Chart of the Week
Rules Action.
The Biden administration filed an official announcement that the Safe Harbor rebate rule’s effective date would be delayed until Jan. 1, 2023 in concurrence with a court order.
Other Stuff.
- A major theme in the coming months and years is how COVID affected health care demand. It is anyone guess right now on what is gone and never coming back and what will get worse and what will shift to another care setting. Most important for our purposes is to determine if the managed care models are properly priced. We tend to think not. For context, the Robert Wood Johnson Foundation issued a useful report.
- FDA’s Vaccine Advisory Committee meets next week to discuss $JNJ’s EUA. Link to meeting materials are here.
- The administration plans to appoint Chiquita Brooks-LaSure to the post of CMS administrator. Ms. Brook-LaSure has been around U.S. health policy in Washington for years including a post at CMS during the ACA negotiations. Look for policy direction to return to its wonkiness of the early aughts.
- Xavier Barrera is scheduled for confirmation hearings next week. Republicans are not fans, but it won’t stop the confirmation train. However, the dialogue will help us focus on the points of contention.
- The White House shook some couch cushions and came up with $1.6B for testing, vaccines and viral variant tracking. That is a small amount of money relative to the scope of the problem but suggests, as we have noted before, that testing at some level is going to remain a priority for some time to come. Details here.
- Indirectly related to health but directly related to inflation, the administration filed its immigration reform bill. This bill is important as it seeks to address the working conditions of agricultural workers that made battling COVID in rural communities a losing battle. The White House plan is to pursue policies that transform the U.S. agricultural system into one that is a bit more resilient than it proved to be the last year.
- School re-openings continue to be a mess with confused communication from the White House, the always off-message Tony Fauci, and the CDC. Our humanity requires up to be hopeful for a return to school operations but it looks like the battle may rage into spring, except of course, in Florida.
SPAC and S-1 Corner.
Filed S-1s This Week
Pine Technology Acquisition Corp. (Cantor $300M) Technology to support insurance industry
Vida FLaSH Acquisitions (GS $175M) “growth-stage medical technologies, diagnostics, digital health and genomics companies where the business model is relatively de-risked.”
Frontier Acquisition Corp. (CS $200M) “promising opportunities at the intersection of the healthcare and technology industries, specifically within the biotechnology sector.”
Twist Investment Corp. (DB $175M) AI & digital remittance software
European Biotech Acquisition Corp. (CS $100M) Life Sciences
Sandbridge X2 Corp (Citi $200M) Consumer focused including health and wellness
Initial Business Combinations in Process
ARYA Sciences Acquisition Corp III – Nautilus Biotechnology ($900)
Big Rock Partners Acquisition Corp – NeuroRX
Our Take = NeuroRX is developing a drug regime for the treatment of bipolar disorder and Acute Suicidal Ideation/Behavior. Reported this week preliminary results from their Phase 2b/3 trial of ZYESAMI™ (aviptadil, previously RLF-100) performed in collaboration with Relief Therapeutics Holdings, AG (SIX:RLF; OTCQB:RLFTF) in patients with respiratory failure due to Critical COVID-19. The study showed that patients who were treated with the maximal standard of care plus ZYESAMI were discharged sooner from the hospital compared to those treated with placebo plus maximal standard of care (SOC)
Deerfield Healthcare Technology Acquisition – CareMax/IMC Medical
Our Take = Caremax’s TAM is the Medicare Advantage market like $CLOV, $OSH and they appear to be establishing themselves as a risk bearing entity in partnership with health plans and providers. IMC Health is a primary care practice, that paired with CareMax’s risk-bearing solutions might make a good combination. We will reiterate, the MA market is getting highly penetrated, especially in urban areas and the competition for patients will be fierce. Both companies are based in Florida.
Falcon Capital Acquisition – Sharecare ($3.8B)
Our Take = We have been familiar with Sharecare for years and remain a little dubious. Sure, employers are getting more involved in managing their health care spend. Yes, digital therapeutics are a thing. Yet, we remain skeptical. Perhaps a deep dive into the proxy statement will help.
GigCapital2– Uphealth/Cloudbreak Health
Our Take = Uphealth is a digital platform designed to manage chronic and complex care, medications and behavioral health. Cloudbreak provides a telehealth solution that includes quarantined inpatients. One of Cloudbreak’s most interesting features is its multilingual capabilities which should be accretive for providers in communities with non-English speaking patients. Not sure Uphealth offers enough to get behavior to change or encourage adoption.
GX Acquisition Corp – Celularity ($1.7B)
Our Take = We love anything that pushes cell-level therapies and diagnostics forward. The company has several cell therapies in clinical and pre-clinical development that deploy allogeneic placenta derived cells.
Hudson Executive Investment Corp – Talkspace ($1.4B)
Our Take = Behavioral health via telemedicine will prove to be one of those COVID-19 trends that endures. It solves several problems for the incumbent system: availability of providers, cost and productivity. Behavioral/mental health services largely exist outside the health insurance system which eliminates a lot of regulatory risk
JAWS Acquisition Corp – Cano Health
Our Take = Cano represents what we believe will be the most formidable Direct Contracting model in Medicare. Cano is participating in the implementation stage of the first two Direct Contracting Models. The primary care focus gives maximum insight into patient condition, needs and behaviors that can be influenced to avoid high cost care. One caveat since we still bear the scars of PhyCor: physicians drive patient flow and if you don’t keep them happy, they go elsewhere.
Leisure Acquisition Corp – Ensysce Biosciences ($207M)
Longview Acquisition Corp – Butterfly Network
Our Take = Butterfly makes portable ultrasound devices for the human and animal health markets. Portable means greater efficiency which is going to continue to be important as the health care delivery system works through the backlog of cases created by COVID. The Teleguidance system could prove to be valuable in areas with limited access to advanced technology.
VG Acquisition Corp. – 23andMe
Out Take = 23andMe plans on a future in drug development using their extensive library of genetic data. It seems like a reasonable plan but privacy concerns are likely to be a feature of this company’s regulatory environment for some time to come. IBM's decision to pass Watson Health on to someone else proves that data alone does not make health care any easier or better.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Replays
$CLOV is expected to report on Mar. 1, 2021. Given the depressed state of health care delivery, the 4Q report should be fine. Will be interesting to hear what company has to say about enrollment for 2021 and the Direct Contracting opportunity we have had difficulty associating with the company. Replay to call last week is here.
Upcoming Events.
Feb. 24 @10 a.m. ET (Add to Outlook Calendar) – Driving Blind: Managing Managed Care Post-COVID We are going to take a look at enrollment trends, penetration into eligible populations, star ratings and what deferred care means to MLR.
Tweet of the Week
Emily Evans
Managing Director – Health Policy
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