Brainstorm Health: Omada and Depression, Lilly Loxo Deal, Shutdown and the FDA

The JPMorgan Healthcare Conference brings with it partnerships promised and born. Before the conference even began this week in San Francisco, drug giant Bristol-Myers Squibb announced a blockbuster proposed deal to acquire Celgene for $74 billion – a potential merger that some analysts speculated was meant to shore up weak points for both companies and create a substantially larger player in the cancer drug space.

Just a few weeks before, British pharma mainstay GlaxoSmithKline (not exactly known for keeping up with rivals like Merck and Bristol-Myers in the new generation of cancer immunotherapy drugs) agreed to buy the biotech Tesaro for $5.1 billion.

Then, on JPM Monday, Indianapolis-based Eli Lilly announced that it would buy the smaller cancer-focused biotech Loxo Oncology for $8 billion. As Lilly CEO David Ricks explicitly pointed out, this was an intentional move geared toward expanding the company’s presence in oncology. It helps that Loxo won an FDA approval for a first-of-its-kind cancer drug in November.

I chatted with biotech investor and cancer immunotherapy guru Brad Loncar about the state of biopharma M&A yesterday, and while he’d caution overstating the trend, he pointed out that these end-of-2018 and early-2019 deals may signify the underlying hunger for more robust biopharma M&A this year.

One important question is whether or not oncology is the only space that will see a flurry of big-name deals – and, if not, which others may follow.

Read on for the day’s news.

DIGITAL HEALTH

Omada announces expansion into depression treatment. Omada Health, a digital health firm whose tech-driven approach to diabetes maintenance has achieved impressive real world results, announced Monday that it's expanding into another major chronic disease space: Depression. The program is still in its planning stages, but CEO Sean Duffy tells me that he's excited about the project precisely because of how connected conditions like obesity, diabetes, and depression are; the interplay between the conditions can lead to a vicious cycle that exacerbates all of them.

INDICATIONS

Sage's postpartum comeback. Sage Therapeutics unveiled promising clinical data on Monday showing that its pioneering postpartum depression drug - widely expected to be the first treatment approved in the space - met important primary and secondary goals in a late-stage trial. Sage shares were up as much as 44% in Monday trading (although they evened out a bit on Tuesday, dropping about 7%). There had been initial concerns about Sage's experimental treatments potential side effects.

THE BIG PICTURE

Shutdown crunch hits the FDA. The ongoing federal government shutdown has also left the Food and Drug Administration in a bit of a precarious position, according to Commissioner Scott Gottlieb. Gottlieb says that the shutdown is preventing the agency from collecting certain user fees that helps fund important agency operations. All told, there's about a month's worth of funding left from the specific user fees that fund new drug reviews.

REQUIRED READING

Why Samsung & LG Shocked Profit Analysts With Dire Profit Warnings, by David Meyer

Another Blood Pressure Medication Is Being Recalled, by Emily Price

Why China's Moonshot Matters, by Clay Chandler

AMD CEO: Security Flaws a 'Wakeup Call' for Chip Makers, by Andrew Nusca