These Biotech CEOs Made the Biggest Blunders of 2016
December 6, 2016
By Mark Terry, BioSpace.com Breaking News Staff
As the end of the year approaches, there will be many “Best Of…” lists. Brian Orelli, writing for The Motley Fool, takes a little different spin, pointing out a handful of biotech bosses who made the biggest blunders of the year.
1. Prabhavathi Fernandes, Cempra
Prabhavathi Fernandes, president and chief executive officer of Cempra . In October, the company announced that the U.S. Food and Drug Administration (FDA) had problems with a manufacturing facility run by Cempra’s contract manufacturing organization (CRO), Wockhardt. As a result of the news, company shares took a dive.
Orelli writes, “You could argue that the manufacturing issues were out of the control of the company’s hands, although picking a manufacturer that was following good manufacturing practices certainly would have avoided the issue.”
He goes on to point out, however, that it wasn’t the only questionable issue made by Fernandes. Less than a week later, the FDA published details about solithromycin’s potential for liver damage. “Not disclosing the potential liver issues before the FDA briefing documents was a huge mistake,” Orelli writes, “as the 61 percent decline after the FDA disclosure clearly showed. Managing investors’ expectations is one of the top jobs of a CEO.”
It may be minor in the long run, however. Yesterday the company announced that Toyama Chemical Company, a subsidiary of FUJIFILM Holdings Corporation, had started Phase III trials of solithromycin in Japan.
2. John Crowley, Amicus Therapeutics
John Crowley, chairman and chief executive officer of Amicus Therapeutics . The company’s Galafold (migalastat) to treat Fabry disease, is marketed in Europe, but hasn’t been approved yet in the U.S. Again, this is a case of not managing shareholder expectations. The FDA indicated it wanted more or better kidney biomarker data before U.S. approval.
Orelli writes, “When asked about how the discussions with the FDA were going earlier this month, Amicus’ chairman and CEO John Crowley declined to comment, ‘We’ll only confirm that we will provide an update by the end of this quarter.’ Perhaps a better description of how negotiations with the FDA were going would have softened the blow.”
On November 28, Amicus provided information on its plans to meet the FDA’s requirements.
3. Matthew Pfeffer, MannKind
Matthew Pfeffer, chief executive officer of MannKind . MannKind has been totally beaten up by the failure of its inhaled insulin, Afrezza. MannKind had a marketing deal with Sanofi , but even Sanofi couldn’t make it work, primarily due to how insurers classified the therapy, making it less likely to be chosen for treatment. What Pfeffer did that’s questionable, is after Sanofi abandoned its involvement, Pfeffer decided to try and market the product itself, with little success.
“While things could turn around,” Orelli writes, “MannKind would likely have been better off shelving Afrezza and investing whatever it will spend on selling the insulin on developing another drug using its inhaled drug technology.”
4. Hans Bishop, Juno Therapeutics
Hans Bishop, president and chief executive officer of Juno Therapeutics . In early July, Juno reported that the FDA had placed a clinical hold on its Phase II trial of JCAR015 in adults with relapsed or refractory B cell acute lymphoblastic leukemia, after two patients died. It was believed that the addition of fludarabine to the pre-conditioning regimen was the cause. The FDA agreed with that reasoning and the trial continued. Then two more patients died of cerebral edemas and the trial was placed on hold again. Fludarabine wasn’t the problem, or wasn’t the only problem.
“It’s tough to say Hans Bishop … made a dumb move,” Orelli writes, “since fludarabine seemed like the likely culprit. But assuming the obvious possibility was the case and not investigating further cost the company time and money.”
It’s difficult to point the finger and say whether, at the time, any of these seemed like “dumb moves.” It’s always easier to second-guess after the fact. Still, mistakes were made.
“The moral of the story here is that investors need to remember that the risk of these CEO decisions are real and set their risk-adjusted valuations accordingly,” writes Orelli.