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Those big billion-dollar PhIII studies? Martin Landray says they can be done for a tiny fraction of the cost

Martin Landray knows what controversy in clinical drug development feels like, from first-hand experience.
Bioregnum Opinion Column by John Carroll
Landray…

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Martin Landray knows what controversy in clinical drug development feels like, from first-hand experience.

Bioregnum Opinion Column by John Carroll

Landray was the chief architect of RECOVERY, a study that pitted a variety of drugs against Covid-19. And he offered some landmark data that would help push dexamethasone out into broader use as a cheap treatment, while helping ice hydroxy’s reputation as a clear misfire.

“Lots of people told us we shouldn’t use it,” Landray says about dexamethasone and Covid-19. “It was dangerous. We shouldn’t even do a trial. They also cared about hydroxychloroquine and lots of people said we shouldn’t do a trial because it must be used. I’ve got the letters from both sets of people.”

Now, after 20 years of mounting clinical trials, the Oxford professor is building on what he’s learned from RECOVERY and scores of drug studies to take on one of the most quixotic tasks in the industry: building an organization that can take a drug — anything from a cheap generic like dexamethasone to an experimental biopharma drug — and put it through its paces in large Phase III trials. And at just a tiny fraction of the cost developers would normally spend on late-stage programs.

A lot of this depends on approaching drug data in a new way, carefully and precisely identifying the data needed, without overcomplicating matters, then working in alignment with key drug developers, patient groups, providers — the UK’s NHS, with its massive database, is a supporter — and clinical organizations to recruit en masse.

In doing that, he intends to break a decades-long trend in drug development that has steered large and small organizations away from the big population studies needed for cardio and other broad disease areas like dementia and into the rare disease field, where smaller trials are the norm.

And that makes him a radical in what he sees as a field that’s begging for a game-changing revolution.

“It’s unsustainable,” says the Oxford professor about the Phase III sector of R&D. “I mean, it’s already broken … The so-called GCP regulations, good clinical practice, the old joke goes they’re not good, they’re not clinical, and they’re not practical. And that joke has been around 25 years and hasn’t changed much.”

This is not something that needs incremental improvement. From his perspective, this is a big issue for the world.

Huge financial and public health issues were at stake when the Covid vaccines first entered the clinic, and decisions were made on those with what Landray considers “pretty scruffy evidence.”

“The original vaccine trials cost probably a billion dollars apiece,” Landray says. “The idea, if you turned around to one of those companies and said, ‘And now we want you to do a trial of a million people.’ They’d say, ‘Well, our pockets are just not that deep.’ If you say, ‘Well, I want to do a trial of a million people and it costs a million pounds,’ suddenly the possibilities open up. And we put the proposal together for that. I’m absolutely serious about those numbers.”

David Schenkein

Click on the image to see the full-sized version

Landray has done more than simply win over some converts to the Phase III revolution he’s plotting. He’s building a non-profit organization called Protas that has drawn some influential backers in biopharma. Sanofi came in early on with a promise to collaborate and £5 million. And today GV — Google’s venture arm — is in for another £5 million grant, with active support from David Schenkein, a high-profile researcher who helped build Agios before jumping to venture capital.

“I’ve been doing clinical trials my whole life out of grade school,” Schenkein, a Genentech alum, tells me, “and we need to see the whole ecosystem improve. And that’s good for everybody. So it is definitely a philanthropic grant, but we think it’ll improve the entire ecosystem, which we’re obviously so committed to. We’ve known Martin and his team for years and have just been incredibly impressed. And we’ve looked at the clinical trial space and we’ve talked about this before, you and I, but what Martin and his team have done have just been outpacing everybody else.”

“There’s no question that the way we do Phase III clinical trials today is largely no different than the way we did them when I first went into the industry or where we’ve been doing it for 40 years, which means we enroll patients the same way we used to. We don’t go directly to patients in many cases,” Schenkein adds. “We only go through the sites. The sites say, ‘Yeah, I’ll give you 20 patients.’ They end up giving you zero. And so you need more sites. We end up collecting way more data. We don’t know which is the right data to collect, and so we collect everything. We clean everything. And all of that drives the cost up exponentially and slows it down. And what Martin and his team have just gotten so much smarter using data to be able to say, not only how do we enroll patients in a different way, how do we know the right data to collect, not collect too much data, the right data. So all of that will just completely change the way we think about conducting clinical trials, and that has to happen.”

Dietmar Berger

“We engaged with them because we believe integration of clinical trials into everyday clinical practice can be an important new model, which offers advantages both for the healthcare system as well as for sponsors,” Sanofi development chief Dietmar Berger tells me. “Running large late-stage trials in close collaboration with practicing physicians and a large healthcare provider (for example via Protas) can lead to more efficient data generation, with representation of a diverse, ‘real world’ population. This could apply especially for large studies in common diseases, and include novel drugs.”

Right now, there are no trials underway at Protas or ones planned before 2024. Landray is using his funding to create a group that can orchestrate a variety of new methods to smash classic Phase III budgets. And his experiences running the informatics part in the early days of the UK Biobank project — with its half a million subjects enrolled in a massive genetics project — have helped.

We just need to spend those two years making sure that we’ve got all the right things in place. Part of that is technology. IT systems actually make it easier to do the right thing in terms of following the protocol. Part of that is about regulatory and other policies. And we’ve been doing a lot of work with ICH, with FDA, with all sorts of organizations around what should good clinical trials regulation look like? Part of that is building on the experiences from things like the RECOVERY trial. Part of that is partnerships with clinicians, clinical health services, and patient groups. We need those things in place before one actually starts delivering.

If you say, have we started planning? Yes, we’ve started thinking about some of those first trials. I just don’t have anything concrete to talk about today.

Landray has given this all a lot of thought, and it’s worth listening carefully to what he has to say about the many things that have skewed so far off course in drug development. And why it’s important to get on the right track.

What we’ve seen is that Big Pharma has largely opted out of developing new drugs for common diseases. That’s true in heart disease, in arthritis, and so on. Respiratory disease. It’s very true if one looks at depression. It’s substantially true if one looks at dementia, where there are two challenges to dementia. One is, can we find some potential drugs that might work? Probably. And then the second is, how are we ever going to make that commercially successful? And that’s going to be driven in large part by what’s the affordability and the practicality of doing those sorts of trials that you would need to do in dementia.

So it’s not just about how we get drugs cheaper, but it’s also, from my point of view, it’s can we get better drugs to treat the big issues? And if one looks at a health system and again — goes back to that point of view for a moment — the reason that everybody’s health system is creaking/broken is largely because there are very large numbers of people who are late middle aged and elderly with two or three or possibly more relatively common conditions. And if we want to actually get something that is much more sustainable in terms of an overall health system and public health, then we have to tackle common disease and we have to also tackle the prevention elements, whether that’s early detection of cancer or preventative treatments like reducing the risk of future cardiovascular events.

Schenkein agrees wholeheartedly: “I think that the most important factor here is the shift we’ve seen in our industry away from investments in the common diseases more towards the rare. I agree with Martin. The rare diseases are critically important, but that shift has to come back the other way.”

Consider the case of PCSK9, the big target that drove Amgen and Novartis out onto the market with limited data on efficacy in an attempt to reach a portion of the population that could benefit from it.

Here’s Landray:

In the PCSK9 antibodies, yes, they showed it reduced MACE, major cardiovascular events, but didn’t show an impact on cardiovascular death and they didn’t have the full range of safety information you might want to see for a new class of drugs. Then what happens was that someone had to pay back the cost of those trials. One of the many contributing factors, but a significant one, is how do we recoup our R&D costs, of which something like half or more is probably on that single late-phase trial.

And then the payers turn around…and they say, that’s all very well, but we see you’ve demonstrated efficacy in that, remember, limited population of all the patients who’ve had heart disease, but we can’t really afford to treat all of those patients. And therefore we’ll put in place some other clinical guidance. It’s all called clinical guidance or whatever, but it’s basically a form of rationing.

That can substantially be avoided if you avoid calamitous R&D costs.

That could be arguable, as drugs aren’t priced — in the US in any case — according to the cost of development. But you’ll never break through that barrier, Landray argues, until you start doing huge studies at relatively meager prices.

For Landray, this isn’t about empire building. If Protas can break the mold and essentially force the rest of the R&D world to adopt it, he’d gladly shut down a decade from now. Mission accomplished.

But first there’s a revolution to inspire.

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Economics

Nearly Half Of Americans Making Six-Figures Living Paycheck To Paycheck

Nearly Half Of Americans Making Six-Figures Living Paycheck To Paycheck

Roughly 60% of Americans say they’re living paycheck to paycheck -…

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Nearly Half Of Americans Making Six-Figures Living Paycheck To Paycheck

Roughly 60% of Americans say they're living paycheck to paycheck - a figure which hasn't budged much overall from last year's 55% despite inflation hitting 40-year highs, according to a recent LendingClub report.

Even people earning six figures are feeling the strain, with 45% reporting living paycheck to paycheck vs. 38% last year, CNBC reports.

"More consumers living paycheck to paycheck indicates that many are continuing to lose their financial stability," said LendingClub financial health officer, Anuj Nayar.

The consumer price index, which measures the average change in prices for consumer goods and services, rose a higher-than-expected 8.3% in August, driven by increases in food, shelter and medical care costs.

Although real average hourly earnings also rose a seasonally adjusted 0.2% for the month, they remained down 2.8% from a year ago, which means those paychecks don’t stretch as far as they used to. -CNBC

Meanwhile, Bank of America found that 71% of workers say their income isn't keeping pace with inflation - resulting in a five-year low in terms of financial security.

"It is no secret that prices have been increasing for everyday Americans — not only in the goods and services they purchase but also in the interest rates they’re paying to fund their lives," said Nayar, who noted that people are relying more on credit cards and carry a higher monthly balance, making them financially vulnerable. "This can have detrimental consequences for someone who pays the minimum amount on their credit cards every month."

According to an Aug. 30 report from the Federal Reserve Bank of New York, credit card balances increased by $46 billion from last year, becoming the second-biggest source of overall debt last quarter.

And as Bloomberg noted last month, more US consumers are saddled with credit card debt for longer periods of time. According to a recent survey by CreditCards.com, 60% of credit card debtors have been holding this type of debt for at least a year, up 50% from a year ago, while those holding debt for over two years is up 40%, from 32%, according to the online credit card marketplace.

And while total credit-card balances remain slightly lower than pre-pandemic levels, inflation and rising interest rates are taking a toll on the already-stretched finances of US households.

About a quarter of respondents said day-to-day expenses are the primary reason why they carry a balance. Almost half cite an emergency or unexpected expense, including medical bills and home or car repair.

The Federal Reserve is likely to raise interest rates for the fifth time this year next week. Credit-card rates are typically directly tied to the Fed Funds rate, and their increase along with a softening economy may lead to higher delinquencies. 

Total consumer debt rose $23.8 billion in July to a record $4.64 trillion, according to data from the Federal Reserve. -Bloomberg

The Fed's figures include credit card and auto debt, as well as student loans, but does not factor in mortgage debt.

Tyler Durden Tue, 10/04/2022 - 20:25

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Spread & Containment

Plunging pound and crumbling confidence: How the new UK government stumbled into a political and financial crisis of its own making

Liz Truss took over as prime minister with an ambitious plan to cut taxes by the most since 1972 – investors balked after it wasn’t clear how she would…

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The hard hats likely came in handy recently for Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng. Stefan Rousseau/Pool Photo via AP

The new British government is off to a very rocky start – after stumbling through an economic and financial crisis of its own making.

Just a few weeks into its term on Sept. 23, 2022, Prime Minister Liz Truss’ government released a so-called mini-budget that proposed £161 billion – about US$184 billion at today’s rate – in new spending and the biggest tax cuts in half a century, with the benefits mainly going to Britain’s top earners. The aim was to jump-start growth in an economy on the verge of recession, but the government didn’t indicate how it would pay for it – or provide evidence that the spending and tax cuts would actually work.

Financial markets reacted badly, prompting interest rates to soar and the pound to plunge to the lowest level against the dollar since 1985. The Bank of England was forced to gobble up government bonds to avoid a financial crisis.

After days of defending the plan, the government did a U-turn of sorts on Oct. 3 by scrapping the most controversial component of the budget – elimination of its top 45% tax rate on high earners. This calmed markets, leading to a rally in the pound and government bonds.

As a finance professor who tracks markets closely, I believe at the heart of this mini-crisis over the mini-budget was a lack of confidence – and now a lack of credibility.

A looming recession

Truss’ government inherited a troubled economy.

Growth has been sluggish, with the latest quarterly figure at 0.2%. The Bank of England predicts the U.K. will soon enter a recession that could last until 2024. The latest data on U.K. manufacturing shows the sector is contracting.

Consumer confidence is at its lowest level ever as soaring inflation – currently at an annualized pace of 9.9% – drives up the cost of living, especially for food and fuel. At the same time, real, inflation-adjusted wages are falling by a record amount, or around 3%.

It’s important to note that many countries in the world, including the U.S. and in mainland Europe, are experiencing the same problems of low growth and high inflation. But rumblings in the background in the U.K. are also other weaknesses.

Since the financial crisis of 2008, the U.K. has suffered from lower productivity compared with other major economies. Business investment plateaued after Brexit in 2016 – when a slim majority of voters chose to leave the European Union – and remains significantly below pre-COVID-19 levels. And the U.K. also consistently runs a balance of payments deficit, which means the country imports a lot more goods and services than it exports, with a trade deficit of over 5% of gross domestic product.

In other words, investors were already predisposed to view the long-term trajectory of the U.K. economy and the British pound in a negative light.

An ambitious agenda

Truss, who became prime minister on Sept. 6, 2022, also didn’t have a strong start politically.

The government of Boris Johnson lost the confidence of his party and the electorate after a series of scandals, including accusations he mishandled sexual abuse allegations and revelations about parties being held in government offices while the country was in lockdown.

Truss was not the preferred candidate of lawmakers in her own Conservative Party, who had the task of submitting two choices for the wider party membership to vote on. The rest of the party – dues-paying members of the general public – chose Truss. The lack of support from Conservative members of Parliament meant she wasn’t in a position of strength coming into the job.

Nonetheless, the new cabinet had an ambitious agenda of cutting taxes and deregulating energy and business.

Some of the decisions, laid out in the mini-budget, were expected, such as subsidies limiting higher energy prices, reversing an increase in social security taxes and a planned increase in the corporate tax rate.

But others, notably a plan to abolish the 45% tax rate on incomes over £150,000, were not anticipated by markets. Since there were no explicit spending cuts cited, funding for the £161 billion package was expected to come from selling more debt. There was also the threat that this would be paid for, in part, by lower welfare payments at a time when poorer Britons are suffering from the soaring cost of living. The fear of welfare cuts is putting more pressure on the Truss government.

a man in a brown stocking hat inspects souvenirs near a bunch of UK flags and other trinkets
The cost of living crisis in the U.K. has everyone looking for deals where they can. AP Photo/Kirsty Wigglesworth

A collapse in confidence

Even as the new U.K. Chancellor of the Exchequer Kwasi Kwarteng was presenting the mini-budget on Sept. 23, the British pound was already getting hammered. It sank from $1.13 the day before the proposal to as low as $1.03 in intraday trading on Sept. 26. Yields on 10-year government bonds, known as gilts, jumped from about 3.5% to 4.5% – the highest level since 2008 – in the same period.

The jump in rates prompted mortgage lenders to suspend deals with new customers, eventually offering them again at significantly higher borrowing costs. There were fears that this would lead to a crash in the housing market.

In addition, the drop in gilt prices led to a crisis in pension funds, putting them at risk of insolvency.

Many members of Truss’ party voiced opposition to the high levels of borrowing likely necessary to finance the tax cuts and spending and said they would vote against the package.

The International Monetary Fund, which bailed out the U.K. in 1976, even offered its figurative two cents on the tax cuts, urging the government to “reevaluate” the plan. The comments further spooked investors.

To prevent a broader crisis in financial markets, the Bank of England stepped in and pledged to purchase up to £65 billion in government bonds.

Besides causing investors to lose faith, the crisis also severely dented the public’s confidence in the U.K. government. The latest polls showed the opposition Labour Party enjoying a 24-point lead, on average, over the Conservatives.

So the government likely had little choice but to reverse course and drop the most controversial part of the plan, the abolition of the 45% tax rate. The pound recovered its losses. The recovery in gilts was more modest, with bonds still trading at elevated levels.

Putting this all together, less than a month into the job, Truss has lost confidence – and credibility – with international investors, voters and her own party. And all this over a “mini-budget” – the full budget isn’t due until November 2022. It suggests the U.K.‘s troubles are far from over, a view echoed by credit rating agencies.

David McMillan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Economics

Roubini: The Stagflationary Debt Crisis Is Here

Roubini: The Stagflationary Debt Crisis Is Here

Authored by Nouriel Roubini via Project Syndicate,

The Great Moderation has given way to…

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Roubini: The Stagflationary Debt Crisis Is Here

Authored by Nouriel Roubini via Project Syndicate,

The Great Moderation has given way to the Great Stagflation, which will be characterized by instability and a confluence of slow-motion negative supply shocks. US and global equities are already back in a bear market, and the scale of the crisis that awaits has not even been fully priced in yet.

For a year now, I have argued that the increase in inflation would be persistent, that its causes include not only bad policies but also negative supply shocks, and that central banks’ attempt to fight it would cause a hard economic landing. When the recession comes, I warned, it will be severe and protracted, with widespread financial distress and debt crises. Notwithstanding their hawkish talk, central bankers, caught in a debt trap, may still wimp out and settle for above-target inflation. Any portfolio of risky equities and less risky fixed-income bonds will lose money on the bonds, owing to higher inflation and inflation expectations.

How do these predictions stack up? First, Team Transitory clearly lost to Team Persistent in the inflation debate. On top of excessively loose monetary, fiscal, and credit policies, negative supply shocks caused price growth to surge. COVID-19 lockdowns led to supply bottlenecks, including for labor. China’s “zero-COVID” policy created even more problems for global supply chains. Russia’s invasion of Ukraine sent shockwaves through energy and other commodity markets. And the broader sanctions regime – not least the weaponization of the US dollar and other currencies – has further balkanized the global economy, with “friend-shoring” and trade and immigration restrictions accelerating the trend toward deglobalization.

Everyone now recognizes that these persistent negative supply shocks have contributed to inflation, and the European Central Bank, the Bank of England, and the US Federal Reserve have begun to acknowledge that a soft landing will be exceedingly difficult to pull off. Fed Chair Jerome Powell now speaks of a “softish landing” with at least “some pain.” Meanwhile, a hard-landing scenario is becoming the consensus among market analysts, economists, and investors.

It is much harder to achieve a soft landing under conditions of stagflationary negative supply shocks than it is when the economy is overheating because of excessive demand. Since World War II, there has never been a case where the Fed achieved a soft landing with inflation above 5% (it is currently above 8%) and unemployment below 5% (it is currently 3.7%). And if a hard landing is the baseline for the United States, it is even more likely in Europe, owing to the Russian energy shock, China’s slowdown, and the ECB falling even further behind the curve relative to the Fed.

Are we already in a recession? Not yet, but the US did report negative growth in the first half of the year, and most forward-looking indicators of economic activity in advanced economies point to a sharp slowdown that will grow even worse with monetary-policy tightening. A hard landing by year’s end should be regarded as the baseline scenario.

While many other analysts now agree, they seem to think that the coming recession will be short and shallow, whereas I have cautioned against such relative optimism, stressing the risk of a severe and protracted stagflationary debt crisis. And now, the latest distress in financial markets – including bond and credit markets – has reinforced my view that central banks’ efforts to bring inflation back down to target will cause both an economic and a financial crash.

I have also long argued that central banks, regardless of their tough talk, will feel immense pressure to reverse their tightening once the scenario of a hard economic landing and a financial crash materializes. Early signs of wimping out are already discernible in the United Kingdom. Faced with the market reaction to the new government’s reckless fiscal stimulus, the BOE has launched an emergency quantitative-easing (QE) program to buy up government bonds (the yields on which have spiked).

Monetary policy is increasingly subject to fiscal capture. Recall that a similar turnaround occurred in the first quarter of 2019, when the Fed stopped its quantitative-tightening (QT) program and started pursuing a mix of backdoor QE and policy-rate cuts – after previously signaling continued rate hikes and QT – at the first sign of mild financial pressures and a growth slowdown. Central banks will talk tough; but there is good reason to doubt their willingness to do “whatever it takes” to return inflation to its target rate in a world of excessive debt with risks of an economic and financial crash.

Moreover, there are early signs that the Great Moderation has given way to the Great Stagflation, which will be characterized by instability and a confluence of slow-motion negative supply shocks. In addition to the disruptions mentioned above, these shocks could include societal aging in many key economies (a problem made worse by immigration restrictions); Sino-American decoupling; a “geopolitical depression” and breakdown of multilateralism; new variants of COVID-19 and new outbreaks, such as monkeypox; the increasingly damaging consequences of climate change; cyberwarfare; and fiscal policies to boost wages and workers’ power.

Where does that leave the traditional 60/40 portfolio? I previously argued that the negative correlation between bond and equity prices would break down as inflation rises, and indeed it has. Between January and June of this year, US (and global) equity indices fell by over 20% while long-term bond yields rose from 1.5% to 3.5%, leading to massive losses on both equities and bonds (positive price correlation).

Moreover, bond yields fell during the market rally between July and mid-August (which I correctly predicted would be a dead-cat bounce), thus maintaining the positive price correlation; and since mid-August, equities have continued their sharp fall while bond yields have gone much higher. As higher inflation has led to tighter monetary policy, a balanced bear market for both equities and bonds has emerged.

But US and global equities have not yet fully priced in even a mild and short hard landing. Equities will fall by about 30% in a mild recession, and by 40% or more in the severe stagflationary debt crisis that I have predicted for the global economy. Signs of strain in debt markets are mounting: sovereign spreads and long-term bond rates are rising, and high-yield spreads are increasing sharply; leveraged-loan and collateralized-loan-obligation markets are shutting down; highly indebted firms, shadow banks, households, governments, and countries are entering debt distress.

The crisis is here.

Tyler Durden Tue, 10/04/2022 - 17:25

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