The year 2018 saw a number of significant triumphs in the biopharma industry – increased numbers of drug approvals and near record-shattering IPOs, but the industry also saw its share of blemishes and black eyes from various corners of the globe.
The year 2018 saw a number of significant triumphs in the biopharma industry – increased numbers of drug approvals and near record-shattering IPOs, but the industry also saw its share of blemishes and black eyes from various corners of the globe.
As 2018 comes to a close, BioSpace takes a look at some of the various stories that garnered significant coverage throughout the year.
Martin Shkreli – Pharma’s bad boy Martin Shkreli’s was sentenced to prison in March for his part in a criminal securities fraud scheme related to his time as a hedge fund manager. Shkreli’s was found guilty last year, but was not sentenced until this past spring. The indictments against Shkreli stem from a five-year period from 2009 to 2014when he was in charge of the hedge funds MSMB Capital and MSMB Healthcare. He was found guilty of causing his investors suffer a loss of more than $11 million. Shkreli, of course, is far more infamous for his tenure as head of Turing Pharmaceuticals and his brash defense of a 5,000 percent price-hike for Daraprim than for his schemes that landed him in prison. Since his sentencing, Shkreli has found time to blog about the biopharma industry from prison.
Theranos – The long-awaited end to the Theranos saga came with a whimper this year. In September the company closed its doors for good as the company fell from the ranks of unicorn with a valuation of about $9 billion, to an empty storefront with the cobwebs of scandal and criminal fraud charges against the company founder Elizabeth Holmes and former president Sunny Balwani. Holmes has already agreed to pay a $500,000 fine for fraud to the U.S. Securities and Exchange Commission for earlier charges brought against the two. Balwani is fighting the charges brought against him.
Novartis – Swiss pharma giant Novartis has been at the center of a scandal that went all the way to the halls of power in Washington, D.C. This spring it was revealed that Novartis, under the leadership of its previous CEO, had entered into a contract with Michael Cohen, the lawyer close to President Donald Trump who pleaded guilty to multiple counts of tax evasion and campaign finance fraud earlier this year. Novartis had contracted with Cohen for $100,000 per month for a one-year period in what has been equated to a “pay-to-play” payment for unsanctioned lobbying with the attorney who had been known as the president’s “fixer.” Novartis said it made a mistake entering into an agreement with Cohen and concluded shortly after it signed an agreement with him that he would be unable to provide the services he offered. Despite that conclusion, Novartis maintained that it was still obligated to pay Cohen’s $1.2 million fee.
Biohacker Dies -- Aaron Traywick, the 28-year-old chief executive officer of Ascendance Biomedical, and a controversial member of the biohacker community, was found dead in a Washington, D.C. sensory deprivation tank at the end of April. Traywick’s death came several months after he brazenly injected himself with an alleged experimental herpes vaccine before a crowded biohacker conference in Texas. While there were a number of theories circulating around his death, it was ruled that Traywick drowned in the tank with the drug ketamine, a powerful sedative, in his system.
BIO Party – As the #MeToo movement was at its height, another biotech-associated party featured topless women emblazoned with the body-painted-on logos of several biotech companies. The annual Party at Bio Not Associated with Bio (PABNAB) in Boston was decried as tone-deaf and lacking awareness in the wake of the concern over gender equality throughout the pharma and biotech industry. PABNAB bills itself as the “anti” party at BIO. The party, which was widely condemned by BIO, was reminiscent of the LifeSci Advisors party at J.P. Morgan in 2016. That party included a number of “scantily-clad” women who were hired to mingle with the primarily male attendees.
Article Retractions – Transparency has become a significant concern in the biopharma world. Several noted medical and pharma journals were forced to retract a total of 31 articles written by Dr. Piero Anversa, a pioneer in the field of cardiac research. The article were retracted over concerns of falsified claims made in the article about something called cardiac stem cells. The move was made by Harvard following an internal investigation that led to Harvard and Brigham and Women’s Hospital agreeing to pay a $10 million settlement over allegations of research misconduct involving Anversa and members of his team. Anversa’s work centered on the idea that the heart contains stem cells that could regenerate cardiac muscle. The team claimed that it had identified cells known as c-kit cells that were responsible for that regeneration. Although various teams have tried, the results of Anversa’s work could not be reproduced.
PixarBio CEO Arrested – In April Frank Reynolds, CEO of Cambridge, Mass.-based PixarBio, along with two C-suite associates, Kenneth Stromsland and M. Jay Herod, were charged with securities fraud. The three men were charged with using false and misleading statements to defraud company investors. The men were also accused of manipulating data to affect stock prices. PixarBio had a focus on the development of non-opioid pain medication.
Bribery and Kickbacks – In September Sanofi settled corruption charges with the U.S. Securities and Exchange Commission with a $25 million check. It was alleged that company employees in the Middle East and Kazakhstan made corrupt payments in order to win business. Sanofi wasn’t alone in allegations of kickbacks. In March Medtech company Abiomed, Inc. paid the U.S. government $3.1 billion to settle allegations that the company sought to influence doctors to use the company’s line of heart pumps in a kickback scheme. Illinois-based AbbVie was under fire from California’s Insurance Commissioner over allegations of a kickback scheme to support sales of blockbuster rheumatoid arthritis treatment Humira in the state. According to the complaint, AbbVie engaged in a “far-reaching scheme” that included both classic kickbacks, such as compensation in the forms of cash, meals, drinks, gifts, trips and patient referrals. In May, Gary Tanner, formerly of Valeant Pharmaceuticals and Andrew Davenport, the former chief executive officer of Philidor RX, were found guilty on multiple charges, including wire fraud and conspiracy to commit money laundering, Tanner and Davenport were arrested and charged in 2016 for the kickback scheme to defraud their company.
Insider Trading -- U.S. Rep. Chris Collins his son, Cameron, and the father of Cameron’s fiancée, Stephen Zarsky, all faced charges of insider trading related to Australia-based Innate Immunotherapeutics. Collins, a New York Republican Congressman, was a board member for Innate. The government charged he used non-publically disclosed information he was privy to in order to help his son make timely trades. Last year it was reported that Collins bragged about how many millionaires he had made of people due to their investments in Innate.
