takeaways, and, if you missed it, see our highlights from Day #1 below.

Day #1 Highlights – Tech updates from Dexcom, Teladoc, Medtronic; Digital Health Panel; Therapy updates from Vertex, Hanmi, Regeneron, Novartis, J&J, Merck, Gilead, Amgen; Keynote from JPM CEO Jamie Dimon and Merck CEO Kenneth Frazier

Table of Contents 

Diabetes Technology Highlights

1. Insulet CEO Shacey Petrovic Expresses Confidence About First Half 2021 Launch for Omnipod 5, Despite FDA Backlog; Pivotal Trial Data of the Breakthrough Device Designated Technology to Read Out at ENDO 2021 in March

Insulet’s morning presentation provided a number of updates around the highly-anticipated Omnipod 5 hybrid closed loop system. Most notably, Insulet CEO Ms. Shacey Petrovic reiterated during both her prepared remarks and Q&A that she is confident that Omnipod 5 will meet its previous expectations to launch “in the first half of this year.” This is consistent with the launch timelines given by Insulet since 1Q20; as a reminder, the pivotal trial was resumed in June 2020. Ms. Petrovic also reiterated plans for a “limited launch” for Omnipod 5 during the first half of the year, followed by broader rollout in 2H21. Insulet’s confidence in its 1H21 Omnipod 5 launch timing is surprising to some, (though certainly welcome!), given the FDA’s communication that submissions for diabetes devices would be delayed by ~three months (see DiabetesMine Innovation Days 2020) due to the shifting of resources towards COVID-19-related reviews. Senseonics recently confirmed an “at least 60-day” delay for its 180-day Eversense submission; other notable device submissions potentially affected include Tidepool Loop, Tandem’s t:slim X2 smartphone control, and Medtronic’s MiniMed 780G. That said, however, understandably, the Breakthrough Device Designation for Insulet’s Omnipod 5 that it has from the FDA (announced 3Q18), certainly gives Insulet confidence in a faster review time.

  • “As you note, we benefit from the Breakthrough Designation program. So, over last few years, FDA has been engaged in collaborative review of our submission modules leading up to the formal submission and we remain very confident in our ability to launch in first half of this year. Responsiveness and collaboration with the Agency has not diminished as they focus on COVID. The Breakthrough devices have priority, so we’re feeling pretty good about the target we laid out to launch in 1H21.” – Ms. Petrovic

  • Results from the Omnipod 5 pivotal trial will be presented at ENDO 2021, currently scheduled for March 20-23. Previously, results were expected to be read out at ATTD 2021, and that meeting has been postponed from February to June in hopes that it can be held in-person in Paris. Strong pre-pivotal results (two weeks, n=36) were presented at ADA 2020, headlined by especially strong hypoglycemia and usability results.

  • In addition to reiterating launch timing forecasts and plans for presenting pivotal data, Ms. Petrovic’s presentation provided a few updates on Omnipod 5:

    • Omnipod 5 will be the first commercial AID system to use CGM trend arrows in its bolus calculation. Currently, Medtronic and Tandem AID systems are able to perform bolus calculation based on CGM values, but do not adjust calculation based on trend arrows. This is great news from our view, as the “trend” should be closer to reality.

    • The Omnipod 5 PDM will come with SIM connectivity to ensure constant connectivity. As Omnipod 5 will initially launch with Samsung phone compatibility, we see this feature as being especially valuable for non-Samsung Android and Apple iPhone users. While those users will not be able to adjust or bolus insulin from their smartphones, the PDM’s SIM connection means they will still be able to see their CGM and pump data from their iPhones in real-time. Since the Omnipod 5 algorithm also resides on the patch pump itself, the PDM also does not need to be in-range for users to stay in closed loop. In sum, even for non-Samsung users, the PDM will only be necessary when delivering a bolus, priming the pump, or adjusting insulin delivery.

    • Users will be required to “register” in order to get Omnipod 5. Ms. Petrovic stated that this process would help Insulet provide better customer support and data tracking. Back in August, Insulet shared with us that current DASH users will be receiving a new PDM to upgrade to Omnipod 5 – notably, today, Ms. Petrovic also confirmed that that PDM upgrade will come at no-cost to the user.

    • Ms. Petrovic stated that Insulet would be the first to market with full smartphone control. Given the confidence in Omnipod 5’s 1H21 launch, that certainly seems likely, though, depending on FDA progress, a number of other systems could be launching smartphone control shortly after. Tandem had already submitted for pump smartphone control for t:slim X2 as of 3Q20 and Tidepool recently submitted its Loop app to the FDA.

  • Beyond initial launch of Omnipod 5, Insulet has already begun or planned a number of studies in new populations. As we’d heard before, a pre-school pivotal trial (ages 2-6, n=80) has already begun, as well as enrollment for a 30-40 person type 2 feasibility study. A slide from today’s presentation also outlined studies for HypoProtect (Omnipod 5’s hypoglycemia protection mode) in exercise and in-hospital study, both expected to start in 2021.

  • On R&D, Ms. Petrovic discussed four key values for Insulet: simplicity, outcomes, empowerment, and choice. On choice, Ms. Petrovic reiterated Insulet’s plans to support iOS users (Android made sense as a starting point, given DASH runs on a locked-down Android phone) and Abbott FreeStyle Libre users. On empowerment, Ms. Petrovic expressed a belief that users’ data could be empowering if “analyzed and presented in the right way.” The picture in the slide is particularly exciting, as it appears to show screenshots of “Omnipod Health” with an overview of glycemic control and a messaging interface. This is our speculation, but could Insulet build out its own coaching program? There is undoubtedly more interested in behavioral health now though we are unaware on all that’s available on this front. The nature of Insulet’s overview page suggests that users will be able to easily review their data and change or reinforce behaviors. Certainly, the transition from discrete BGM to continuous CGM data has empowered patients to make behavior changes and understand their diabetes better. Investors may ask whether with more insulin delivery data is collected from smart pens and pumps, will the same effects be seen? We would certainly assume so, based on the impact to date of AID (automated insulin delivery).

  • Insulet also continued to focus on expanding its footprint globally. Insulet is aiming to expand into Turkey “early this year” and Australia “later on this year.” The two countries are estimated to add ~1 million intensive insulin users to Insulet’s total addressable market. There will certainly be major enthusiasm in both places although hands down, the change in geographic markets that we expect to make a major difference is when closed loop becomes available – we believe closed loop of any brand for intensely managed people with T1D trumps almost any “feature battle” (to use Robert Ford’s vivid reference re: the current CGM landscape). Omnipod DASH also continues to roll out more broadly in the US and elsewhere, with full commercial launch in Canada next week.

2. Abbott: Working Through Reimbursement for FreeStyle Libre 3 in Europe; CEO Robert Ford Reaffirms Commitment to FreeStyle Libre as a “Platform Product”

Abbott CEO Robert Ford spoke at length with highly regarded JPM MedTech analyst Robbie Marcus in a “fireside chat” this morning. While the format was certainly laid-back, we loved hearing about diabetes throughout the conversation – we aren’t sure how it works (are company executives invited for fireside chats? Do they request it?), but the format certainly plays to the strengths of this leader, who appears to have every detail of every Abbott business at his fingertips, no matter how obscure, and he also has the most confidence-inspiring perspective we’ve seen, particularly in the midst of COVID-19.

Listeners leaned in on multiple highlights. First, Mr. Ford confirmed that FreeStyle Libre 4 and Libre 5 will be “in the works” in the coming years – we heard our first very brief reference in 3Q20, in Q&A, so we were very impressed to hear references this time that didn’t skip a beat from that question that had been given from JPM’s Robbie Baxter himself (a question about Libre 3). This announcement came on the heels of 2020, which saw (long-awaited) US launch of FreeStyle Libre 2 at the end of 3Q20 and CE-marking for FreeStyle Libre 3. Second, we heard more positivity and a few more details on Libre 2 (to be launched in the US this year) and Libre 3 (to be launched in the EU this year). Both Libre 2 and Libre 3 are both meaningful upgrades over the first-gen FreeStyle Libre – FreeStyle Libre 2 added on optional alarms, while FreeStyle Libre 3 represents Abbott’s first real-time CGM, bringing real-time minute-by-minute readings directly to mobile devices via Bluetooth all in a smaller and thinner form factor. Interestingly, according to Mr. Ford, Abbott is still working through securing reimbursement for FreeStyle Libre 3 in European markets, which has been difficult as many countries have shifted their focus to COVID-19 related approvals and reimbursements. That said, Abbott expects the next-gen sensor to be available “soon,” but Mr. Ford gave no specific timelines. When the initial announcement of CE-Marking came through in September, Abbott was expecting to be able to launch FreeStyle Libre 3 in the “coming months.” We didn’t hear any updates on US timing for FreeStyle Libre 3, but according to comments from 3Q20, the US pivotal will not be delayed by COVID-19.

  • Mr. Ford credited Abbott’s “mass market” strategy for FreeStyle Libre as a major factor in the franchise’s substantial growth in recent years. Notably in 2020 the franchise recorded 59%, 40%, and 36% YOY growth in 1Q20, 2Q20, and 3Q20, respectively, on very tough comparisons to 2019 growth. Specifically, Mr. Ford emphasized Abbott’s strategy to deliver a “consumer friendly, intuitive, and disposable sensor” that could provide “measurable improvements in outcomes at a price point that allows for mass adoption” and highlighted the importance of appreciable outcomes for securing broad reimbursement. To meet the vast demand for FreeStyle Libre products, Abbott has dramatically scaled its manufacturing and now has the capacity to produce “hundreds of millions” of sensors. Mr. Ford expressed that Abbott’s large manufacturing capacity continues to be key for keeping the cost of FreeStyle Libre down and maintaining product accessibility. Additionally, Mr. Ford emphasized that Abbott’s commitment to its goal of simplicity has allowed it to avoid getting caught up in “feature battles” between competitors and instead focus on driving improved outcomes for patients and reduced costs for healthcare systems. With optional alarms, Bluetooth connectivity, and real-time data transmission, assuming pricing remains the same as for FreeStyle Libre 2, we’d imagine FreeStyle Libre 3 will be an incredibly compelling offering for those on intensive insulin therapy and beyond.

  • During today’s “fireside chat” Mr. Ford reiterated Abbott’s goal for Libre to become a “platform product” highlighting its novel Libre Sense Sport Biosensor as the first step toward expanding Libre sensors outside the field of diabetes. As a reminder, Libre Sense received CE-Marking in September for over-the counter purchase by athletes interested in learning more about their performance by tracking their glucose levels. Libre Sense is not cleared for use in people with diabetes, despite the fact that it retains the form factor and many of the functions of FreeStyle Libre 2. While Mr. Ford didn’t share specifics on other projects, he did share that Abbott has a “dedicated team” investigating potential opportunities for expansion including alternate analytes that could be measured similarly to glucose. Mr. Ford also acknowledged that non-diabetes markets will likely require a different business model compared to Abbott’s current CGM approach, but described the non-diabetes market as a “huge growth opportunity.” Notably, Dexcom CEO discussed the potential for other analyte sensing during his JPM presentation yesterday, with a specific mention of “sepsis detection,” though any non-glucose sensing product from Dexcom is also “a ways out there” in terms of timing.

  • Though not the focus of today’s presentation, Mr. Ford did speak briefly about Abbott’s strong financial position moving into 2021. Mr. Ford did not share any specific numbers for 2021, but stated that that Abbott’s financial health is “very strong” referencing the company’s 25% increase in quarterly dividend payouts announced in December. Mr. Ford also stated that Abbott is coming into 2021 from a “great standpoint from a debt perspective” with no debt coming due in 2021 and “very manageable” debt coming due in 2022. We expect to learn more about Abbott’s finances in the company’s 4Q20 call schedule for January 27th.

3. BD: Emphasis on COVID-19 Testing and Vaccines; No Significant Diabetes Updates; Strong Company Revenue Growth Driven by COVID-19 Testing (+26% YOY)

Unsurprisingly since diabetes isn’t the main part of BD’s business, diabetes went unmentioned during BD’s early morning presentation today. As we’d expect, management focused on the company’s significant COVID-19 efforts. Most notably, BD’s Veritor COVID-19 PCR test has gained wide-spread adoption generating preliminary 4Q20 (F1Q21) revenue of approximately “$685 million.” BD has also significantly ramped manufacturing for COVID-19 tests and invested $1.2 billion in expanding capacity for pre-filled syringes over the next four years which could certainly influence insulin delivery for patients using syringes for MDI.

  • BD provided company-wide preliminary revenue for 4Q20 (F1Q21) which came in at $5.3 billion compared to $4.2 billion in 4Q19 and representing a whopping +26% YOY growth. Much of this growth can be attributed to BD’s Life Sciences Segment which saw +74% YOY growth driven by $865 million in COVID-19 related revenue. BD’s Medical and Interventional segments also saw YOY growth in the quarter of 6.6% and 5% respectively which is very promising and indicates that BD’s in-hospital business recovered quickly following hospital shutdowns in the spring. We expect to learn more about BD’s diabetes-specific finances on the company’s upcoming 4Q20 call. For some context, quarterly diabetes revenue has hovered consistently between $250-$300 million for the last ~four years, with the most recent $277 million in diabetes revenue in 3Q20.

  • No updates were provided on either BD’s “Swatch” patch pump, which was last mentioned in 3Q19, or the company’s BD Diabetes Care app (App Store, Google Play). We imagine BD is still working on its patch pump, but the road has not been easy as BD had to withdraw its FDA application in May 2019 – we also wouldn’t be surprised if other priorities have arisen at the time of this global health crisis of COVID -19. BD’s Diabetes Care app on the other hand, which launched an updated version this spring bringing injection tracking to the platform, appears to going strong and receiving positive feedback with “over 30,000” users as of ATTD 2019.

Diabetes Therapy Highlights

1. Lilly: Confidence in Sustained GLP-1 Growth; Pursuit of “Beyond Normal Indications” for Tirzepatide, Downstream of Weight Loss; Remote Clinical Trials and Sales Reps Here to Stay

Lilly CEO Mr. David Ricks (virtually) sat down with JP Morgan analyst Mr. Chris Schott to discuss the company’s long-term growth beyond blockbuster GLP-1 Trulicity, lessons learned from the COVID-19 pandemic, and new phase 2 data for Alzheimer’s candidate donanemab. While JPM this year has been quiet generally, Lilly created a splash yesterday when it released the positive phase 2 Alzheimer’s data. Despite that breaking news, diabetes and its co-morbidities were still a major focus for Mr. Ricks, particularly in regard to “next-gen” incretin tirzepatide. Mr. Schott acknowledged that analysts have been consistently surprised by GLP-1’s rapid growth but remain skeptical as to whether or not it can be sustained over the next five to ten years (especially as patents on original generation patents expire). Mr. Ricks responded that he believes there is still significant room for growth in the patient population (i.e., individuals inadequately managed by all oral medications), of which ~40% are currently on a GLP-1. Referring to both weight and hypoglycemia benefits, Mr. Ricks asserted that GLP-1s are now known to be unequivocally superior to daily insulin injectables, so “most everyone else” outside of the 20-25% of ‘lean type 2s’ and certain older patients “should be getting a GLP-1.”

  • Mr. Ricks expects GLP-1s to “grow out of that positioning over time – particularly to earlier in the disease course, where we have the potential to disrupt the progression of failure that defines diabetes treatment.” Because individuals with diabetes often go through the frustrating process of repeatedly failing oral medications – while their pancreas health, weight, and insulin levels are “going in the wrong direction” – earlier application of differentiated GLP-1s (like Rybelsus and GLP-1/GIP dual agonist tirzepatide) could “double or triple” GLP-1 class size over the “next three or four years.”

  • Mr. Ricks remains extremely bullish on the future of tirzepatide. Citing SURPASS-1, Mr. Ricks stated that the newly released data confirmed two important points for tirzepatide – (i) that the profound A1c benefits seen in phase 2 could be replicated (“half [of participants] got below 5.7% on A1c, which is the first time that any study is even measuring that level… half the participants become euglycemic on tirzepatide. That’s a profound switch in how we think about [treating diabetes]”); and (ii) that tolerability could be dramatically improved using staggered titration (dropout rates fell from the mid-20s at the highest dosage in phase 2 to just 6% in SURPASS-1). Furthermore, Mr. Ricks emphasized that these benefits will likely be the “least remarkable” compared to other SURPASS program trials, given that patients in SURPASS-1 were recently diagnosed or treatment naïve.  

    • Mr. Ricks painted a promising picture of tirzepatide’s future in obesity, NASH, and even heart failure:We know that chronic obesity has many downstream health effects – it may be the equivalent of smoking in the 60s. You have all this downstream health cost and lifestyle impairment and disability that’s caused by it. So, reversing obesity has to be a key public health goal.” Although obesity will almost surely be one of tirzepatide’s indications, Mr. Ricks notes that payers will likely restrict use, so Lilly may need to search for other weight loss-related indications. To do so, Lilly will comb through upcoming data from tirzepatide’s obesity trial SURMOUNT-1 to identify promising secondary outcomes related to other potential indications.

  • Specific commentary on the non-GLP-1 diabetes portfolio was limited to expectations for modest price erosion over the next few years, offset by volume growth “in the mid-teens”.

  • When questioned on lessons learned from the pandemic, Mr. Ricks stated that the company will look to continue to utilize remote monitoring and virtual support in its “big, primary care, late-stage studies.” Furthermore, virtual sales outreach, especially to physicians who are employed at hospitals that ban pharmaceutical representatives, is likely here to say.

  • Mr. Ricks responded to some questions regarding Alzheimer’s candidate donanemab, following the release of positive topline phase 2 results. Lilly is no stranger to the Alzheimer’s field (see the now discontinued solanezumab), and Mr. Ricks hopes to capitalize on the developmental strategies learned there. Mr. Ricks pushed back on criticisms regarding the trial’s small size and shared that at the first measurable timepoint, a significant number of patients had no amyloid beta plaque. Full results will be presented on March 9 at the ADPD conference, and a second pivotal study is in the works. 

  • While not mentioned during the presentation, Lilly announced that the FDA has accepted its sNDA for SGLT-2 inhibitor Jardiance (empagliflozin) in heart failure with reduced ejection fraction (HFrEF), based off results from the EMPEROR-Reduced trial presented at ESC 2020. Approval would make Jardiance the second SGLT-2 inhibitor indicated for HFrEF, with or without diabetes, on the heels of AZ’s Farxiga.   

2. Novo Nordisk: Long-term Potential for Rybelsus; New Perspective on Obesity and Alzheimer’s disease GLP-1 Programs

Novo Nordisk’s presentation took the form of a free-flowing “fireside chat” between the company’s CEO Mr. Lars Fruergaard Jørgensen and top pharma analyst, the highly regarded Mr. Richard Vosser (Head of European Pharma & Biotech, J.P. Morgan). The two discussed the recent launch of Rybelsus (oral semaglutide) in US and international markets; GLP-1 programs in obesity and Alzheimer’s disease; strategies for overcoming competitive pressures in the US; and “big picture” aims for the company over the next 5-10 years.

  • Mr. Jørgensen discussed the first-year results of Rybelsus in the US, following its launch in 4Q19. Although sales suffered at the outset of the pandemic, Mr. Jørgensen was encouraged by recent performance for the GLP-1 receptor agonist. Mr. Jørgensen attributed this success to (i) patients being more comfortable visiting their HCP virtually than at the start of the pandemic; (ii) virtual direct-to-consumer (DTC) campaigns; and (iii) the large market potential for efficacious, tablet-based diabetes therapies. We know the significance and duration of cardioprotection must also play a major role, going back to LEADER results  (see June 10, 2016, ADA, Full LEADER Results) and multiple other CV outcomes trial results since then. As well, the differentiation of GLP-1 in a pill, given the growth of the class, must also be a big deal to endos and PCPs. Novo Nordisk is the top player in the $10 billion-plus market; clearly, the other positive effects like weight loss and lack of hypoglycemia. Notably, the oral agent has begun to roll out in international markets (Japan, EU, and UK, to name a few), and Mr. Jørgensen expressed a measured and also clear confidence about the reception. He explained that these patients are the “same type of patients [as the US] looking for more efficacious treatments;” presumably, Mr. Jørgensen is just referencing the lack of effectiveness associated with monotherapy and in particular SFUs and/or metformin. We’d point out that the bar is pretty low for decent “population level” results (A1c, Time in Range) and Mr. Jørgensen showed particularly high hopes (and expectations) about market potential in Japan, where a vast majority of therapies are already tablet-based and where there has traditionally been aversion to pens or needles and where GLP-1 will have a number of clear benefits compared to SUs.

  • In obesity, Mr. Vosser and Mr. Jørgensen discussed the precedent set by GLP-1 receptor agonist Saxenda (liraglutide) as an effective therapeutic option. Mr. Jørgensen alluded to the “bad experiences” experienced by patients and providers on older obesity medications, which has made the market neither “well-recognized nor liked.” Lack of reimbursement and stigma surrounding obesity are  additional factors. With Saxenda, and now with semaglutide 2.4 mg, showing highly efficacious, consistent, and long-lasting results in obesity (as demonstrated in STEP 1-4), patients and providers now have better medications. Mr. Jørgensen noted that greater weight loss increases incentive to stay on treatment, potentially improving adherence for  semaglutide 2.4 mg compare to that of Saxenda. He also conveyed enthusiasm about semaglutide in combination with human amylin analog AM833, as synergistic mechanisms may trigger even more extensive weight loss. Indeed, in Novo’s 2Q20 update, CSO Dr. Mads Thompsen highlighted the combination therapy as having potential to become a “strong, future, non-invasive treatment alternative to bariatric surgery.” As Mr. Jørgensen laid out in the discussion, future challenges are many, however, particularly involving persuading global healthcare systems to acknowledge the value of treating obesity pharmacologically. We hope that treating obesity will also considered in light of what changes can be made on the classic “food, exercise, mindset, and sleep,” classic factors emphasized by Adam Brown in “Bright Spots and Landmines,” the book that has met with so much success in and around diabetes, having sold hundreds of thousands of copies.

  • Following new news on Lilly’s work on Alzheimer’s disease (outside of diabetes), discussion of the condition has been frequent and notable, with very keen interest from investors. Referencing Novo Nordisk’s new phase 3 program for semaglutide in Alzheimer’s disease, Mr. Jørgensen called the GLP-1 the drug which just “keeps giving.” We believe he meant from the perspective of both patients and payers – we’d say HCPs have also really benefited from being able to treat type 2, pre-diabetes, and obesity with the compound. Admitting that these trials are much riskier for Alzheimer’s disease than those in indications approved to date, Mr. Jørgensen clearly and crisply indicated that they are worth pursuing – enough signal has been observed in preclinical models and payer databases to suggest the drug could benefit this patient population, and semaglutide already has a well-understood safety profile. Even if the chance of this program’s success remains unclear, Mr. Jørgensen clearly views the risk profile as one that is important to explore – clearly, it goes without saying that if the compound shows success on this front, the potential return will be very significant given the size of the market and the average lifespan of patients.

  • To overcome competitive pressures in the US diabetes and cardiometabolic market, Mr. Jørgensen stressed the importance of always setting the bar higher on innovation. Mr. Jørgensen cited two of Novo Nordisk’s most exciting insulin programs – the newly launched phase 3 trial for once-weekly insulin icodec and phase 1 trial for glucose-sensitive insulin – for potentially “redefining” how insulin is used. These novel products may eventually lead the field to reconsider how market shares are divided, leading to price protection or even new price points for the agents. In addition, Mr. Jørgensen emphasized Novo Nordisk’s commitment to expand beyond its collection of peptide-based therapeutics to novel platforms. Specifically, Mr. Jørgensen pointed to the company’s collaborations with Dicerna Pharmaceuticals to develop RNAi-based therapies and with bluebird bio to discover mRNA-based gene therapies. In five or ten years, Mr. Jørgensen argued, parallel technological and biological innovation axes will enhance Novo Nordisk’s growth. We certainly agree, given growth in the field, and particularly the absolute absence of any slowdown in disease prevalence.

3. Sanofi: Management Sets Sights on Immunology, Oncology, and a “Play to Win” Strategy for Digital Health – Ongoing Approach to Diabetes Through Digital Health

Sanofi’s CEO Mr. Paul Hudson led the company’s presentation, primarily focused on vaccine development, performance of allergy drug Dupixent, oncology, and the company’s digital health strategy. While there was no direct mention of Sanofi’s diabetes or metabolic franchises during the update, it’s been clear for some quarters now that better investment in access as well as investment in digital health R&D should help Sanofi in this business that they, for all intents and purpose, built through the 2004 acquisition of Aventis for a little under 50 billion Euros. They got Lantus as part of the acquisition, as well as the highly successful proceeds from the investment in Regeneron, which ultimately produced the eye drug Eylea (now a multi-billion franchise shared between Regeneron/Sanofi and Amgen). Mr. Hudson emphasized the success of Sanofi’s R&D in 2020, sharing that the company initiated twelve phase 3 trials in oncology and inflammation/immunity (I&I). While Dupixent is reaching over 200,000 patients globally, Sanofi intends to expand this further with eight new indications in dermatology, respiratory health, and esophageal disease. Presentation slides also highlighted company plans to roll out Dupixent in China in March 2021. Vaccines, especially for influenza, were also highlighted as company growth drivers, and Sanofi has plans to continue mRNA vaccine development with two new clinical programs slated to start in 2021.

  • Sanofi’s Executive VP and Chief Digital Officer, Mr. Arnaud Robert, outlined the company’s “play to win” strategy in digital health – we see this as a very active area that can obviously show huge gains from improved results in diabetes care stemming from smarter titration and dosing in insulin as one important example. This involves a four-pronged approach: (i) focusing on growth; (ii) leading with innovation; (iii) accelerating efficiency; and (iv) reinventing how people work. Along with building new platforms for HCPs, R&D, eCommerce, and patient experiences, Sanofi plans to use technological advancements for internal cultural changes. With this, Sanofi will focus primarily on specialty care, vaccines, general medicine, R&D, CHC, and AI in 2021-2022 – this actually sounds a bit broader than a year ago and “general medicine” certainly includes diabetes. We were impressed by Sanofi’s futuristic approach to its update, even more so with their vision for 2023-2025+ - we look forward to hearing more about how they will drive improvement in project launches, more efficient resource deployment, and greater R&D productivity.  Though Sanofi’s diabetes portfolio has certainly continued since the company announced its discontinuation of R&D in diabetes research related to insulin and CVD, the company has clearly increased investment in access and accessibility to Sanofi products that have been on the market long-term and it continues its work on cures for type 1 diabetes. Research has also increased at Sanofi on R&D related to digital as well as R&D related to healthcare delivery – on the latter, particularly given the growing focus in the field on health equity, we have high hopes.

Select Q&A

Q: On business development, what is Sanofi looking for regarding strategy?

Mr. Paul Hudson: We felt underrepresented last year, but now we're showing when we think we have winners; we double down and move faster to focus in on the earlier science. There are a couple of lenses to making sure we deliver science that’s transformative but also in areas in which we have capabilities and expertise so we can bring products to commercialization at lower costs. That doesn’t mean we exclude breakthroughs when they come, but it does mean we have opportunities to turn great science into great products for patients. We’re keeping up in areas that were strong but continue to stay open minded.

4. Akero Confirms FDA Acceptance of its Phase 2b Plan for NASH Drug Efruxifermin (FGF21 Analog), with F4 (Cirrhosis) Readout of BALANCED Trial in 1H21

Akero Therapeutics, which delivered unprecedented phase 2a data last year in F1-F3 NASH patients, confirmed the timing and design of its anticipated phase 2b trial of EFX during its JPM presentation this morning. While the number of patients in the trial has yet to be finalized, inclusion criteria will allow people with diabetes on ‘stable’ (for six months) medications, including GLP-1s and SGLT-2 inhibitors. Secondary efficacy endpoints will include A1c and weight reduction. Also in 1H21, Akero expects to have a liver biopsy readout from F4 patients who continued in a special arm of the BALANCED trial. Success in that arm would likely lead to a successor 48-week phase 2b trial in F4 (cirrhotic) patients.


  • The results of the BALANCED trial in F1-F3 patients were surprisingly strong, even for the high expectations resulting from management pedigree (CEO Dr. Andrew Cheng and EVP Kitty Yale were in senior positions at Gilead), product provenance (out-licensed from Amgen with good data in phase 1 diabetes studies), and confidence in the FGF21 class (both Merck and BMS are also developing FGF21s). The BALANCED trial was the first time a compound achieved both of the registration requirements for NASH, i.e., (i) one stage improvement in fibrosis without worsening of NASH, or (ii) resolution of NASH without worsening of fibrosis. The exhibits below (from slides) illustrate the strength of the results compared to trial data to date from leading competitors in the NASH field under both criteria.





  • Akero is unusual in NASH for many reasons, including that it is not only a NASH “pure play” but also has only one drug under development. It is the only ‘leading’ NASH drug that is intended to be a once-weekly subcutaneous injectable, and Dr. Cheng acknowledged during Q&A that a good combination strategy is not yet clear, in a field which is currently expected to evolve to combination therapy (in other words, investors and KOLs are less interested – today – in the best monotherapy as opposed to the best potential combination for NASH).

5. Enanta NASH Programs: Phase 2b Interim Results for FXR Agonist EDP-305 Expected Mid-2021, with “More Potent” EDP-297 Phase 1 Data 2Q21

The majority of Enanta’s presentation focused on the company’s extensive virology franchise, which comprises Abbvie-partnered Mavyret/Maviret (approved in hepatitis C virus, HCV) and a portfolio of pipeline candidates in respiratory syncytial virus (RSV), HCV, hepatitis B virus (HBV), human metapneumovirus (hMPV), and SARS-CoV-2. However, President & CEO Dr. Jay Luly did update the status of NASH candidate EDP-305 (FXR agonist), which was granted Fast Track Designation by FDA in January 2017. Enanta’s candidate is one of few “non-bile acid” FXR agonists alongside Terns’ TERN-101 and Novartis’ tropifexor. In Enanta’s phase 2 ARGON-1 study, EPD-305 showed significant reductions in GGT (marker of liver injury) at the higher 2.5 mg dose over the course of 12 weeks. At the same time, patients taking EDP-305 showed a high incidence of pruritus (itching) during the study, which caused 20.8% of patients in the 2.5 mg arm to discontinue. On the basis of these results, Enanta launched the phase 2b ARGON-2 study in January 2020, designed to identify an optimal dose for fibrosis improvement with less pruritus. This 72-week trial is investigating two doses of EDP-305 (1.5 and 2 mg) in around 340 patients with biopsy-proven NASH fibrosis, and 12-week interim analysis is expected in mid-2021.

  • Dr. Luly also drew our attention to a new “potent and differentiated follow-on FXR agonist” EDP-297, which began phase 1 testing in 3Q20 (data expected 2Q21). As Dr. Luly showed, this agent has greater potency than all other FXR agonists currently in development, as well as greater specify for liver and intestine target organs. Enanta predicts that this agent may precipitate lower dosage requirements, reduced drug levels in plasma in skin, and potential reduction in pruritus as a result.

6. Pfizer: All Eyes on Vaccines; Internal Medicine Portfolio Gets Single Shoutout

As expected, the majority of today’s fireside chat between CEO Mr. Albert Bourla and JPM analyst Mr. Chris Schott focused on the company’s ongoing efforts to produce COVID-19 vaccines. Secondary topics included Pfizer’s oncology portfolio, namely Ibrance for metastatic breast cancer, and the company’s collection of late-stage JAK inhibitors. On the COVID-19 front, Pfizer has increased its vaccine output goal to 2 billion doses by year’s end (raising the bar by more than 50%). While Pfizer’s vaccine is currently priced “well below the price of value to society” due to the unique circumstances of a global pandemic, Mr. Bourla did not shy away from the idea that a future version may be priced on par with similar vaccines. Looking ahead, Mr. Bourla foresees that Pfizer will double down on mRNA technology (“I think it’s a must”) – a strategy particularly suited for rapidly evolving strains of influenza, he noted.  

  • When questioned on R&D strategy, Mr. Bourla stated that Pfizer is biased to its existing focus areas – internal medicine, inflammation/immunology, oncology, rare diseases, and vaccines. As Pfizer’s experts are more likely to make “fewer mistakes” when choosing candidates or developing them, these areas are where Mr. Bourla sees the company adding the most value. In particular, the company has its eyes on phase 2 or phase 3-ready candidates with the potential to be first and best-in-class. On acquisitions, Mr. Bourla confirmed that there is “no upper bound on size” and Pfizer “frankly” has the ability to do “anything that exists out there if [they] want to.” While Mr. Bourla did not single out specific candidates when he spoke about exciting pipeline candidates, he did mention the internal medicine portfolio in passing.

  • To end the session, Mr. Bourla shared powerful words on future healthcare reform: I think [rising out-of-pocket cost] has become a unanimous concern for all of us. If you ask any of my peers, and good friends, they’ll tell you that one of the highest concerns is that in the US, patients are getting their medicines like if they don’t have insurance, even if they do have it. That’s the result of a system that was driven by rebates, and we’re stimulating wrong behaviors. We’ve arrived at a situation where we need reform – that needs to change… We believe that the number one priority of any healthcare reform is to reduce the out-of-pocket cost for patients. That’s the number one. Everybody should contribute to that. We should contribute, insurance companies should contribute, the state should contribute – everyone should contribute. This is a must because it’s not a sustainable situation and that creates a lot of animosity. It is the fundamental base of why things are so tense in the healthcare section… I think we will work with a new administration, all of us, with a new congress to [move toward] pro-innovation, pro-patient solutions. Need to have a vibrant innovative biopharmaceutical industry, and I don’t think I need to explain why after COVID-19. The cost of not having it is not going to be multiple but exponentially higher. But of course, all these breakthroughs don’t do any good unless they reach the patients, so we need pro-patient policies.”

7. GlaxoSmithKline: Increased Concentration on Immunology in Oncology and Infectious Diseases; Diabetes Goes Unmentioned

GSK continues its venture in building two companies, one biopharma focused and one for consumer healthcare. While CEO Emma Walmsley was surely missed by JPM-goers (“you set public targets and have consequences…” is just one of our favorite quotes of the highly-admired CEO), CSO and President of R&D Mr. Hal Barron confidently led today’s presentation. Mr. Barrons stated that the move towards two companies will better allow for sustainable growth. GSK has placed increasing focus on strengthening their pipeline for the production of transformational vaccines and medicines and has had strong commercial execution in their specialty products.

  • Similar to last JPM, diabetes went unmentioned, very unsurprisingly since it divested GLP-1 Tanzeum several years ago, even after very positive HARMONY results published in the Lancet in 2018. GSK instead focused on increasing clinical studies in oncology and infectious diseases. Significant progress has been made in immunology within oncology, with nine promising IO agents and three cell therapies in progress. Mr. Barron also emphasized GSK’s involvement with new technological advancements and transformations in vaccines, specifically looking at mRNA platforms with self-replication. The company is in an active search for solutions for the pandemic and believe pivotal data will be available regarding its vaccines by the end of the year. We’d love to see it buy its GLP-1 back (this won’t happen since the factory has been sold, apparently) and invest in prevention of obesity as just one example – we do believe its workforce would like to see what a company run by Ms. Walmsley could make happen. Seeing GSK and so much success makes us rue the day, of course, back in 2014, when that Cleveland Clinic’s Dr. Steve Nissen decided to get involved and drive sales of TZD Avandia into the ground. Even though 2014 saw FDA backtrack and decide REMS weren’t needed, the damage was done.

8. Takeda: Company’s Focuses on Oncology, Rare Diseases, Like with GSK, Shows Life Beyond TZDs

In a similar fashion to his talk at last year's JPM, Takeda CEO Mr. Christophe Weber opted away from mentioning the company’s diabetes portfolio, mainly DPP-4 inhibitor Nesina, in his prepared remarks yesterday. That was too bad from our perspective since there is actually a strong trial called VERIFY that shows how meaningful the management impact could be. He instead focused on the company’s strong R&D focus on oncology, rare genetic diseases, hematology, neuroscience, and gastroenterology. He highlighted the company’s strong growth prospects stemming from the company’s “Wave 1” pipeline, consisting of 12 best-in-class or first-in-class products projected to be released by 4Q23.

Big Picture Highlights

1. Stanford Medicine Faculty Discuss the Changes COVID-19 Has Encouraged in Medicine, Focusing on Telehealth Innovations, Novel Approaches to Research, and Technological Opportunities

Moderated by Dr. Lloyd Minor, dean of the Stanford University School of Medicine, the panel discussed the healthcare changes and innovations brought on by COVID-19 response. Dr. Megan Mahoney highlighted changes to care delivery, referencing the accelerated expansion of telehealth services. A benefit of telehealth is that it can be used to offer remote diagnostics, pre-visits, and self-exams, she said. However, it’s important to ensure that all populations can access digital heath tools and that existing disparities aren’t compounded. Agreeing that equitable access to patients is important in telehealth, Dr. Yvonne Maldonado added that there are numerous ways that social determinants of health can be addressed outside the medical setting in partnership with the community. In discussing the environment for clinical trials, Dr. Maldonado described how the pandemic prompted a restructuring of the approach to research, in order to prioritize needed therapeutics. She emphasized the need to leverage existing data to identify which populations may be at high risk for a disease and target clinical trials to them. Lauding the promise of at-home diagnostic testing, Dr. Euan Ashley stated that an obstacle to this kind of innovation has been the regulatory environment.  This could change in the future, he said, particularly as people realize the benefits of conducting broader tests for respiratory illness at home. See below for the entire conversation and its nuances.

Panel Discussion

Dr. Lloyd Minor:  We all are aware that COVID-19 has presented society with many challenges, but we’re now seeing the opportunities in biomedicine that have come about because of COVID-19. 11 months from when the sequence of the SARS-coV-2 virus was first published to using mRNA to elicit a new immune response. There are many things that have been done that will likely have enduring effects on biomedicine. We’re going to explore some of that innovation and those budding trends this afternoon. We have a distinguished panel of three Stanford Medical faculty members. For each of you in your domains, you’ve seen the impact of innovation on how you practice and the scope of your research. Can each of you describe how COVID-19 has accelerated or changed the acceleration in your world, and can you say what you’re excited for now and in the future?

Dr. Euan Ashley: I would start with saying that one of the silver linings of this movement is the collaboration. We saw that in a movement, Stanford faculty came together for several thousand patients who presented to the hospital. To really give us some indication of why some patients were asymptomatic with this disease in the ICU, I think that is something that requires the power of many centers coming together. On the innovation side, we were able to run as part of an early warm up to the main program focused on COVID, the new normal, and inventions in the middle of the pandemic. We have received over 100 applications and moved forward with many, and several months later, there is still an urgent need. We have invented an assay and to scale that into millions of tests of the innovations that have come from Stanford and moved rapidly.

Dr. Megan Mahoney: The COVID crisis has dismantled the traditional delivery of care entirely, with respect to convenience and the power dynamics that exist between patients. With COVID, its very clear that the clinic is no longer where its at. Our early investments in telehealth has helped with the affordability of digital health. This will continue to expand into the future. We could give the tools to our provider so that they could have the time and capacity to respond. We also focused on different performance metrics. We devised quality metrics and patient satisfaction metrics. COVID put immense pressure on inpatient environments. We had to reduce lengths of stay and create models to allow teams to take care of more patients. We also employed algorithms. We saw broad misinformation at the beginning of the pandemic and saw the need to provide real time information as the guidelines changed. I was involved in developing an app that was involved in the frontline community. We were able to give that information at real time to a community to and from the testing sites we set up. The partnerships we had in the public health system were crucial and I hope we can continue that into the future.

Dr. Yvonne Maldonado: Let me talk a little bit about two aspects of the innovation and what pivoted rapidly. We had a paper published in NEJM Catalyst outlining the way we developed our incident command approach during this pandemic, during which we rose up against in March. The incident-command structure is a time-honored tradition in the military for building out an approach to triage and enabling different groups that need to be in charge of particular areas that may not have been included in the current structure of hospitals. Using our usual incident-command approach and innovating, we’ve been able to adapt that to many workgroups and subcommittees. We’ve built out that approach to every aspect of COVID-19 from the healthcare setting, research setting, educational setting, and all the way around. We have numerous stakeholders that I don’t think we would be able to address rapidly otherwise. I think it will stand the test of time, it’s a way to get the right people in the right place when needed and pivot when supposed to. It’s an innovation here because it was tested under fire with a brand-new pathogen and a once in a lifetime problem that affected everything we do in our personal lives and workplace. It worked out well for us and allowed us to do the research innovation.

I’m the co-director of the COVID clinical trials research unit at Stanford, which did not exist before March 2020. With the help of philanthropy and repurposing of projects and funds, we were able to put together a state-of-the-art research facility to develop novel and repurposed drugs for use in phase 1, 2, and 3 clinical trials that we’re still doing now. This has shown us that there are many different types of treatments available, but the vast majority are novel. We needed to repurpose drugs rapidly to handle this pandemic. Allowing ourselves to think outside the box and thing about what our needs are based on guiding principles.

Dr. Minor: Of course, not everything has gone as smoothly or quickly as we hoped. Can each of you mention an example where there have been impediments or detriments to innovation or rolling out innovation in the care delivery environment?

Dr. Maldonado: We were able to ramp up and moved quickly, but with clinical trials, utilizing the existing clinical trials approach with approval, contracting, and human subjects’ reviews needs weeks or months of scheduling and availability for approval. That was our bottle neck- I think we have done a much better job now of repurposing those procedures so that they’re still equitable and working. I think the other area is personnel. Because we were in isolation, trying to get the right personnel to get together to work on documents taxed our work force. We adapted, but further work needs to be done.

Dr. Mahoney: As I start thinking about some of the major changes that occurred, one is the use of apps, wearable devices, and chat. A struggle was the lack of platform integration.  It wasn't clear how we can access data in a consistent way. That was an issue for us. We noticed people were deferring preventative care. That lead to a higher incidence of cardiovascular and heart disease. We know how to monitor heart rate, but how does that translate to better prevention of these diseases? It was difficult to have a sense of ICU and hospital utilization at the population level because of poor data sharing and a lack of interoperable structure. We struggled initially with an under-resourced public health system.

Dr. Ashley: I think one of the major successes of the pandemic was development of major vaccines in record time under the approval of the EUA. One of the disappointments was the diagnostic testing. If you take a step back, we are disappointed at the impact of at-home testing from early on. In general, the therapeutic companies are able to put large amounts of cash reserves into a highly risky program. Diagnostics are narrower, and it's harder for them to say they are willing to lose a million dollars. We need new changes in the regulatory environment to allow us to think about more epidemiological testing and about how testing can help us control an epidemic or pandemic. That’s been disappointing, and 8-10months later, we’re not in a different situation, but that doesn’t mean we can’t adapt in the future. After all, every season we have the flu or respiratory viral season including respiratory viruses. I don’t think this is going away, but increased interest in respiratory viruses is coming our way for sure.

Dr. Minor: The things I hear from Bonnie are greater participation in clinical trials, and the FDA has talked a lot about that. During COVID, we see a very small number of patients with COVID being offered participation in a clinical trial. Megan, you underscored that our problems with interoperability and data systems are magnified during COVID. As we roll out a vaccine, we don’t have a database monitoring who has gotten it or not. Ewan, your point on diagnostics is that we still don’t have the diagnostic tests we need, but the fundamental underpinnings of the technology are there. Any thoughts on low hanging fruit or what can be done in these areas?

Dr. Maldonado: I agree, the fact that clinical trials for vaccines are being moved into younger age groups is promising, but there seems to be little uptake in younger age groups. We need to do a better job in building these networks. For example, in the UK, they have a national health service, but we should be able to expand our networks to include large datasets around the country. We have the AI and technology capacity to do so and analyze data at a very high level to look at numbers of cases across the country and come to a conclusion on the natural history of disease, determinants, and outcomes. We don't know this information other than the general categories of people who are at highest risk for infection and serious disease. The data is out there across the country, we just need to bring it together to screen people and tell them they're at high risk. A problem at enrollment is that people don't think they're going to get that sick, but we need to see who is at risk and target trials to find those people more easily than we are right now. 

Dr. Mahoney: I would say I know you have given this a lot of thought with electronic health. Beyond advocacy for policy change, there has been a lot of investment in the personal health record and what we can do with that.

Dr. Ashley: I think the answer is digital. With two operating systems, we cover six billion people across the world, and those tech companies seriously interested in health and are close neighbors and those individual devices that are iOS- or Android-based also need to be partners. I think bringing together those groups for discussion has been brought to clear focus by the urgency of the pandemic.

Dr. Minor: One thing that comes up a lot at the JP Morgan Conference is where there are investment opportunities. Where are the opportunities for investment capital to rapidly accelerate the pace of innovation and improve health and wellbeing? Each of your comments have touched on where there could be opportunities. Could each of you delve more deeply into where you are enthusiastic about investment and how investment could accelerate the pace of innovation? Where do you see the opportunities in diagnostics for innovation and investment capital to result in real improvement in tests and outcomes?

Dr. Ashley: Part of this futurism is thinking what the future looks like. For sure we are not going to move away from using masks. I think as I mentioned earlier, as we move into every winter season, we are going to want to look to more home testing around the county. We want to find more respiratory panels without going out and affecting others, with a much lower bar for telehealth. They are expected to have the option for telehealth with their doctor. The number of people who would be better treated in their home is large, and if we can have that MD visit at home through telehealth, we need the diagnostic testing that can be safely tested at home. One of the things on my mind with the new technology along with vaccines is how we can vaccinate if we know the autogenic profile of the immune disease. 

Dr. Maldonado: I have two very different thoughts. One is around value-based care models. I think one of the problems is how do you measure, assign, and reimburse for value to keep the systems running and incentivized? It’s complicated to try to figure out how to do that. When you’re bogged down by CMS rules and other national agencies, it’s really hard for us to come up with good bundles. There are institutions around the country that try to tackle this. With COVID, it’s a focused disease that has many manifestations. The bundles allow us to explore bundling value here, but we shouldn’t let that opportunity be lost. This is an opportunity to change the way we structure healthcare models to not only make them sustainable but incentivize it. It’s a systemic way to build models to know what metrics are for many diseases. The second area is global surveillance of infectious disease. Internationally, we’ve invested in over 40 million labs that diagnose disease- we should scale them up to avoid the next pandemic. This is only the beginning, and we have the tools to do this, but we need to collaborate around the world to pull the data together to identify genetic changes in pathogens and potential approaches as well. 

Dr. Mahoney: I was going to build on both comments. The first is movement to value-based models. Providing service outside of the walls of the clinic. I would point to any services that augment care outside the hospital. I also want to highlight that we can anticipate a tsunami of mental health issues after the pandemic. We saw a success of providing behavioral health, but that might be an area of focus going forward. As a primary care provider, I have a patient e-consultation service. One patient in particular w chest pain coincided with his co-worker dying suddenly of a heart attack. A long-distance runner had come in and got an EKG that suggested possible ischemia. I sent it to a cardiologist that reassured this can be found in long-distance runners. This is the kind of service outside traditional care.

Dr. Minor: On the topic of telehealth, how will the skills and training of practitioners, PAs, and physicians need to change if the transition to virtual care becomes permanent? 

Dr. Mahoney: The first is we had to adapt. Many were not there early. We are starting to envision the way healthcare can orient toward patients and bring care to patients in a familiar environment. Providers can look at the home and conduct a medical reconciliation visit. Many health systems have adopted a digital first approach. They can replace orders for other routine labs outside of the context of a visit. Much more care is being provided in the patient portal with no visits necessary. We have developed a module to help us teach the patient the self-exam; we can conduct a physical that the patient can do themself. These are examples of ways we have slightly changed the way we provide care.

Dr. Maldonado: One other area that we really need to think about is to make sure within all this telehealth that we have equitable access to all of our patients. That’s where the innovation can come from in our industry. I know that schools have done that similarly by setting up hot spots near bus stops. I think we need to stop thinking differently about everyone having zoom or a laptop, which will provide broader care. 

Dr. Ashley: With telehealth and virtual visits, we are back doing house calls and it's really useful addition to what we had before. I have had visits with patients in front of laundromats. The point is it's convenient for the patient and it really should be organized by the patient and I think that is what we are heading towards with these virtual visits.

Dr. Minor: How can we make sure that the disparities in health and healthcare that have been brought to the forefront during COVID are addressed by innovation now and in the future?

Dr. Mahoney: There has been rapid acceleration of transformations resulting from telehealth. The crisis has revealed health disparities in indigenous, African American, and Latinx populations. There is variation in access to primary care despite regulations and policies encouraging digital care. We have much more tech available to patients, but there is a lack of availability in different languages. Limited English proficiency has disadvantages, like not being able to access something we now use all the time (the patient portal). There is also an issue around broadband access. There are a number of ways that technology can serve a broader population. We need to ensure the design of these innovations include all users across the population.

Dr. Maldonado: Stanford really championed the concept of precision health and disease prevention. Social determinants are not really in the medical space as much anymore, and we need to start to think about how innovation outside of the medical profession can help us. How do we provide green spaces, how do we remove food desserts, how do we provide access to better environments overall for people? This is where we can develop community outreach of giving people products and providing education in a culturally appropriate way. When people are interested in these products, the market is ready to be tapped there. Apps and opportunities to build into local communities is waiting; we can do this in ways that are entertaining and exciting. Doing that will keep people outside of the medical facility and promote overall health. There’s a lot of marketing that can be done in those populations. 

Dr. Ashley: To finish on a technical and innovation note, I'm excited by the potential of satellites to bring broadband to these groups for schooling and for healthcare. The access to broadband is important to global health and for healthcare we need to think globally as well.

Dr. Minor: How do we as scientists and biomedical leaders better communicate what we are doing and what we are learning? We still see a lot of vaccine hesitancy. Can you speak very briefly on the topic of communication?

Dr. Maldonado: The graduate school of education here has an interesting project called the Stanford Internet Observatory. They used this as a platform in the immediate sense. We can put messages out, but how do you get there on the social media misinformation rabbit hole? They responded on the election misinformation and they were able to use an AI platform to get out there, find the misinformation, and respond to it. We can do the same thing. Facts don’t always change things, but social media with trusted people in a real-time setting really makes a difference. 

Dr. Minor: Thank you very much for an engaging and enlightening discussion. 

2. Moderna: COVID-19 Success Supports Growing mRNA Vaccine Industry

While not in our usual wheelhouse, we would be remiss not to cover COVID-19 vaccine developer Moderna. In the company’s presentation yesterday, CEO Mr. Stéphane Bancel expressed the company’s excitement about the future of mRNA in the production of vaccines. More specifically, Mr. Bancel highlighted the high transferability between the COVID-19 vaccine and other potential mRNA vaccines, as they utilize the same manufacturing process for the mRNA. Furthermore, Moderna has produced successful antibodies utilizing mRNA in all nine viruses that have been evaluated in a series of clinical trials.

  • Outside of COVID-19, Moderna management promoted the company’s production of additional mRNA vaccines and growing research into new modalities. Mr. Bancel emphasized Moderna’s successful innovation in mRNA vaccinations, specifically noting four first-in-class vaccines against respiratory viruses, three public health vaccines, and two first-in-class vaccines requiring complex antigens. The core modalities in which they have accomplished work includes prophylactic vaccines and systemic secreted and cell surface therapeutics. They have a wide field of exploratory modalities, of which six have ongoing clinical trials and four in preclinical development.

  • During Q&A, Mr. Bancel touched on the challenges of manufacturing yield and raw material access in regard to COVID-19 vaccine supply. Mr. Bancel noted that the COVID-19 vaccine is Moderna’s first commercial product, and thus, a new endeavor for the company. As the year goes, Mr. Bancel expects there will be an increase in yield, but currently the company’s approach is “to be conservative and cautious.” In addition, raw material is more difficult to supply, as key suppliers could not have predicted the demand and must work to increase their supply to the capacity that is needed. The company also highlighted the lack of data for alternative variants altering the antibodies that neutralize the virus. They will “continue to evaluate variants as they emerge,” but there is a strong belief their technology would be suited to promptly produce a new vaccine to target a new variant.

3. One Medical Discusses Vision to Transform and Modernize Healthcare

One Medical’s Chair, CEO, and President Amir Dan Rubin expands on One Medical’s vision to address the needs of the population through modernizing healthcare. One Medical focused on transforming healthcare through a “human-centered, technology-powered model,” which includes on-demand virtual care, personalized and proactive clinical outreach, and coordination of specialty care. Through partnerships with various markets and companies, like Advocate Aurora Health and UCSF Health, they address the needs of many and bring healthcare access in a simple format for the consumer. With a member-based system, in which members are charged an annual fee for access to One Medical’s office and primary care providers, One Medical assesses the population’s health and looks for gaps in patient care through analyzing their integrated longitudinal data from both digital and in-person visits, which can be shared across teams for optimized care. They specifically note follow up appointments for diabetes care and managing overall health and well-being as examples of care gaps in certain populations. However, it is important to keep in mind that One Medical is currently only available in large, metropolitan areas in the US (e.g., Atlanta, Austin, Boston, Chicago, Los Angeles, New York City, Orange County, Phoenix, Portland, San Diego, the San Francisco Bay Area, and Washington DC), which may limit the generalizability of the findings shared.  

  • Mr. Rubin emphasized the importance of addressing needs of key stakeholders in One Medical’s plan. One Medical placed high importance on improving experiences and outcomes for consumers and employees, promoting their well-being, lowering costs for employers, and coordinating care across primary and specialty providers through their health partnerships. Through addressing the needs of consumers, providers, employers, payers, and health networks, One Medical reports a high customer satisfaction, low wait time for care, 33% lower ER costs, and a 100% participation in leading health plan networks. We look forward to seeing One Medical continue its plans for healthcare modernization and to see how the company impacts the field of telehealth this year.

4. Andy Slavitt on telehealth, Medicare, and the COVID-19 pandemic

Andy Slavitt, the former acting administrator of the Centers for Medicare and Medicaid Services, joined JPMorgan’s Lisa Gill, Gary Taylor, and Tycho Peterson in a keynote session to discuss the COVID-19 pandemic’s effects on the healthcare system. He also touched on federal plans for various healthcare agencies, specifically Medicare and Medicaid, as the transition to the Biden administration is underway.

  • Under the Trump administration, there was no significant increase in research funding despite the COVID-19 pandemic. According to Slavitt, the administration was unwilling to fund healthcare agencies to tackle the pandemic because disease spread appeared to rely largely on individual behavior.

  • NIH funding received a 3% boost for FY 2021. Committee recommendations had initially suggested a 13% increase, but Congress approved the 3%, or $1.25B, spending package. This is down from the 7% increase made for FY 2020.  – whether or not funding will increase under the Biden administration for FY 2022 remains undetermined.

  • Slavitt is optimistic that Democratic control of the Senate could allow President Biden to implement a more progressive healthcare agenda including increased federal research funding and expanded coverage, but acknowledges healthcare, beyond the scope of the COVID-19 pandemic, is not a priority for the start of the Biden administration. The keynote was recorded prior to the Georgia Senate runoff elections, and Slavitt predicted that there will be resistance to any increase in funding ordered by the Biden administration if McConnell remained the Senate majority leader.

  • The future of Medicare and Medicaid seem unclear. According to Slavitt, Medicare and Medicaid are a "trust fund" under the Biden administration that will be in place until 2024. However, Slavitt maintains that support for Medicare is fairly bipartisan, and Medicare advantage is being led by prominent Democrats and Republicans in the Senate. There is concern that the Biden administration plans to cut Medicare payments to private plans, but this could be a misunderstanding of Biden’s proposed Medicare regulation.

Slavitt offered his thoughts on innovation and regulation in the digital health landscape. The rise of telehealth and virtual health services is one upside of the COVID-19 pandemic. While services are generally reimbursed, Slavitt believes that "by not supporting virtual health services, legislation would not be living in modern times." Yet, despite widespread support of telehealth expansion, practitioners face legal barriers to reimbursement, such as the relevance of state boundaries for medical licensing purposes and protected interests. With existing levels of support, telehealth is likely to move forward.  Yet many telehealth reimbursement plans are pandemic-era exceptions, which, if allowed to expire, would once again restrict telehealth offerings for clinicians. If healthcare systems remain heavily fragmented, pre-pandemic regulation could restrict future telehealth expansion. Slavitt believe these barriers may be overcome by legislative action if there is not universal industry support. “The healthcare industry is good at resisting political or other means of disruptive change,” Slavitt says. The current relationship between healthcare and politics is fraught, and with the health sector heavily siloed, there is no benefit for companies to work with each other or with the government.

In the latter half of the session, conversation shifted to the COVID-19 pandemic, starting with vaccine optimism and rollout. Echoing many public health officials across the United States, Slavitt finds vaccines’ 95% efficacy on multiple platforms highly encouraging and agrees with an ideal blanket immunity target of 78–85%  of the population. Yet despite this positive response, Slavitt expressed his disappointment with prioritization: there is too much autonomy and flexibility granted to each state, leaving certain groups facing little risk vaccinated while others with regular exposure to COVID-19 or those at high risk of infection await their turns.

  • The number of COVID-19 cases today exceeds contact tracing capabilities, even with aggressive public health efforts to expand infrastructure. In order to resolve this, Slavitt believes systems governing essential workers must allow employees to stay home and continue to be paid when ill. If this could be implemented, Slavitt lays out the following timeline for 2021: vaccinations for the general public in April or May, small outdoor gatherings in the summer, and small indoor gatherings in the fall. Large events will likely be the last to return.

  • At-home testing is on the rise, and Slavitt spoke in favor of the development of at-home testing kits, arguing that digitization of at-home tests would still allow the government to collect adequate data to monitor the spread of the disease while increasing access to a larger number of individuals. While he expresses some concern that testing has become too decentralized into the point-of-care market, becoming its own massive industry, he believes their benefits outweigh their downsides. Slavitt highlights a critical different between COVID-19 and the flu: the onset COVID-19 symptoms can take place days after infection, allowing a feedback loop which spreads the virus someone realizes they are sick. Even in sacrificing accuracy of hospital-administered tests, Slavitt believes the convenience and affordability of at-home tests have potential to limit this feedback loop.

  • The keynote ended on a discussion of a systemic crisis in healthcare: how should medical deserts be eliminated? Often, Slavitt acknowledged that low-income, older, and sicker groups are “placed into the denominator rather than the numerator” of statistical models. While such models hold immense potential to improve livelihoods, vulnerable populations such as the homeless and those with severe mental illness are particularly difficult to reach, and so far, there has been no good way to involve all populations. He acknowledges working with certain groups is often an expense, not an investment. Slavitt proposes “town-hall ventures,” where he hopes traditionally neglected communities with “solvable issues” can work with companies and government organizations to build culturally competent models.

5. CVS Health, Rite-Aid, and Walgreens Discuss COVID-19 Vaccine Administration, Company Financials, and Opportunities for Growth During the Pandemic; Amazon Pharmacy Could Pose a Challenge to Well-Established Payers

At JPM, we attended a series of talks by major US pharmacies CVS Health, Rite Aid, and Walgreens, and began coverage of Amazon Pharmacy. Company financials and growth during the pandemic as well as COVID-19 vaccine distribution were discussed in depth throughout the sessions. In the years to come, we look forward to seeing how Amazon Pharmacy and other online pharmacy programs will use their price-comparison options, two-day delivery from Prime members, and “heavily discounted” prescription drugs to disrupt the industry.

  • CVS Health CEO Larry Merlo, incoming CEO Karen Lynch, and CFO Eva Boratto discussed the company’s involvement in COVID-19 testing and vaccine distribution, HealthHUB expansions, and long-term strategy. CVS Health executives appeared optimistic about the pandemic’s impact on business strategy and financial outcomes. In 2020, revenue reached just under $270 billion, up nearly 5% increase from 2019. In 4Q20, sales of just under $70 billion rose ~ 4% YOY increase.

    • The presentation focused on the COVID-19 pandemic. CVS Health currently has over 4,000 open testing locations, and at time of presentation, had conducted over 10 million tests, started over 8,000 vaccine distribution facilities, and administered 700,000 vaccines doses overall (CVS has yet to make more recent data available for public access). An impressive ~10% of all inoculations in the United States had been administered by CVS, and they have been selected by over 40,000 long-term care facilities (LTCFs) to distribute the vaccine. Notably, 85% of all people in the US live within five miles of the 9,900+ CVS Health retail locations.

    • CVS Health executives highlighted an opportunity for economic growth and customer base expansion in the COVID-19 pandemic. Through massive testing and vaccination programs, Ms. Lynch saw the potential to expand the CVS customer base to include millions of visitors there for COVID-19-related purposes who were not previously pharmacy customers. For example, CVS has seen a 16% uptick in its usage of chronic condition services in “MinuteClinic” locations within HealthHUBs and pharmacies, indicating a rise in consumer’s willingness to use CVS services differently.

    • Echoing the sentiments of many healthcare leaders at JPM, CVS Health is prioritizing digital and on-demand care. At their 600+ HealthHUB locations, a majority of which opened in 2020, CVS aims to be an in-person touchpoint for patients to manage chronic conditions such as diabetes and kidney disease. These HealthHUB locations can also help to close gaps in healthcare for those unable to visit a primary care physician each month or are not fully insured. In 2020 alone, six million people with low- or no-copays were supported through the HealthHUB system.

    • The CVS Health presentation closed with a discussion on the timeline for vaccine rollout. Mr. Merlo remained optimistic that the vaccine rollout is proceeding according to schedule. CVS Health is expected to have the first round of vaccinations in all assigned LTCFs completed by the end of January, as they await individual states to activate plans for further inoculations. Across the U.S., CVS Health has over 90,000 clinicians in pharmacies equipped to give the vaccine – as soon as the programs open, it expects to be able to administer 20 - 25 million vaccines per month. Once the country enters the “retail phase” of the vaccine rollout, Mr. Merlo predicts CVS Health locations will reach nearly one million vaccinations per day.

  • Rite-Aid CEO Heyward Donigan, COO Jim Peters, and Matt Schroeder CFO presented on the company’s financial success in 2020 and opened up about Rite-Aid’s central role in administering COVID-19 vaccines throughout the United States. At more than 2,400 stores nationwide, Rite-Aid generated approximately $24.0 billion dollars in revenue in FY 2020, up 12% YOY. 4Q20 revenue was reported at $6.1 billion, up 12% YOY. At time of writing, annual numbers have not been reported. Elixir, Rite-Aid’s pharmacy benefits and services provider, saw revenues increase by more than 29% in 3Q20, with their member base growing to nearly 3.7 million members. Beyond financial metrics, Rite Aid is one of the retail pharmacy chains alongside CVS Health and Walgreens to be partnered with the federal government on vaccine distribution. Donigan explained that while only ~5,000 vaccines had been distributed at the time of presentation, this number is expected to dramatically increase when the vaccine becomes available to the general public in Phase II. They have also provided more than 1.5 million COVID-19 tests to this point. As part of the federal rollout, the Biden administration has sent out vaccines directly to 6,500 retail pharmacies nationwide (companies were not specified) and plans to expand that to 40,000 retail pharmacies.

  • Donigan also outlined the issue of vaccines going to waste when demand at an individual pharmacy is lower than expected. While vaccine rollout at Rite-Aid sites has gone largely according to schedule, one problem continues to persist for many pharmacies: a significant quantity of vaccines are not administered in time and must be subsequently discarded. “It's difficult to figure out how many doses to send to which place and then for them to figure out how to orchestrate getting those doses into people's arms … if you open up a bottle and only get one dose, you have to figure out what to do with the rest of the vial,” Donigan said. “We don’t want doses going unused, but it is extremely complicated to figure out how to find the right people at that moment in that day.” Once a vaccine vial is opened, they must be used day of or discarded. 

  • For those who have received the vaccine already, Donigan emphasized that Rite-Aid is prepared to offer proof of immunization. Given that fairly robust infrastructure for proof of vaccine already exists, Donigan did not expected this process to be too challenging. Moving forward, Donigan noted that digitalization of this evidence will be critical, as proof of immunity will eventually be required for many activities.

  • Walgreens CFO James Kehoe and COO Alex Gourlay presented on the company’s strong financial growth in the past calendar year. With more than 9,000 locations, Walgreens generated revenue of just under $140 billion, up 2% YoY. In 4Q20, sales increased just over 2% YOY to ~ $35 billion. “Despite uncertainty amid the global COVID-19 pandemic,” Kehoe explained, “we are seeing gradual improvement in key U.S. and U.K. markets and continued strong performance in our wholesale business.” As the pandemic continues, Walgreens sees tremendous potential for growth and believes that investing in vaccines will be a beneficial investment long-term.

    • Kehoe and Gourlay also outlined Walgreens’ integral role in providing COVID-19 vaccines and tests. The company is currently conducting over 10,000 COVID-19 tests each day. Walgreens, along with CVS Health, is a primary distributor of vaccines to the phase 1A cohort, having administered over 1 million doses of the vaccine at the time of presentation. Kehoe expects to distribute approximately 30 million vaccines over the summer months. Walgreens’ market share currently limits their ability to be even more involved in the rollout. Yet, if Walgreens were the only pharmacy working in partnership with the U.S government to distribute vaccines, Kehoe estimated they would have the capacity to distribute between 20 and 25 million vaccine doses a month this summer. This distribution would be attributable to Walgreens’ strong staff of approximately 50,000 clinicians trained to administer shots nationwide. Finally, Kehoe and Gourlay anticipated vaccines will be available for the general population through their 9,000 stores sometime in spring 2021. 

  • Amazon Pharmacy, launched in November 2020, is already posing a challenge to these well-established pharmacies. The company promised free two-day delivery on all products from Amazon Pharmacy for Amazon Prime members, in addition to discounted drug prices for uninsured customers. On the day of Amazon Pharmacy’s launch, CVS Health and Walgreens stock declined by 9% each, Rite Aid stock dropped 16%, and drug distributors such as McKesson and Cardinal Health also saw their stocks sink.

    • Amazon first acquired the online pharmacy PillPack in 2018 for $753 million, when PillPack was already gaining momentum in the pharmaceutical markets. The company was expecting to make approximately $299 million in annual revenue that year, and that value was estimated to double in 2019 and again in 2020.

    • Yet, even with early market achievements, some in the pharmaceutical industry are skeptical about Amazon Pharmacy’s potential for long-term success. Throughout the COVID-19 pandemic, all traditional pharmacies have accelerated efforts to simplify delivery systems for over the counter and prescription products, potentially diluting Amazon’s unique two-day delivery promise. Furthermore, the younger generations which drove the rise of Amazon are not the target consumers of pharmaceutical industries – are older generations willing to change their pharmacy habits? Pharmaceutical companies will surely be keeping a close eye on Amazon Pharmacy in the coming years.


--by Joseph Bell, Hanna Gutow, Gabby Mitchell, Chris Cardillo, Wilson Murane, Gerol Fang, Lydia Davis, Gerol Fang, Terry Vance, Kira Wang, Joseph Bell, Ursula Biba, Albert Cai, Rhea Teng, and Kelly Close