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RBC Imagine: Game Changers for Biotech in 2021

COVID-19 continues to be the big potential disruptor for healthcare this year, and there could be increased pressure on new drug launches and clinical trials especially if the pandemic continues beyond the end of 2021. Our equity research analysts believe innovation within the sector in areas such as neuropsychiatry, cancer, diabetes, and HIV, will likely create notable developments on the horizon, but could also lead companies to face new competition.

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By Brian Abrahams, Luca Issi and Greg Renza
Published February 26, 2021 | 3 min read
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Key Points

  • Biotechs have managed to weather pandemic-related disruptions better than many other sectors, but anything that prolongs its effects could put pressure on the industry.
  • The growth of telemedicine is having an effect on prescription rates, particularly in psychiatry.
  • Patent lawsuits continue to be a concern for a variety of players in biotech, as competitors challenge ownership of intellectual property (IP).
  • CAR-T cell therapy for the treatment of cancer is also seeing some rapidly growing threats in the use of bispecific antibodies and allogeneic approaches.

Disruptive products, innovative technologies and even epidemiological or legal issues all have the power to transform the lay of the land in the biotech sector. As research and development continues at a rapid pace, there is a large potential impact to existing big hitters in the industry, particularly in fields such as psychiatry, cancer, HIV and diabetes. Here are some of the key disruptions to watch out for this year:

1. Controlling the pandemic

In this fast-moving sector, a start-up with the right idea and new technology can quickly disrupt an existing franchise. But the major disruptor in 2021 continues to be the global pandemic.

Multiple effective COVID-19 vaccines have begun rolling out across the world, signaling a potential end to the worst effects of the pandemic this year. While our analysts believe that the base case is for biotechs to be able to return to a greater normalcy of operations by the end of this year, there are risk factors that could derail this recovery.

Scientists are already encountering mutations and variants in the coronavirus that are challenging the efficacy of existing vaccines. The mountain to climb was the development of vaccines in the first place – meeting the challenge of new strains would likely be an easier process of adapting existing remedies. Nevertheless, it could slow down the pace of recovery from the pandemic.

The mountain to climb was the development of vaccines in the first place – meeting the challenge of new strains would likely be an easier process of adapting existing remedies. Nevertheless, it could slow down the pace of recovery from the pandemic.

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There are also challenges in supply chains, including for the vaccines themselves and for the peripheral equipment needed (vials, syringes, etc.). An uneven vaccine rollout across the world, whether it be due to supply limitations, distribution challenges, or vaccine reticence, may also increase the chances of mutations and reinfections, again slowing the recovery.

Biotechs have managed to weather pandemic-related disruptions better than many other sectors, but anything that prolongs the pandemic could further pressure prescription volumes, especially for new launches and hard-to-administer products, as well as drug supply chains and reimbursement. Much work had been done to minimize delays to clinical trials in 2020, but this will also become much harder to manage if disruption continues.

2. Online psychiatry

Another pandemic-related disruption has been the growth of telemedicine, which is having an effect on prescription rates, particularly in psychiatry. Although the adoption of telemedicine for psychiatry has increased, prescriptions associated with online visits have decreased. Psychiatrists are prescribing new brand prescriptions in the telehealth setting at 60% the rate versus face to face in-office patient visits per IQVIA in Dec 2020, suggesting that it has been more difficult to start new patients on new psychiatric therapies during the pandemic. For example, the movements in parts of the body characteristic in tardive dyskinesia (TD), may be particulary difficult to recognize and diagnose via just a virtual platform.

Psychiatrists are prescribing new brand prescriptions in the telehealth setting at 60% the rate versus face to face in-office patient visits per IQVIA in Dec 2020, suggesting that it has been more difficult to start new patients on new psychiatric therapies during the pandemic.

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3. Intellectual Property and HIV

Patent lawsuits continue to be a concern for a variety of players in biotech, as competitors challenge ownership of intellectual property (IP). Next year will see the start of the trial in the bictegravir IP lawsuit against Gilead Sciences, in which ViiV Healthcare is alleging that this key component of Gilead’s HIV treatment Biktarvy infringes on their US dolutegravir patent.

Gilead is also facing the continuation of the federal government’s suit against the company’s PrEP drugs, used to prevent HIV infection, and its own countersuit against the CDC regarding the same patents.

Our analysts are also watching with interest the development of islatravir, a first-in-class nucleoside reverse transcriptase translocation inhibitor with a differentiated mechanism of action for HIV. Developing pharma Merck is bullish on the drug, although it remains to be seen whether it can challenge existing dominance in the field.

4. Oncology innovation

CAR-T cell therapy for the treatment of cancer is also seeing some rapidly growing threats in the use of bispecific antibodies and allogeneic approaches. Several companies are developing non-CAR-T immune-oncology agents for use in diffuse large B-cell lymphoma that may offer the advantages of off-the-shelf speed, easier administration, fewer adverse events and no need for CAR-T infrastructure. Many of these treatments were showcased at the 2020 American Society of Hematology meeting and exposition.

However, our analysts believe that while bispecifics and ADCs will likely have a future role in oncology treatments, they’re not all quite there yet. It will take time to further dose escalate and fully understand whether these agents can offer a balance of efficacy and safety that is meaningfully better than CAR-Ts. In the meantime, these may become the treatment of choice only in certain circumstances, such as when a patient’s disease is so advanced they are unable to wait for CAR-T cells to be manufactured, or they are elderly and unable to tolerate CAR-T.

These are just a few of the big-picture, under-the-radar developments that could potentially impact biotech in 2021 and determine whether existing franchises are likely to be sustainable for years to come. But the largest game-changer remains COVID-19, and how long the pandemic-related disruptions will continue to effect the sector, and the wider world.


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RBC Imagine™

This report is part of our RBC Imagine initiative, which assesses the long-term impact of emerging disruptive forces, thematic drivers of global change, and opportunities across the rapidly evolving equities landscape through management interviews, cross-sector case studies, and differentiated research reports.


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