This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Open Orphan, Operation Yellowhammer and a Bridge to Ireland

Last night I attended a ShareSoc company presentation seminar. One of the companies that presented was Open Orphan (ORPH) which used to be called Venn Life Sciences but changed name after a reverse takeover of Open Orphan and a change of CEO. The new focus is on orphan drugs which are those medications that are focused on rare diseases, i.e. those with relatively few patients and where historically there have been few treatments available and typically very little research. Big pharma tends not to spend money researching such drugs because the likely revenue from them is small. As a sufferer from a rare disease this presentation was of particular interest to me.

As the presentation indicated, Venn was historically loss-making and was viewed as “under-capitalised”. Market cap of ORPH is only £17 million when forecast revenue this year is £16.5 million.

Open Orphan’s new strategy is to concentrate on launching additional services focused on orphan drugs and develop a proprietary data platform. That includes building a database of patient and genomic data. They are also developing a “virtual sales rep” service to enable lower cost sales to specialists in orphan diseases. This seems to be a telemarketing operation supported by webinars. I was surprised to learn that drug sales in big pharma are still promoted by personal visits from highly-paid sales staff when in other fields a more “hybrid” approach is long established.

There is clearly a lot of work going into digital health platforms and databases – Renalytix which I covered in a previous report is one company focused on doing this for renal disease. So there are no doubt opportunities here although the presentation was short on information on the likely cost of developing such a platform and building the databases. Future fund raising looks a distinct possibility.

One question raised by the audience was whether patients would volunteer their own data (which in Europe they “own”). But I don’t think they will have objections because the chance of assisting development of treatments when there may currently be none will incentivize them to do so.

I suggest Open Orphan is a company to keep an eye on for the future. It’s still at an early stage of development.

Which brings me onto the subject of Operation Yellowhammer, the Government report which has now been published on the impact of a “hard” Brexit, or the “Reasonable Worst Case Planning Assumptions” as they headline the document (see https://tinyurl.com/yy2oll7p for the full document – it’s only 5 pages). As I am personally dependent on drugs to stay alive, the scare stories being propagated by some people about shortages on a hard Brexit are not just of academic interest.

The report suggests some disruption at Channel ports, including possibly up to 2.5-day delays to HGVs in Kent, i.e. similar to past disruptions caused by strikes in France which had no obvious impact on consumers although it might have some impact on “just-in-time” operations of manufacturing businesses.

But three-quarters of medicines come by the Channel straits which might have an impact on the supply of medicines and medical supplies, if unmitigated. As Nigel Farage has pointed out, the UK has 100 ports so alternatives to the Channel ports are readily available. Only a minority of drugs are time-sensitive and those could possibly be transported by air freight.

Pharmacy2U, one of the biggest prescription suppliers have published this note which covers patient concerns about Brexit: https://tinyurl.com/yxubdlsu . It basically says “don’t panic”, and carry on as normal. There are often problems with drug supplies due to complex supply chains, manufacturing or regulatory issues so this will be nothing new.

The report says demand for energy will be met as there will be no disruption to electricity or gas interconnectors but there may be rises in electricity prices. But it does warn about the availability of fresh foods, e.g. salad products from southern Europe which may be reduced. Are you worried about not being able to purchase tomatoes at Christmas? I cannot say I am.

In summary the Yellowhammer document is not something that will put off Brexit supporters from wanting to exit the EU on October 31st regardless.

One way around the problem of the Irish “Backstop” in the Withdrawal Agreement is to simply move the customs border to the Irish sea. This won’t please the DUP party of course but can they be bought off with the sop of a new bridge linking Northern Ireland to Great Britain? Or is this another of Boris Johnson’s bridge fantasies like the Garden Bridge in London? Is it even practical?

The Daily Telegraph published an analysis by a civil engineering expert. In essence it is possible because there are similar bridges in terms of length (13 miles or more depending on the chosen crossing point) elsewhere in the world. Even the deep water, up to 160 metres on one possible route, can be done. The cost might be £15 billion. So it’s perfectly feasible and probably better value than HS2.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

2 Comments
  1. marben100 12th September 2019 at 8:41 pm

    Thanks for another interesting post, Roger.

    I have comments on a number of the points you make.

    Firstly, you say: “Big pharma tends not to spend money researching such drugs because the likely revenue from them is small.” Not sure how true that is. I have a small portfolio holding in AstraZeneca and follow their progress closely. They regularly seem to announce new drug developments that are granted orphan status. Notably for Imfinzi and Fasenra in recent times.

    Whilst, by definition, the market for such drugs is small, their prices can be very high, meaning that they can still be “blockbusters” (drugs generating more than $1bn p.a. of revenues). A good example of this is Alexion’s Soliris, which is available at a cost of ITRO $500,000 per patient per annum. I have queried the ethics of such high pricing (which inevitably must be subsidised from the public purse), The argument is that whilst the cost is very high during the patent period (generally 15 years from initial filing), the drug becomes freely available thereafter and becomes a permanent public good. So, the initial subsidisation can be regarded as an investment to make the drug readily available to affected patients in perpetuity.

    I also suffer from a rare disease but fortunately I am finding a simple, low cost and readily available drug is keeping it at bay and keeping me in good health. As you say, I am more than happy for researchers to make use of my genomic data to try to understand the genetic causes of my condition (which are not currently well understood), so I’m sure obtaining consent to use the data is not a problem in practice.

    Moving on, to Yellowhammer. I too have read the document and note two points. Firstly, when it was first leaked to the Sunday Times, the document was essentially the same but was marked “base case”. Mysteriously whilst the content has not been materially changed, it is now marked “worst case”. Is the government trying to downplay the risk? More significantly, I was struck by how short it was. Seems like a pretty flimsy analysis focusing on a few selected areas of the UK economy and life in the event of a “no deal” Brexit. What about, for example, nuclear materials (including medical isotopes) whose regulation currently falls under Euratom?

    Whilst I understand your objection to centralised European regulation and some poorly thought out regulations, these issues are often compounded by UK bureaucracies “gold plating” European directives to create a more stringent UK regime, whereas some other EU states, stick only to the letter of the directives and regulations, creating less of a burden on their businesses. This is primarily a UK problem, not an EU one.

    Currently a very broad range of industries fall within single market regulation. The beauty of this is that regulatory authority is delegated to a local regulator in each member state and compliance with the local regulator (under the jurisdiction of the ECJ) is sufficient for the product or service to be marketed/distributed in any other member state. If we become a “third country” without an FTA, a business wishing to sell and product or service in EU member states will have to comply with local regulators in other EU states, which adds a layer of complexity, and is a bigger barrier to trade than tariffs, in many cases.

    A good example of this is GDPR. See this for the impact of no-deal: https://ico.org.uk/for-organisations/data-protection-and-brexit/data-protection-if-theres-no-brexit-deal/the-gdpr/ As the ShareSoc director with principal responsibility for GDPR compliance, I am well aware of what a pain this regulation is and I think there are certainly “unintended consequences” in the drafting and implementation. However, I believe the primary principles behind it are sound: granting data subjects the right to control the use of their data, forcing organisations to seek consent (in a granular fashion) for the different types processing they intend to use personal data for, introducing a “right to be forgotten” and imposing rigorous penalties for failure to protect personal data adequately.

    Moving on to “long bridges”, they are an interesting engineering challenge but one that is increasingly being met. The recently opened Hong Kong-Macau bridge forming a 55km long link(!) shows what is possible: https://en.wikipedia.org/wiki/Hong_Kong%E2%80%93Zhuhai%E2%80%93Macau_Bridge . A Scotland-NI bridge (shortest distance ~40km) should be straightforward by comparison – but I somehow doubt we’d do it as cost-effectively as the Chinese!

    Regards,
    Mark Bentley

  2. Roger Lawson 13th September 2019 at 9:10 am

    Mark, here are some responses:

    Orphan drug designation is recognised in regulations in the USA and Europe – see https://www.ema.europa.eu/en/human-regulatory/overview/orphan-designation-overview where it says that to qualify for the designation: “it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development”. In reality for the disease I have, which is not that rare, there was almost no research on it until recently and what research there has been has been funded by Government or by private individuals (such as me!).

    As regards the Yellowhammer document, as you say it is remarkably short (or “flimsy” as you put it). Perhaps that’s just symptomatic of inability to identify major issues.

    As regards “regulation” harmonisation with Europe, I have no objection to that in principle and can see a lot of advantages to that in many areas. For that reason I did not oppose many aspects of the Withdrawal Agreement. However in the case of financial market regulation the EU is particularly inept and GDPR is another example of poorly thought through regulations.

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