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FDA’s Updated Biosimilars Naming Policy

Two days after Mr. Gottlieb announced his departure from the FDA within a month on March 5, he released an updated draft guidance on biologics naming policy, adding another accomplishment in the last month of his tenure.

The question at the core is how to market “generic versions” of biologics, aka biosimilars. Unlike generic versions of traditional drugs, which could achieve a very confident level of equivalence to their original forms, the difference between biosimilars and their originals are “theoretically” high.

A biosimilar is a biological product that is highly similar to and has no clinically meaningful differences from an existing FDA-approved reference product.

– FDA

The naming policy comes into play to assert that difference.

For interchangeable biosimilars, the agency will designate a proper name that combines the core name and a distinguishing suffix that is devoid of meaning and composed of 4 lowercase letters.

– FDA

It is another confirmation that, biosimilars will not provide the similar competition as generics [to traditional drugs].

Biosimilars can be seen as lower-priced branded drugs. And it will really need real-world experiences to tell the interchangeability and other considerations.

A new biosimilar approval could be seen as providing a new solution, instead of providing a less expensive version of the current solution, to patients.

「Video of the Week」CRISPR-edited Bacteria As A Storage of Data

First video stored in its digital form in bacteria’s DNA, with the help from CRISPR/Cas9 gene editing.

DNA as a storage is not an entirely new idea. Microsoft has been exploring this field with Twist at least since 2016. They have successfully stored music (audio) performances in DNA in 2017.

Now (in the video), researchers at Harvard Medical School and the Wyss Institute are using live organisms.

MSCI China A Shares Inclusion (2): 253 Large-cap and 168 Mid-cap

Following up on the previous post of MSCI’s inclusion of 236 China A Shares last year, I created another list (in excel format) according to the recent update.

MSCI A-share List_2019Feb

MSCI will increase the weight of China A shares in the MSCI Indexes according to the following schedule:

  • Step 1: MSCI will increase the index inclusion factor of all China A Large Cap shares in the MSCI Indexes from 5% to 10% and add ChiNext Large Cap shares with a 10% inclusion factor coinciding with the May 2019 Semi Annual Index Review.
  • Step 2: MSCI will increase the inclusion factor of all China A Large Cap shares in the MSCI Indexes from 10% to 15% coinciding with the August 2019 Quarterly Index Review.
  • Step 3: MSCI will increase the inclusion factor of all China A Large Cap shares in the MSCI Indexes from 15% to 20% and add China A Mid Cap shares, including eligible ChiNext shares, with a 20% inclusion factor to the MSCI Indexes coinciding with the November 2019 Semi-Annual Index Review.

On completion of this three-step implementation, there will be 253 Large and 168 Mid Cap China A shares, including 27 ChiNext shares, on a pro forma basis in the MSCI Emerging Markets Index, representing a weight of 3.3% in the pro forma index.

Again, there is no clear/editable list publicly available… Always a list in jpeg/png format.

Compared to the list of 236 large-cap stocks last year, there are 24 additions and 7 deletions, listed in separate sheets. (236+24-7=253)

 

MSCI China A Shares Inclusion (1): 234 -> 226 -> 236 Large-cap

One thing I found very odd when doing some research on the recent inclusion of China’s A-shares into MSCI’s indexes – there is even no easily-accessible and “readable” list…

“Lists” I saw are in the format of pictures.. not usable, considering the number of stocks are in hundreds.

(Really don’t understand why a simple list is protected… and available in uneditable form…)

And there is no consistent track of inclusion/exclusion of stocks publicly available.

Given that, I created excel lists [MSCI China A Shares List] of tickers proposed by MSCI with a history of different versions in 2018.

[For 2019 versions, please see the next post]

In this post, three versions are shared:

  1. 5/15/2018 version with 234 stocks ->
  2. 5/31/2018 version with 226 stocks (8 are removed due to reasons like suspension of trading, lack of buying opportunity, etc.) ->
  3. 8/31/2018 version with 236 stocks (10 are added)

From 1 to 2, the 8 deleted stocks are:

  • 002310 东方园林 (停牌原因)
  • 600170 上海建工 (调出沪股通标的)
  • 601390 中国中铁 (停牌原因)
  • 600369 西南证券 (调出沪股通标的)
  • 002450 ST康得新 (停牌原因)
  • 000825 太钢不锈 (停牌原因)
  • 601118 海南橡胶 (调出沪股通标的, 停牌原因)
  • 000063 中兴通讯 (停牌原因)

From 2 to 3, the 10 added stocks are:

  • 600760 中航沈飞
  • 601088 中国神华
  • 600050 中国联通
  • 600795 国电电力
  • 600346 恒力股份
  • 600406 国电南瑞
  • 000100 TCL 集团
  • 000063 中兴通讯
  • 600588 用友网络
  • 601966 玲珑轮胎

Mark Zuckerberg’s Post on Privacy

Today, the person at the center of today’s privacy/data issues commented with his thoughts and future moves of Facebook.

[Read Zuckerberg’s original post here]

End-to-end encryption and secure data centers are the two most important things touted by Facebook’s CEO.

“In a few years, I expect future versions of Messenger and WhatsApp to become the main ways people communicate on the Facebook network.”

[WhatsApp is the leader in end-to-end encryption and was acquired by Facebook in 2014 for $22 billion total]

[Read more on the conflict between Facebook and WhatsApp after acquisition]

However, there is one big mismatch – users don’t care what technics FB is using; they care if people they don’t know know them well. Essentially, users will still feel their information is sold if they saw tailored ads in WhatsApp. They only care about results. And that’s where Apple’s iMessenger wins. Users don’t know what efforts Apple is making but they don’t see ads.

What’s more…

“Beyond that, significant thought needs to go into all of the services we build on top of that foundation — from how people do payments and financial transactions, to the role of businesses and advertising, to how we can offer a platform for other private services.”

Yes Facebook will do payments and issue blockchain-related or other forms of cryptocurrencies/units.

FDA Head Will Resign In A Month (Not Good..)

Scott Gottlieb, the commissioner of the Food and Drug Administration, will leave the office after a tenure of 23 month.

[Original Resignation Letter]

In a previous post, I listed some of the agency’s innovative approvals during the past two years under Mr. Gottlieb’s lead. The departure of the head of this crucial regulatory body will negatively impact the overall (biotech, pharma, medical devices, etc.) industry. (possible slower, less innovative approvals)

What seems odd here: 1. Mr. Gottlieb publicly has said in January on Twitter: “I want to be very clear — I’m not leaving. We’ve got a lot important policy we’ll advance this year.” 2. Mr. Gottlieb was working throughout the morning

Mr. Gottlieb March 5th Twitter

There should be an increasing intensified pressure from industries that are experiencing headwinds due to his policies and the end users/stakeholders that are complaining about some current situations (but not in total control of FDA I believe), such as opioid abuse, prevailing of e-cigarettes among teens, etc.

Some of topics he is intervening include: 1) brand drug companies withholding samples needed by generic drug makers 2) rebate traps and other anti-competitive abuses in the pharmaceutical supply chain 3) rising use of electronic cigarettes (e.g. JUUL Labs).

[Warning Letter from FDA to JUUl Labs]

Last December, Altria invested $12.8 billion into JUUL for a 35% ownership. JUUL projected revenue of $940 million in 2018, with gross margins of 70 percent, and its 2018 projected EBITDA approximately $250 million. [Crunchbase News]

(So assuming 100% growth -> 1.84 billion in revenue in 2019, it’s valued at ~20.0x revenue multiple)

Last year, FDA issued more than 1,300 warning letters and fines to convenience stores, gas stations and other stores over the summer for selling e-cigarettes to minors, Gottlieb says. The FDA says it’s the agency’s largest such action in history. [npr.org]

Mr. Gottlieb also planned to seek a ban on menthol cigarettes.

Mr. Gottlieb has received criticism for the approval of Dsuvia, a powerful opioid painkiller.

Update on March 6: Tobacco giants’ stocks rising…

  • Altria Group Inc (NYSE: MO)
Source: Google finance
  • British American Tobacco PLC (NYSE: BTI)
Source: Google finance

Some Thoughts on E-sport Comparing to Traditional Sport Industry

E-sport is a very hot growing industry with the future format of living embedded in. It is the intersection between gaming, technology, social, media and entertainment.

There are some related concepts, e.g. streaming gaming, and they share some similar fundamental building blocks.

Future of gaming will be mostly based on cloud. Just like Office Suite and Adobe Suite is moving to the subscription model, the computer gaming industry is making that transition as well and this might be the next growth opportunity for Microsoft (with its cloud computing services, Hololens and Xbox, etc.) and other companies. In fact, most of the mobile games today have already relied on continuous connections, instead of a publisher model like movie/music (buy, download and play).

As certain games (now and in the future) would be considered as “sports”, they inherently include related business opportunities – worldwide competitions, leagues, sale of tickets, game watching and ads, etc. It is very similar to today’s sports and is able to provide a more authentic experience as games are born to be digital (unlike traditional sports that are recorded and digitalized for TV/videos). The concerns here include: 1. the watchableness of players playing games is hard to improve. Players are just sitting in front of the PC or even holding phones. (It is the characters they are playing are watchable) 2. Compared to traditional sports, games usually need a certain level of understanding to enjoy, while sports are commonly understandable and may have some natural beauty to watch.

The leading games that are run like “sports” include LOL (League of Legends), Dota2, Overwatch, etc. The Dota2 international competition in 2018 (TI8) has $25.5 million prize pool. Another major company to “sportify” gaming it Amazon, with its Twitch platform, on which there are 140 million monthly active users. [Netflix has 139 million subscribers globally]

From the technology perspective, the increasing power of cloud is definitely the driver here. Additionally, the coming 5G (low latency, faster transmission of larger data) and AR/VR (actually bringing sports alive; and to solve the watchableness issue maybe) will revolutionize our view on gaming and e-sports. That will even redefine what is “living” and “socializing” in the future (say 25-50 years).

The concept of “playing video games with friends” will be barely used. The line may be so blur that the following concepts are true “life is a real game” and “living on the net”.

And then virtual goods will be huge market. It’s not only buying on the internet (which is e-commerce) but also using on the internet. The virtue clothing on a virtual character we control would have value. Many people are buying or will buy virtual luxury goods. It doesn’t matter if a product’s actually cost is $100 or $0 – they can be sold at $3000. Clothings have already gone far beyond keeping us warm anyway.

E-sports is part of the test field or connection between our current world and the future living.

China’s New Nasdaq-style “Technology Innovation Board”

Although China’s economy and stock market size has been growing fast, the underlying capital market mechanisms are not as advanced.

China has made several efforts to modernize its stock market, but mostly remained in the previous framework or didn’t become a game-changer.

This time is different.

Regulatory approvals are replaced by general registration processes (guidance and regulations still there). Any company that fulfills certain requirements can go public.

Pre-profit companies can go public. Previously, the stock market was heavily leaning towards sectors with profits like banking.

Different share structures are allowed. Super voting power is allowed.

Lock-up period is higher than NASDAQ’s.

—

Attached is a presentation from a major investment bank in China.

20190302.pdf