Bristol-Myers Ltd.

Legal advisers for AstraZeneca, Bristol Myers Squibb and Johnson & Johnson filed a petition on Wednesday with the federal appeals court in Philadelphia to rehear a lawsuit The lawsuit challenges the first law in US history to force drug companies to negotiate drug prices with Medicare, the government insurance program. The health insurance program benefits about 66 million Americans. In the initial negotiations, Astrazeneca's diabetes drug Farxiga, Bristol-Myers Sfubb's anticoagulant Eliquis and Janssen's anticoagulant Xarelto were selected as among 10 drugs subject to price negotiations, and their prices were subsequently reduced by 56% to 68%. The new pricing, which would begin in 2026, is expected to save Medicare about $6 billion in the first year. The drug companies argue that the program, part of the Inflation Reduction Act, constitutes a gratuitous expropriation of their property in violation of the U.S. Constitution. Earlier, federal district courts in Delaware and New Jersey dismissed the companies' lawsuits. Yaakov Roth of Jones Day, representing Bristol-Myers, argued in arguments Wednesday to a three-judge panel of the 3rd U.S. Circuit Court of Appeals that the law does not give drug companies leeway to negotiate and instead threatens them with steep fines or withdrawal from Medicare. Bring the company to heel. Medicare accounts for almost half of the prescription drug market. Catherine Padhi, a lawyer for the Justice Department, responded that the government had the power to use its purchasing power to achieve its goals and offered the plaintiffs "a very favorable deal." Mr. Janssen's lawyer, Kevin King of Covington & Burling, argued that the law violated the company's First Amendment right to free speech by requiring it to accept the "highest fair price," even if it deemed the price unfair. "The government cannot force regulated parties to express the government's preferred message," King said. Padhi countered that "maximum fair price" is a "statutory term" and does not involve a subjective value judgment. The panel, composed of circuit judges Thomas Hardiman, Peter Phipps and Arianna Freeman, did not explicitly indicate its intention to rule. During questioning, Judge Hardiman suggested that the plan could be seen as the government using its "leverage" to force drugmakers to give up their property. But he also noted that drugmakers were trying to enjoy the benefits of both the government's "massive purchasing power" and "free market pricing" while the program was designed to stop "the federal budget deficit from spiraling out of control." So far, drugmakers' legal challenges to pricing plans have been largely unsuccessful. But in September of this year, The Fifth U.S. Circuit Court of Appeals in Texas reinstated a lawsuit brought by the Pharmaceutical Research and Manufacturers of America, the largest U.S. pharmaceutical industry lobbying group, and other groups. The cases included Astrazeneca v. Becerra (case No. 24-1819) and Myers Squibb et al. V. Becerra (case No. 24-1820), both before the United States Court of Appeals for the Third Circuit. Astrazeneca was represented by Kate Stetson of Hogan Lovells; Bristol-myers was represented by Yaakov Roth of Jones Day; Janssen was represented by attorney Kevin King.

It all started to look seriously bad when my legs began to swell up, which I initially — stupidly — shrugged off. By the time it became apparent that my kidneys had stopped working, I grabbed an Uber after arriving at the airport near where I live in Texas and headed straight to the ER of Valley Baptist Medical Center near the Mexican border. For the first four days at Valley Baptist, I witnessed a healthcare system at war with common sense. My doctors would wander in and out in the morning, offering little detail and few answers in their brief pit stops. Sometimes they didn’t come at all or just kept moving if I was nodding off. I was subjected to a poorly-handled procedure to install nephrostomy tubes — which I was forced to loudly and profanely demand from an interventional radiology team unhappy with my potassium numbers after they tried wheeling me in and then back out of the interventional radiology arena without explanation. I don’t recall even being told about a colossal blood clot that threatened my life — but did get three rounds of dialysis that may well have saved my life. The initial working theory, as told to me by a PA in the ICU — Mike, the only actual source of in-depth information during my entire stay — was that lymphoma had probably swelled my lymph nodes and dammed up my kidneys. I wish. On the fifth morning, 48 hours after a biopsy, my oncologist in charge — who had earlier told me in a bit of intentional expectation management that it would take seven days to determine what cancer I had — rather triumphantly announced that my preliminary biopsy analysis concluded that I had neuroendocrine tumors with Merkel cell features. It was, he announced, “stage 4.” I know stage 4. Not good. But at this point I could say I’ve had better relationships with used car salesmen wearing joke ties. I hoped he was blundering on sparse information. And what was Merkel cell carcinoma, anyway? The only treatment, he added, with my wife standing next to me, was chemo. No surgery, no radiation, and no explanation. Just chemo. I didn’t know it at the time, but he definitely screwed that up. If I had stayed at Valley Baptist and been treated with chemo, I likely would have seen Merkel cell carcinoma rear back up within a few months, putting me on a statistically short path to the grave. As it turned out, there was a turn of good luck involved here as well. The pathologist handling the biopsy had trained with the team at the University of Texas MD Anderson Cancer Center, and would identify aspects of the cancer cells that would convince my medical crew in Houston early on that they were indeed dealing with Merkel cell carcinoma. As for Valley Baptist, I had already determined that I had to get the hell out of Dodge and make a run for a top-tier medical institution in the region. My case manager said that if I wanted to leave they would have to arrange a transfer. But I already had the lay of the land from the small army of assistants and nurses who kept the hospital on its rickety track. A nurse told my wife and I — sotto voce — that as we were headed into the weekend, that could take days. You should just go, she said quietly. My wife drove the getaway car after I signed the AMA (against medical advice), and a friend in the industry helped text my way into MD Anderson as we made the six-hour trip north. Like a lot of people, I’ve heard about melanoma, skin cancer triggered by exposure to the sun. I’m 67, I’ve spent a considerable amount of time in the sun, and I knew I had risks. About seven months before fate dropped a ton of cancer bricks on my head, I had a full body exam done by a pro. Nada. So I thought I had skin cancer covered. Wrong again. Merkel cells in the skin are there to assist with sensation and touch. “The density of them is much higher on the lips and the fingertips,” said Paul Nghiem, a leading Merkel cell researcher at the University of Washington and the prestigious Fred Hutchinson Cancer Center in Seattle. “If you put your hand in your pocket and you’re feeling the difference between sandpaper and silk, those are Merkel cells telling you about texture and touch.” Nghiem, a dermatologist by training, ended up as Mr. Merkel Cell — one of the key figures in this field with the longest, broadest history of treating patients — in a serendipitous fashion. Back in the mid-1990s, his professor needed to produce a chapter on Merkel cell carcinoma, and for the professor, Nghiem seemed the obvious person to write it. Nghiem didn’t much care for the assignment. But what started out as a “complete waste of time” became the big focus of his career, one that would contribute to a tidal shift in therapy and offer a key role in examining how this cancer can be cured one day — or made livable — for most advanced patients. Nghiem — an effusive, enthusiastic physician-scientist — now doesn’t believe Merkel cells become cancerous. Rather, it seems to him that cells in the body are hijacked and acquire Merkel cell features as they turn cancerous. Merkel cell carcinoma can follow a melanoma-like process, exhibited on the skin by something that may look like a nodule or raised bruise. A large majority of cases — predominantly men above the age of 65 — are linked to the polyomavirus, which inhabits a large swath of the population. Chatting about my case, Nghiem said I may have had something visible on the skin months before the diagnosis, which could have gone unnoticed and then disappeared as it spread inside the body. He doesn’t know, of course. But he’s observed that people whose immune systems have quelled cancer on the skin before it spread to lymph nodes tend to have a strong natural response to fighting advanced Merkel cell — giving them a big boost when immunotherapy comes into play. Wherever the cancerous cells come from, once the cell division process begins, it tends to run amok in advanced cases. As my doctor at MD Anderson described it, where you see a single cell division in melanoma, you can run up the lethal score dozens of times faster with Merkel cell. That makes it a quick and efficient killer, a berserker cell, especially for the advanced patients who are not eligible for surgery. For those patients, chemo was the original standard of care. But chemo flattens the immune system, the exact opposite of what you want to do if you need to fight Merkel cell. Which is why most of the improvements oncologists saw in patients treated with chemo were brutally transient. Early on in this process, my doctors concluded that Merkel cell carcinoma had spread to my lymph nodes, which in turn swelled and shut down my kidneys. Blocked kidneys were the first thing that came close enough to killing me — with my potassium numbers spiking into a deadly range. But Merkel cell isn’t just a singular rare cancer, generating some 3,000 new diagnoses a year. Because my cancer had advanced into a segment of my body that was choked with arteries, veins, the path for kidney drainage and more among the swollen lymph nodes — a biological traffic snarl — it was beyond the reach of surgery. And it represents one of about 1,000 new advanced cases a year. In other words, I was one of just a slice of an already tiny group. That’s a far cry from one of the Big Cancers like lung cancer, where biopharma is throwing major cash. Ask any drug developer, large or small, what’s driving their work, and they’ll tell you it’s all about patients. But what they don’t say is that it’s typically a critical mass of patients. Patients whose collective cases can spin off billions of dollars a year in revenue. One thousand new cases a year in the US — where the money is in global drug development — is not much of a market to tempt drug developers. And Merkel cell was never a favorite in the big cancer story being told to investors over the last decade. Ipilimumab, the CTLA-4 immunotherapy birthed by Nobel Prize winner Jim Allison and sold as Yervoy, became the pioneer checkpoint inhibitor in the field. Then came nivolumab (Opdivo) from Bristol Myers Squibb and pembrolizumab (Keytruda), the King Kong of immunotherapy drugs that generated $25 billion of revenue for Merck in 2023. Keytruda made the big bucks by zeroing in on cancer with a full pipeline of projects for one drug. It’s been making Merck investors happy campers ever since it was first approved for advanced melanoma in 2014. Merkel cell carcinoma, it turns out, is one of the most immunogenic tumors in the book. Nghiem and others advocated early on that a drug that unleashed the immune system would go a long way to treating the cancer. For them, Merkel cell was a classic low-hanging fruit. The problem was the harvest was too small to whip up potential industry backers. “It has the highest response rate of any solid tumor to single-agent checkpoint,” Isaac Brownell flatly says. Brownell, a senior investigator and chief of the Cutaneous Development and Carcinogenesis Section, Dermatology Branch inside the NIH, was directly involved in the cutting-edge early research into immunotherapies in MCC and has stayed focused on it, screening drugs for something new. A lot of Merkel cell’s response to treatment has to do with the virus, he adds, which expresses foreign protein — a clear target the immune system was created to hunt down and destroy. In other cancers, tumors can get rid of passenger mutations and evade immune responses, making them a more difficult target. But what is foreign and stays on the radar is a beacon for immunotherapy. So Nghiem and others went knocking on Bristol Myers’ door to test a hypothesis where they had high confidence of success. The door stayed closed. They never got a chance to test ipilimumab, said Nghiem, who also had a brief flirtation with Pfizer’s 4-1BB before the big checkpoint inhibitors came along. But it didn’t get better with nivolumab, Bristol Myers’ big PD-1 drug that stripped cancer cells of the brakes applied to the immune system. Eliminating cancer’s ability to thwart the immune system would surely save lives, but Bristol Myers made it clear they were going to take a pass on Merkel cell. “BMS said, ‘You just go away. We’re not interested at all,’” Nghiem said. Then, the researchers did some of their own strategic thinking. While Bristol Myers and Merck were hogging the spotlight with their PD-1s, Merck KGaA came along with their PD-L1 called avelumab. I covered this drug, and the company, closely at the time. And I wasn’t too kind. What I saw was a drug that would fail a string of important studies as the German outfit fought against a 10-year track record of clinical failures. The first time my doctor at MD Anderson, Mike Wong, brought up avelumab (sold as Bavencio), I turned to my wife — another longtime writer in biopharma — and asked her to remind me who made it. “Merck KGaA,” she said. EMD Serono in the US. My reply: “Oh, shit.” But what I saw as a program ripe for setbacks at one of the most ill-starred R&D groups in the industry looked like a historic opportunity for the small circle of Merkel cell experts in the world. And it was, in more ways than one. “They were behind,” Nghiem recalls about Merck KGaA, which was partnered with Pfizer at the time. “They were behind Bristol Myers. They were behind [US] Merck.” Merkel cell carcinoma looked to them like a short path to the market, where the industry partners — who would break up in 2023 — could gain an initial approval and then start to expand the franchise with new indications. That’s a classic market strategy in the oncology world. Howard Kaufman, then an investigator at the Rutgers Cancer Institute and a prominent member of the small circle of Merkel cell aficionados, used his role on the EMD Serono scientific advisory board to push for the study. It didn’t begin well. “So the first thing they told me at EMD Serono was, of course, ‘There’s very few Merkel cell patients,'” Kaufman told me. “‘We’ll never be able to do the study.’ I said: ‘No, you don’t understand. There’s very few patients, and I know every doctor who takes care of them.'” And the cherry on top: There were no competing studies. They had an open playing field to recruit patients. Kaufman would go on to be the principal investigator in the maiden trial of avelumab for MCC. And there was more than one voice calling on Merck KGaA to try its drug on Merkel cell. Brownell’s office was just a hallway away from noted NCI immunotherapy expert James Gulley, who had done early-stage work on avelumab. Well aware of how far behind Merck KGaA was with the drug, Brownell touted Merkel cell as an ideal target for immunotherapy. And that helped spur the influential Gulley to throw his weight behind the avelumab approach, Brownell says. The researchers ran avelumab through a small, single-arm Phase II study with data on 88 patients who had failed chemo and blew it out, kind of. The requirement on chemo, which would blunt efficacy, was done at the insistence of the FDA, Kaufman said. But regulators were also waiting for the data. One in three patients responded to the drug in the first cohort, the FDA saw in that first clinical foray . About one in 10 had a complete response. For 86% who responded, the response lasted at least six months, dropping to 45% at 12 months. The researchers tracked duration that lasted from a few months to about two years. From start to finish, Kaufman says, the trial took nine months, and the FDA came through with an accelerated OK just 2 weeks after the filing was accepted, delivered in a surprise phone call while Kaufman was attending a satellite meeting for the Society for Immunotherapy of Cancer. He was caught completely off guard by regulators’ speed. I have to say, for a cancer patient, the data they had in hand can be hard to muster a cheer for. Everybody wants better odds than that. But this was a field accustomed to miserable results and researchers knew they had proven conclusively that they were onto something big. There was no way you could misinterpret the data, said Nghiem, who helped lead the trial in Seattle. It more than satisfied the FDA team around Richard Pazdur that the efficacy was clean. No “simple confounding factor” could derail the conclusion, he added. Avelumab worked, and the accelerated approval came through in the spring of 2017, giving Merck KGaA its first real bragging rights to a significant R&D win in 10 years. In 2018, the researchers concluded another small study, this time for the US Merck, which also included Nghiem, who said it “was very hard” to get the company on board. That study proved Keytruda was a game-changer in frontline Merkel cell therapy, without chemo. And researchers followed up with a confirmatory batch of data in frontline therapy that sealed the regulatory deal for Merck KGaA. The FDA cited Keytruda for a 56% overall response rate , with a complete response of 24% on its approval, cementing the new frontline approach as a new standard of care. Even without Bristol Myers’ cooperation, nivolumab and ipilimumab are on the menu of possible treatments for the simple reason that immunotherapies work for a bit better than half of patients with advanced Merkel cell carcinoma. And in some cases, it may prove to be a rescue approach for dying patients. A third PD-1, retifanlimab (Zynyz) from Incyte, would earn an accelerated FDA OK for MCC in 2023 — years after the standard of care had shifted decisively. It’s rarely mentioned by any of the physicians I spoke with. Fast-forward seven years from that first OK and my oncologist at MD Anderson would still recommend Bavencio for my first swing at bat against this cancer. There’s no statistical divide here. No one’s done any randomized study of an immunotherapy for MCC, let alone a head-to-head. And it’s not going to happen. The researchers in the field are unanimous that no one wants to foot the bill for more definitive work on a slice of a rare cancer market. And besides, what patients would volunteer for any randomized study with chemo when you have the clinical proof in hand? As for a head-to-head, there isn’t enough money at stake to compete for the market. And maybe not that much to differentiate themselves anyway. Ironically, the absence of a randomized study has kept immunotherapy sidelined to a second-line therapy in Europe. As a result, Nghiem said, expert practitioners nudge the cancer with chemo, but in low enough doses not to complicate their treatment, announce chemo didn’t work and move on to immunotherapy. It’s just another example of gaming an inexact system, where leading practitioners have learned how to avoid being hamstrung by either recalcitrant pharma players or misguided regulators. So why avelumab? My MD Anderson team likes the active Fc arm, compared to the inactive Fc arm in Keytruda. That’s the downward spoke of an antibody — under the Y-axis — that’s in use in the drug structure. There can be some more complicating factors from this, but an active Fc arm can also deliver advantages, like natural killer cell recruitment. It’s definitely a conclusion reached by the seat of the practitioner’s pants. But practical experience now figures heavily into the state-of-the-art guesswork involved in treating MCC. And at this point, the second wave of Merkel cell therapy relies a lot on observational work and one-on-one experimentation. Here’s an example of the way experience is now influencing treatment: After Kaufman left the Rutgers Cancer Institute — determining that he wanted to devote his life to drug development and treatment after being offered a shot at the institute’s top job — he wound up as CEO of a biotech startup closely focused on melanoma. He would like to ramp up something in Merkel cell, but that’s proved elusive so far. But one day a week he also treats patients at Massachusetts General Hospital, where he’s setting up a non-melanoma skin cancer center that includes Merkel cell. He’s concluded that some patients who aren’t responding to immunotherapy can be pushed into the responder circle with radiation. That sort of hands-on experience gets quickly circulated among the small band of Merkel cell specialists. I’ve seen it in action first-hand in my own conversations at MD Anderson. But the burst of investment that fueled an ongoing wave of immunotherapy R&D in biopharma has yet to deliver any new, approved marked improvements in Merkel cell, despite the wide recognition that it’s a great model for immunogenicity and cell therapy 2.0. Part of that seven-year whiff in Merkel cell is attributed to the general lack of enthusiasm for tiny niche markets. After the biotech boom went bust a couple of years ago, smaller developers also were less likely to devote resources to Merkel cell. And now the Merkel cell network sounds distinctly spooked by the sudden downsizing that is going on among the giant players as the retreat of IPOs in biotech keeps the competition focused on big targets. Case in point: The legendary Roche subsidiary Genentech recently slashed its work in immunotherapy, bidding goodbye to Ira Mellman, one of the best-known players in the field who led the work on Tecentriq. “It was a fantastic 17-year run that allowed us to build possibly the biggest and best unit in industry or academia devoted to the science of cancer immunology and discovery of immunotherapeutics,” Mellman wrote on LinkedIn as he flagged his imminent departure. And it’s over, as a downsized unit is absorbed into another department. For Merkel cell insiders, it’s an example of a widespread retreat that’s having a clear impact on their field. “I think investors are definitely moving away from I/O,” Kaufman said. “There’s no question about that…. There are a lot of other companies [besides Roche] that have been downsizing their I/O capabilities right now.” Right around the time it gained approval to use its new LAG-3 immunotherapy, relatlimab, against melanoma, Bristol-Myers cut a program for a successor to Yervoy. It also didn’t go unnoticed in the Merkel cell circle that Bristol Myers’ application tied relatlimab’s use to its already OK’d Opdivo — pursuing a market the pharma giant believes will hit $4 billion by keeping it all in-house. For these battle-scarred researchers, the lesson is clear: The hunt for maximum market cash continues to direct their efforts. The big problem with Merkel cell right now is that finding the dollars to do research is harder than ever. And ultimately, an industry partner would be needed to take any new drug forward to a decisive trial, says Fred Hutch’s Phil Greenberg, one of the scientific founders of Juno, which helped hatch the CAR-T revolution and the move to engineered T cell therapies. That’s a tough combination to deal with, pushing the bar higher. “The problem now is that the level at which there’s support for these kinds of programs in industry has really gotten smaller,” Greenberg tells me. “And so you need much more proof of principle before you can engage essentially somebody to help support developing it. “The win isn’t big enough to justify the risk of the investment. There was a time when people were willing to take that risk. It’s much less common now.” It hasn’t helped, he adds, that the NIH budget has, in real terms, been shrinking. “NIH grants are trying to de-risk the projects,” he said, and that doesn’t help advance truly innovative, high-risk academic projects. And that steady retreat in turn slows down their work, says Aude Chapuis, Greenberg’s colleague at Fred Hutch. “We’re never going to see a TV ad for the treatment of Merkel cell carcinoma, because it is rare,” Harvard’s Jim DeCaprio mentioned in an interview on Merkel cell. But for DeCaprio, whose lab has long focused on MCC, “there are certainly opportunities to build on its really spectacular response to checkpoint blockade. To build on that opportunity.” And the work is continuing, albeit more slowly and with greater risk of winding up in a dead end at an academic institute or being added to an unapproved toolbox that is gradually growing in Merkel cell. Greenberg and Chapuis have been doing the kind of work in immunotherapy that has attracted biotechs and their legion of investors. Their work on T cell receptor therapies went into creating Affini-T , which is advancing programs for KRAS and p53. But when it came time to prioritize the work after carefully assessing what they needed to do with the money available, Merkel cell went out the window. Now Greenberg and Chapuis are doing the early-stage research in Merkel cell. That’s just the way it works, Affini-T CMO Dirk Nagorsen tells me, in an industry that has undergone more than two years of prioritization reviews. Just about everyone in biotech will tell you that right now, it can be hard to raise fresh funds, with a big focus on maintaining a two- or three-year financial runway and a believable timetable for human data. Demand is hot for big results in key markets. As for Big Pharma, the emphasis is on finding therapies that have been de-risked with human data, and Merkel cell remains on the fringes of their commercial radar. John Connolly, the chief scientific officer at the Parker Institute for Cancer Immunotherapy (PICI), assigns the current chill to a temporary phase — which will reheat as important new immunotherapies are approved. “Agree with you on the rare diseases evaluation,” he responded to one of my emails. “I’m not sure about the broad based retreat from I/O. Cancer is still a huge payday, even for Big Pharma, and discoveries come in waves. A couple of wins will have them back in droves. Keep an eye on PICI.” PICI — founded by Facebook billionaire Sean Parker — has been supporting work at Fred Hutch that aims to make it to the leader of the cell therapy 2.0 movement, including the efforts to directly engage solid tumors. For the researchers, Merkel cell carcinoma is still an ideal target to establish proof of principle. “It’s pretty much nearly a 100% of these Merkels will express CD200,” says Chapuis, citing research that includes Brownell. “So it can be a very useful binder for the switch receptor that Phil had … and with that we have redone a construct.” Using some state research money derived from the Big Tobacco settlement, they’re now lining up a small trial to test their new-and-improved TCR tech on. Nina Bhardwaj, the director of immunotherapy at the Tisch Cancer Institute at Mount Sinai, has been doing her own work on personalized cancer vaccines, using neoantigens to mount a renewed attack right against the cancer cells. There are a variety of experimental programs like this going on. Kaufman ended up as CEO of a Tillman Gerngross startup called Ankyra, which is using an aluminum hydroxide scaffolding tech to hold IL-12 in a designated space, hopefully concentrating its powerful effect in one place, while avoiding the systemic toxicity that has repeatedly thwarted IL-12 therapies. For now, Merkel cell is not in the pipeline, but his CMO brings it up routinely as a promising target. As for Brownell, the spectrum of work that he’s been doing from discovery through early clinical includes a program screening drugs to see whether he can find something that would prove an assist for Merkel cell. That work led him to aurora kinase B, which has worked well in virus-positive mouse models. And that, in turn, led him to a company that was testing the approach in another neuroendocrine tumor, but ran into a roadblock with toxicity. Now he’s waiting to see if the company can work out the tox issues, but it’s an uphill fight. “As you’re aware,” Brownell says, “when things don’t pan out quickly and get return on investment, companies quickly lose interest in developing stuff.” Oncolytics — infecting cancer cells with a virus that destroys them — has also come up on the MCC radar. There’s only one oncolytic therapy on the market: T-VEC from Amgen. Oncolytics are promising, but toxicity has reined in the market for T-VEC. Still, a number of biotechs are working on combos using oncolytic viruses, including CG Oncology, which has promising bladder cancer data from a small study. That’s now in a series of late-stage studies, but nothing in Merkel cell carcinoma. That discovery part of the story is still very much developing, and I’ll keep you posted on what comes out of it. Connolly is optimistic that a combination approach possibly using a cancer vaccine can come into play here. And we’ve been exploring some of the experimental frontier in Merkel cell to see if an IND for one person might be the right move at a later date. I’m willing. If you want to find commitment, talk to patients. But the old rules of the R&D game need to change if you expect to see new therapies coming along, Kaufman said. Especially in this constrained environment. “I think we have to change the eligibility criteria for the studies,” Kaufman said. “I think we have to change the endpoints. And I think we have to change the study designs, because I think they’re all out of date.” RECIST may work for chemo, he adds, but it’s wrong for immunotherapy. And he pointed to ipilimumab’s early near-demise as an example of that. “I’m worried that we’re throwing away drugs that may actually be working, because we’re using outdated endpoints,” Kaufman said. Ultimately, he says, it may just get down to the biotechs in the field, as the FDA signals its willingness to review new standards and patients who are failing approved drugs die off. But Big Pharma remains “too nervous about changing them.” I’ve covered hundreds if not thousands of clinical trials involving oncology therapies. But I’ve never covered a cancer drug as a patient until now. Along the way, I found out a lot more about what the term “fighting cancer” actually means; what it requires of all of us as we are laid up, subjected to painful remedies and poked and prodded and checked for vitals with relentless compassion. I also learned a lot about the real world of drug research, where investigators sometimes form networks of insurgent collaborators, sharing what they learn and adapting standards of care while exploring better ways of keeping patients alive. It involves a lot of educated guesswork, and getting introduced to that informal network should be job number one of any Merkel cell cancer patient. Right now, Merkel cell and other marginal programs are what get dropped from pipelines. You can denounce it, cuss it and even, maybe, generate some popular heat around it. But you’re not going to change it. Math rules, and these people are very, very bright. Not long ago, I was talking to Harvard’s Tim Springer. One of his startups had found a great candidate for preeclampsia, but it was a tough sell to investors or the industry because the market was so small. I can relate to that now like never before. This divide between commercial and patient interest presents a real dilemma — if you’re on the patient and investigator side of things. Without the passionate participation of a small group of experts in Merkel cell, the immunotherapy revolution may well have arrived way late — neglected by companies that were either too daunted by the prospect of mounting a study in a rare cancer or simply uninterested in pursuing it. You can count any delays in lives lost too early. Their persistence paid off in lives saved or significantly prolonged. And that deserves to be recognized as they struggle to improve on therapies for a marginal disease like Merkel cell carcinoma. The system itself is geared to keep patients anonymous. That’s the law. But I started sounding off about my condition from day one on social media. I had a chance of booting up my own informal scientific advisory network of some of the most renowned experts of a small field. And I was determined to take it. It was my edge, when I was short of edges. The key question, though, is whether there’s a broader benefit to trying to spotlight an issue like this. A couple of things: One, there’s a huge segment of healthcare in America that — regardless of disease — is just needlessly killing people. Doctors who care more about their precious ego than the patient. Warring departments. Just bad decision-making. No idea what teamwork means for patients facing a Rubik’s Cube of threats. Utterly incapable of communicating clearly and honestly with patients. Working in institutions which have put a high priority on profits. In these institutions, information can be used to manage patients’ expectations rather than educate them on the disease and their chances. People need to be warned about that and learn how to avoid the valley of death and unneeded pain. You don’t need to be managed into an early grave. At one point when I was arguing at Valley Baptist about my urgent need for nephrostomy tubes, I mentioned something my physician’s assistant had said. “He’s got no sway down here,” came the turf-master reply in interventional radiology. Another time my nephrologist erupted angrily when he saw that I’d had a permanent catheter installed in my neck in case I needed another emergency dialysis. “Who ordered that? I didn’t order that,” he said as he humphed away, never to be seen again. Patients can disappear in these wide cracks that appear in medical care. If you see it, run. MD Anderson is 180 degrees from that. You get an explanation every time you’re talking to the lead doctor. Then they check to make sure it’s sunk in. Then they follow up with a survey to see if it stuck. Two, and this is particularly true in cancer care, you need to be aggressive about getting care and learn what is happening to you. I ended up with some great guides on this journey, and I owe them everything. Three, I could have used a quick intro specific to Merkel cell carcinoma when I got the diagnosis. There isn’t one, so I decided to write it myself. And finally, there’s a hell of a tale here about a small group of researchers who managed to work around a biopharma industry that is largely indifferent to Merkel cell carcinoma in specific and rare diseases in general. And these investigators are still fighting the battle to achieve better outcomes for patients — even as the industry mounts a staged retreat from immunotherapy and academics find it tougher than ever to raise funds for the work. I’m not out of the woods yet. And it’s unlikely I ever will be, this side of my demise. I don’t know when I’m going to die. I can only be sure that the date may be drawing closer, perhaps much closer, than I had counted on. So it goes. Now there’s a choice of drugs and a lot of stuff that’s off the books. I have a Plan A, a Plan B under review and maybe a Plan C in there as well. And it’s early days. I’m also exploring a Hail Mary. I’m not going to ask for one more day on earth, unless I can do something with it. If I’m going to die, I’m not going to be ignorant about the reasons why. I know the odds and I’ll ultimately make my own decisions, with advice. My choices get narrower, but I haven’t run out — yet.

CAYMAN ISLANDS--( BUSINESS WIRE )--MKT Capital Ltd., a significant shareholder of Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (“Aurinia” or the “Company”) which together with its affiliates beneficially owns approximately 4.2% of Aurinia’s outstanding shares, today issued the following letter to the Company's shareholders. *** Fellow Shareholders, MKT Capital Ltd. (together with its affiliates, “MKT Capital” or “we”) is a significant shareholder of Aurinia Pharmaceuticals Inc. (“Aurinia” or the “Company”) with beneficial ownership of approximately 4.2% of Aurinia’s outstanding shares. We initially invested in Aurinia in 2019 because we believed the drug LUPKYNIS had the potential to become a great commercial success as an oral treatment option for advanced lupus nephritis. Unfortunately, since the drug’s commercialization three years ago, the Company has been unable to broaden its distribution or grow sales under Chairman Dr. George Milne and Chief Executive Officer (“CEO”) Peter Greenleaf’s leadership. As a result, LUPKYNIS is being used for the treatment needs of 1,500 patients three years in, or roughly less than 1% of the total 135,000 patient addressable market in the U.S. alone. 1 As a long-term shareholder of Aurinia, we have spent a considerable amount of time reviewing the Company’s corporate governance, executive compensation practices and capital allocation decisions and have attempted to engage meaningfully with management to better understand its overall strategy. Our diligence over the past several years has led us to the following conclusion: a reconstituted Board of Directors (the “Board”) should commence a strategic review process immediately to explore a sale of the entire business, which we believe could attract a well-capitalized strategic acquirer or private equity buyer and yield up to $28 per share, or more than a 192% premium for shareholders . 2 We are deeply troubled by the Board’s decisions, especially as it relates to executive compensation, which we believe illustrate that several incumbent directors are either unable or unwilling to advance shareholders’ best interests or embrace and act on shareholder feedback. We contend: The Board has consistently prioritized the interests of management by enriching Company executives at the expense of shareholders. Year after year, management and the Board take harmful actions that dilute shareholders. The Board has failed to hold management accountable for poor total shareholder returns. The Board has historically been unwilling to embrace and act on shareholder feedback. The Board has been unable to manage turnover in key research and development (“R&D”) and commercialization positions in the c-suite. Management and the Board have failed to diversify Aurinia’s drug pipeline through business development efforts. The Board’s limited shareholdings have only perpetuated its misalignment with investors. We feel it is critical for shareholders to send Chairman Dr. George Milne, CEO Peter Greenleaf and Compensation Committee Chair Joseph Hagan a clear message that the status quo is unacceptable, especially in light of the outsized compensation packages awarded to management in the face of shareholder value destruction at Aurinia. This is why we intend to WITHHOLD support for three current directors at the 2023 Annual General Meeting of Shareholders (the "Annual Meeting") scheduled for May 17, 2023: Chairman Dr. George Milne, CEO Peter Greenleaf and Compensation Committee Chair Joseph Hagan. In our view, these incumbents have perpetuated a culture of failure and self-enrichment at the expense of shareholders and must be held accountable. WE BELIEVE THE BOARD IS MISALIGNED WITH SHAREHOLDERS AND HAS AWARDED EGREGIOUS EXECUTIVE COMPENSATION IN THE FACE OF POOR PERFORMANCE Aurinia’s shares have dramatically underperformed peers and pharmaceuticals indices over relevant time horizons. While the Company delivered approximately -18% in total shareholder returns (“TSR”) over the past three years, the S&P/TSX Composite and S&P Pharmaceuticals Select Industry Indices delivered 73%+ and 33%+ for investors, respectively. 3 1-Year TSR 2-Year TSR 3-Year TSR Aurinia Pharmaceuticals -14.09% -30.80% -17.99% S&P/TSX Composite Index -5.94% 9.94% 73.35% S&P Pharmaceuticals Select Industry Index -4.63% -21.31% 33.16% Management and the Board bear responsibility for overseeing the destruction of shareholder value, which we believe is directly attributable to strategic missteps, rich executive compensation practices and poor capital allocation. While shareholders have suffered tremendous harm, insiders have been insulated from the Company’s deteriorating share price largely due to their minimal ownership. Instead, many of these insiders – including Chairman Milne, CEO Greenleaf and Mr. Hagan – have been consistent net sellers of shares following generous share grants throughout the years. In this year’s proxy statement, Aurinia boasts having adopted a new “share ownership policy” for the Company’s directors and executives following the extremely low say-on-pay vote (51.6% of votes cast) for its executive compensation model put forth at the Company’s 2021 Annual General Meeting. 4 We were disappointed to see that despite this, every independent director currently serving on Aurinia’s Board owns well below less than a fraction of 1% of the Company’s outstanding shares (and the only reason CEO Greenleaf beneficially owns greater than 1% is due to the outsized equity awards that he has received). A closer look at the footnotes under the beneficial ownership table also shows that the overwhelming majority of management and the Board’s ownership position consists of granted options and restricted stock units (“RSUs”). In fact, the proxy statement reveals that nearly 92% of management and the Board’s ownership is in the form of options and RSUs that are vesting or exercisable within 60 days of April 12, 2023, and that management and the Board collectively own only 498,522 shares outright, equating to approximately 0.3% of the outstanding shares. In our view, management and the Board’s negligible ownership leads to a lack of accountability and alignment with the Company’s true owners: its shareholders. This is perhaps the most evident in the tremendous compensation packages that have been awarded to executives in the face of Aurinia’s severe underperformance in recent years. We believe that directors who have chosen to prioritize enriching company executives at the expense of shareholders do not deserve a seat on the Board. In 2020, while the Company’s share price was in the red, Compensation Committee Chair Hagan determined that CEO Greenleaf deserved double his prior year’s compensation and approved a whopping $10.68 million pay package. This included $7.8 million in option awards and $1.5 million in stock awards, in addition to Mr. Greenleaf’s base salary, cash bonus and other incentives. To put this in context, Mr. Greenleaf’s total 2020 pay was 6.2 times the median of Aurinia’s peers. The 2020 proxy also lacked disclosures regarding the short-term incentive goals and specific achievements that had to be met for executives, which reduces pay transparency for Aurinia shareholders. The majority of the equity awards did not include performance conditions and the performance shares were based on one-year goals, for which targets were not disclosed. As Compensation Committee Chair, Mr. Hagan also pushed through an extremely dilutive and problematic amended stock option plan at the Company’s 2020 Annual General Meeting to allow for a variety of equity-based awards, including stock options, restricted stock, RSUs and performance awards valued at $1.48 billion. In addition to the amended plan providing for discretionary non-employee director participation, its estimated cost, resulting dilution and burn rate were all excessive, it contained a problematic change-in-control provision, it provided insufficient vesting provisions for stock options issued to the CEO and it did not include a clawback provision for equity awards. The decisions Mr. Hagan made while serving as Compensation Committee Chair in 2020 are some of the most egregious we have ever seen, and his poor decision-making seemingly has not stopped. Despite the Company’s continued underperformance, certain members of management were just awarded an additional 1,841,624 RSUs (including 667,407 RSUs to CEO Greenleaf alone) on March 2, 2023. 5 We believe Mr. Hagan should step down from the Board immediately in light of his complete lack of judgment when it comes to executive compensation and shareholder dilution in the face of poor performance. We also believe this glaring lack of accountability to shareholders falls on CEO Greenleaf, who through 2022 has reaped nearly $26 million in compensation since 2019 and Chairman Milne, who has acted as a rubberstamp to such outsized compensation decisions. Despite having a fiduciary duty to shareholders as the Company’s Chairman, in our view, Dr. Milne seems more focused on lining his fellow colleagues’ pockets than unlocking value for Aurinia’s long-suffering shareholders. NOW IS THE RIGHT TIME FOR AURINIA TO EXPLORE STRATEGIC ALTERNATIVES While management repeatedly claims that Aurinia is a fully integrated biopharma company , the reality is that since Chairman Milne and CEO Greenleaf took the helm in 2019, they have lost key R&D and commercialization talent, made poor capital allocation decisions and most alarmingly, mismanaged and squandered the opportunity in front of them with the promising drug LUPKYNIS. All of this has destroyed shareholder value. We believe Aurinia is dramatically undervalued at current share prices, representing an attractive acquisition target to both strategic and financial buyers. In our view, the issues the Company is facing are not structural, but self-inflicted due to incompetent leadership that has serially mismanaged a drug that was commercialized three years ago. Under Chairman Milne and CEO Greenleaf’s leadership, Aurinia has been unable to distribute LUPKYNIS widely or grow sales. The Company reported sales of just $201 million over the past three years, while expenses ballooned to $650 million over the same period. At the same time, management has diluted shareholders by over 50% - destroying the value of our investment. This is a clear failure of capital allocation and execution. Shareholders were encouraged by the news of Bristol-Myers Squibb Company (“Bristol Myers”) approaching Aurinia as a buyout target in October 2021, back when our Company was valued at about $2.8 billion. 6 Shares closed up nearly 27% on the day Bloomberg reported on news of the potential buyout. Unsurprisingly, Chairman Milne and CEO Greenleaf refused to address our numerous inquiries, despite our firm belief that Aurinia would benefit tremendously from a strategic acquirer like Bristol Myers. With Bristol Myers’ (or another strategic acquirer’s) manufacturing, production and sales capabilities, there is a profound opportunity to market LUPKYNIS in international markets. In 2022, there was concerning turnover in key R&D and commercialization positions in the c-suite, which has had an adverse impact on the Company’s business development efforts to diversify its drug pipeline. These departures included Aurinia’s Chief Commercial Officer, Max Colao, who resigned in July 2022, as well as the Company’s Chief Medical Officer, Dr. Neil Solomons, and Head of Research, Dr. Robert Huizinga, who both departed in October 2022. We find it extremely troubling that two executives in key R&D positions departed in the same month, with no explanation from Chairman Milne, CEO Greenleaf or the Board as to why. We believe Aurinia represents an attractive asset that a well-capitalized buyer can acquire to begin effectively monetizing the highly valuable LUPKYNIS drug, which has been mismanaged by current leadership. Our analysis suggests that an acquirer could pay up to $28 per share for Aurinia, or more than a 192% premium for shareholders, which is consistent with valuation multiples of public company peers as well as recent biopharmaceutical acquisitions. 7 The only clear beneficiary of waiting any longer to explore a sale is CEO Greenleaf, as he continues to reap outsized compensation and accumulate equity awards. Unfortunately for shareholders, the opposite is true. The longer Aurinia’s long-suffering shareholders are forced to wait for a sale of the Company, the more diluted our holdings become and the more money we lose. Refusing to pursue a sale of the Company is diametrically opposed to management’s repeatedly stated goal of “maximizing value for shareholders.” THE AURINIA BOARD MUST BE HELD ACCOUNTABLE It remains obvious to us – and we believe other shareholders – that Aurinia is a high-quality biopharmaceutical business that remains dramatically undervalued due to mismanagement by certain individuals in the boardroom. We believe the Board must take swift action to realize the value of its drug LUPKYNIS and close this valuation gap through a potential sale of the Company, which will provide immediate value to shareholders at a premium, rather than continuing to let us all suffer under the current status quo. Our singular goal is to set the correct direction for this great medicine for the benefit of patients and shareholders alike. If the Board continues to disregard the widespread shareholder discontent, our hope is that the incumbents responsible for the destruction of shareholder value receive a wake-up call at the upcoming Annual Meeting where shareholders will have an opportunity to hold them accountable. That is why we believe shareholders should join MKT Capital in sending a message to the Board by WITHHOLDING support for the election of Chairman Dr. George Milne, CEO Peter Greenleaf and Compensation Committee Chair Joseph Hagan . Sincerely, Antoine Khalife MKT Capital Ltd. *** About MKT Capital Ltd. Founded in 2012 by Antoine Khalife, MKT Capital Ltd. is an investment management firm which aims to deliver optimal risk-adjusted returns for its investors. For more information, contact Info@mkttacticalfund.com . THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR PROXY. DO NOT SEND US YOUR PROXY CARD. MKT CAPITAL LTD. IS NOT ASKING FOR YOUR PROXY CARD AND WILL NOT ACCEPT PROXY CARDS IF SENT. MKT CAPITAL LTD. IS NOT ABLE TO VOTE YOUR PROXY, NOR DOES THIS COMMUNICATION CONTEMPLATE SUCH AN EVENT. ____________________________________________ 1 Source: Aurinia. 2 Based on price ($9.57) as of close of trading on March 16, 2023, which is the last day of trading prior to MKT Capital’s initial letter to Aurinia shareholders. 3 Source: TSR data was obtained via Bloomberg and includes dividends reinvested. TSR data runs through the close of trading on March 16, 2023, which is the last day of trading prior to MKT Capital’s initial letter to Aurinia shareholders. 4 Aurinia’s 2023 Definitive Proxy Statement, filed April 18, 2023 ( link ). 5 See Form 4 filings made by certain members of Aurinia management on March 6, 2023. 6 Source: Bristol-Myers Makes Takeover Approach to Aurinia Pharmaceuticals , Bloomberg ( link ). 7 MKT Capital’s estimate of up to $28 per share reflects an estimate of $1 billion in sales using a conservative ~4x multiple, as well as comparable transactions in the sector.