The Outlook for Biotech in 2018

Episode Summary

Executive Summary: The episode previews the 2018 biotech landscape ahead of JPMorgan, focusing on record-value drug approvals in 2017, especially gene therapy and immuno-oncology, and debating whether 2018 will be driven more by clinical data or M&A. John Gardner argues that pricing, payer acceptance, and late-line immunotherapy setbacks will shape market winners, while FDA speed, biosimilars, and Brexit-related EMA disruption add uncertainty.

Main Topics: 2017 as a strong year for biotech approvals (Priority: 5/5): Gardner says 2017 delivered an unusually strong set of approvals, including the first U.S. gene therapy and the first two CAR-T therapies, with record fifth-year sales value despite some late surprises. 2018 launch outlook and major drugs to watch (Priority: 5/5): The discussion highlights likely major launches in 2018, including Gilead’s HIV triple drug, Insight’s epacadostat, and Celgene’s ozanimod, with large revenue potential. Gene therapy pricing and payer dynamics (Priority: 5/5): Luxturna’s expected high price raises broader questions about how payers will value one-time gene therapies, especially when benefits extend beyond direct medical costs. Immuno-oncology progress and limitations (Priority: 4/5): Gardner notes that checkpoint inhibitors are moving earlier in treatment, but second-line and first-line failures suggest clear limits and make premium pricing harder to justify outside major indications. M&A, IPOs, and biotech stock drivers in 2018 (Priority: 4/5): With tax reform nearing resolution, deal activity could return, but Gardner thinks clinical successes will likely move biotech stocks more than acquisitions, while JPMorgan may signal IPO appetite. Regulatory speed, biosimilars, and European disruption (Priority: 3/5): The FDA is seen as faster and more permissive on marginal products, biosimilars are increasingly affecting expectations, and the EMA’s move to Amsterdam could disrupt timelines.

Key Arguments: 2017 was one of the best years for approvals in recent memory, with both high volume and high commercial value. The first U.S. gene therapy and first two CAR-T approvals marked a major shift in biotech innovation. Luxturna’s pricing debate will depend on the size of the treated population and how much long-term medical cost it averts. Payers will be skeptical of societal-benefit arguments because U.S. insurance coverage is fragmented and patients change plans frequently. Immunotherapies are powerful, but failures in earlier-line and monotherapy trials show that efficacy limits are becoming clearer. Clinical data will likely drive biotech stocks more than M&A in 2018 because valuations are already high and hard to justify. Pfizer is positioned as the most likely bellwether for a renewed M&A wave after tax reform. Biosimilars are already influencing pricing expectations, particularly in Europe, even before direct U.S. impact fully materializes. A faster FDA may be approving some drugs with only marginal benefit, shifting harder decisions to payers and raising safety vigilance concerns. The EMA relocation could create operational friction and modest delays even if it does not cause major regulatory breakdowns.

Data Points: Forecast number of 2017 approvals: 43 drugs - EP Vantage forecast for U.S. approvals in 2017 Forecast fifth-year sales value of 2017 approvals: $31.6 billion - Highest annual total ever measured in the preview Prior comparison year approvals: 56 drugs - 2015 had more approvals, but lower total sales value than 2017 Biggest 2018 launch forecast: ~$5 billion in sales by 2022 - Gilead’s new HIV triple drug Epacadostat forecast: ~$2 billion launch - Insight’s checkpoint inhibitor combination candidate Strimvelis population: ~1 per million live births - Example of a very rare gene therapy indication in Europe Luxturna price expectation discussed: $1 million - Referenced as the debated one-time cost of gene therapy Bioweek SF resource: October 15-16, 2025 - Sponsored event information for JPMorgan Week preparation in San Francisco EMA relocation: Amsterdam - New headquarters after Brexit-related move Podcast recording note: Recorded prior to Spark Therapeutics’ Luxturna pricing announcement - Important timing caveat for the discussion

Pivotal Quotes: "we had forecast about 43 drugs to be approved in 2017 and approximately $31.6 billion worth of fifth-year sales value" — John Gardner: Summarizing 2017 approvals and their commercial value "I think you're going to see sort of a separate track" — John Gardner: Explaining why gene therapies will be judged differently depending on population size and avoided medical costs "I would say the clinical successes will be greater" — John Gardner: Answering whether 2018 biotech stock performance will be driven more by clinical data or deal activity

Implications: Biotech in 2018 will hinge on real clinical differentiation, payer acceptance of premium pricing, and whether M&A returns after tax reform. JPMorgan may serve as an early signal for IPO and deal sentiment, but data readouts will matter most.