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  • Jonathan Poyer

The Tail Risk of Drug Innovation



The title for world's most expensive drug now belongs to CSL Behring (CSL AU) / uniQure's (QURE) Hemgenix following FDA approval for hemophilia B. The one-time administered AAV5 gene therapy will be priced at $3.5 million per dose, eclipsing other gene therapy treatments approved in recent years (Zolgensma and Zynteglo) that are also priced >$1 million per dose. Despite the record price, analysts have mixed expectations for the pending launch given the long track record of use for more traditional alternative treatments and limited long term data.


A recent report of a second patient death potentially tied to use of Biogen's (BIIB) lecanemab during the Phase III trial extension reminded investors of the importance of the totality of the data. Several analysts came out to defend lecanemab's overall risk / benefit profile, but scrutiny has been raised, nonetheless.

Spectrum Pharmaceuticals (SPPI) announced a 75% reduction in force when they found themselves on the wrong side of the risk / benefit analysis as FDA declined to approve poziotinib for non-small cell lung cancer (NSCLC). The decision was anticipated following a negative recommendation be FDA's Oncologic Drugs Advisory Committee in September.

The overall risk / benefit profile of any investigational medicine may change as additional clinical data accrues. Investigational drug dossiers with smaller patient numbers, limited follow-up and less robustly defined clinical outcomes are more susceptible to degradation over time. Fundamental investors often adjust tail risk and valuation expectations accordingly.

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