The Big Red Biotech Blog

That's The Entrepreneurial Spirit!

I saw this on FastCompany.com and was both mildly amused and appalled.

This post discusses why National R&D dollars being spent to develop technology in universities is not translating better/faster to the marketplace. The US Government does spend $30 B annually on research and development afterall.  The Bayh-Dole Act (aka The University and Small Business Patent Procedures Act) was supposed to make tech transfer easy and flood the market with university technologies. The rush expected has really never happened. Why might this be?

A George Mason University social scientist Edmund Zolnik recently surveyed post-docs in the Washington, DC area.  A population he characterized as "one of the most highly skilled pools of human capital in the world," in "one of the best urban areas of the world for generating wealth."

He thought this area would be teeming with entrepreneurs if anywhere did teem.  He interviewed 126 individuals - asking them their leanings toward entrepreneurism - and TWO listed entrepreneur career tracks as their top choice. This was odd given that this group at least recognized that tech transfer was important - "the bridge between science and society". Zolnik's study suggested that awareness of entrepreneurial career tracks could be raised through model courses, like one at the University of Texas at Austin, aimed at transforming research into marketable products.

However, this was my favorite?/most horrifying? quote from the story, one person wrote in the survey,

"I don't give a damn about transferring technology, greedy bastards."

 

 

 

 

Now, that's really putting your education to good use and truly exploits those federal R&D funds as intended, I'm sure. 

Posted by Bruce Lehr October 8th 2010.

 

 

 

 

Onyx Pharma Encounters Small Black Cloud

Onyx Pharmaceuticals will have to delay its planned end of year filing with the FDA for its multiple myeloma drug, carfilzomib.  The FDA today asked that the company to show it can match smaller amounts of the drug used in clinical trials with new runs made a greater scale. Perhaps this shows greater attention to scale up by the agency given some issues other companies have had with their manufacturing of biologic drugs this year - Genzyme, Dendreon, etc.

Onyx did encounter some problems with scaled up material that was believed to be related to temperature control problems with manufacturing equipment used in the runs.  Onyx will now generate data to show the larger scale process is reproducible. There is no suggestion that the clinical profile of carfilzomib has changed in any way.

“This is a timing issue,” Onyx CEO Tony Coles said today on a conference call with analysts. “We believe the fundamental value proposition for carfilzomib is unchanged and the commercial opportunity is significant.”

The new drug is vitally important to Onyx’s growth prospects, as it seeks to diversify beyond its lone marketed product at the moment, sorafenib (Nexavar) for kidney and liver cancer. If the drug is approved, it would be a new treatment option for a disease that hits about 20,000 people each year in the U.S., and kills about half that many every year.  Onyx expects to file with the FDA as early as mid-year 2011 after resolving the delay.

See Fierce Biotech and Xconomy.

 

Posted by Bruce Lehr October 8th 2010.

Sev Schwan Extols Roche's T-DM1 and MetMab

 

As Roche prepared to make presentations of data from two clinical trials at the European Society of Medical Oncology meetings in Milan, its CEO Severin Schwan took the opportunity to pump its two oncology drugs T-DM1 for breast cancer and MetMab for lung cancer.  He claimed both drugs had performed extraodinarily well in their latest clinical paces and the data would be exciting. 

T-DM1, an antibody drug conjugate (ADC) of Herceptin, demonstrated higher efficacy and lower toxicity than Herceptin in a head to head comparative study. The study still needs to answer the question as to whether T-DM1 does a better job in preventing tumors from spreading - a key endpoint. T-DM1 is being watched very closely by the industry as it is one of the few ADCs in late clinical trials. Genentech is betting that the new drug will improve upon the original, which now generates more than $5 billion in annual worldwide sales.

“We are encouraged by the results,” said Edith Perez, a researcher at the Mayo Clinic in Florida, and the lead investigator of the trial, in a statement. “The study demonstrated that T-DM1 has very good anti-tumor activity as well as much lower toxicity when evaluated side by side to the older ’standard’.”

See Xconomy and Fierce Biotech.

Posted by Bruce Lehr October 8th 2010.

 

 

Sanofi Joins Genzyme in Job Reduction Plan

Maybe it is a race to see who can save their way to prosperity first. 

 
Sanofi announced today (Bloomberg) that it will cut 25% of its US workforce (1700 jobs) as part of a $2.8 B cost cutting initiative.  The French Giant is teetering on its version of the patent cliff in the near term as 6 of its top selling products including Lovenox, Plavix, and Eloxatin will come off patent.  The three accounted for over $9.2 B in annual sales in 2009. One might notice, if that drops off precipitously.

Jack Cox, a spokesman for Sanofi, said “This is beyond just the patent losses. That’s a large driver, but it’s also restructuring the overall organization to prepare for a different future for this company.”  No doubt a new company that includes Genzyme as a key bedfellow - albeit a hostile acquisition. In fact, Bloomberg data says it would be the biggest hostile acquisition since Sanofi acquired Aventis in 2004 for $64 B.  This mere $18-20 B transaction must look like child's play.

 For its part, Genzyme sold off its genetics testing division last month to LabCorp raking in $925 M and shedding itself of 1900 employees in the deal. It also announced a job reduction plan calling for 1000 employees to be "Termeer-nated" over the next 15 months.  The moves were done to save costs and to boost Genzyme's stock price - and it has done so.

So we have one Company shedding jobs to bolster its price to enable it to better position itself to take over another Company shedding jobs to bolster its price to avoid being taken over. Symmetry!

 

 

 

As Newton (not Isaac but his cousin Fig) might conclude in his Third Law of Takeovers, "For every action there is an equal and opposite reaction".  Corollary: You may not have a job. 

Cookie anyone?

 

Posted by Bruce Lehr October 8th 2010.

 

NSF Reports on US Business Innovation

The National Science Foundation published its 2008 Business R&D and Innovation Survey (BRDIS) recently to provide a map of the incidence of innovation by businesses in the USA. Interestingly, I was motivated to pull this report and read it as I had seen several sources quoting from it and bemoaning that only "9% of the estimated 1.5 million for-profit companies were active product innovators and only 9% were process innovators". 

A typical comment, derived from a summary of the report's findings, is evidenced by this quote from the Washington Post's Ezra Klein. There's also a scary takeaway: "You can’t be an innovative economy if only 9% of your companies are innovating."

I think that conclusion/representation is a tad misleading.

Let's look a little more deeply.  The BRDIS is produced by a joint effort of the NSF and the US Census Bureau.  The survey population is 1.5 million for-profit companies, public and private, manufacturing and service sectors.  Measures of innovation follow well-accepted standards described in the Oslo Manual (2005) prepared by Organization for Economic Co-operation and Development (OECD) and Eurostat. BRDIS draws on the Oslo framework. 

In the Oslo framework, "innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations."

Now the data that I'd like to highlight.  Pharmaceutical and biopharmaceutical companies (as well as raw material suppliers to them like SAFC) are manufacturing companies. Manufacturers represent only 8% of the 1.5 million companies in the survey.  The companies above fall into the chemical sector NAICS 325 (or subsegment NAICS 3254).  In contrast to the 9% figure cited in study summary for all companies, 41% of chemical companies were product innovators and 34% were process innovators.

In the non-manufacturing segment, 92% of the total companies, only 8% reported product or process innovation. However, if you look at companies that specialize in scientific R&D services NAICS 5417, these had innovation rates of 33% for products and 26% for processes.

I point this out, as again, presumably most readers of this blog are interested in the pharmaceutical industry.  The industry is made up of manufacturers that work with R&D service providers/manufacturers.  What's more, the BRDIS data show that there is a large difference in innovation incidence when companies with R&D activity are compared to those without any R&D activity. Companies with R&D (either performing R&D or funding others to perform R&D) exhibit far higher rates of innovation than do non-R&D companies.  Sounds like a pharma company.

Only 3% of the 1.5 million companies in the survey perform or fund R&D.  But of these R&D intense companies, 66% were product innovators and 51% were process innovators. There is also indication that the companies with the most R&D (those in the $50–$100 million and $100 million or more annual R&D categories) report the highest incidence of innovation: 76% and 81%, respectively, for products in 2006–08, and 69% and 71% for processes. Clearly this latter group would encompass Big Pharma for sure.

My conclusion is that things may not be as bleak as the summary stats might indicate at first glance - at least not in the pharma sector.  It would be more enlightening to now compare how the US pharma sector stacks up innovation-wise versus its global counterparts in the industry.  That could show a trailing gap or it could show a leadership position.

 

Posted by Bruce Lehr October 8th 2010.

 

IMS Forecasts $880 B Pharma Market and 5-7% Growth in 2011

IMS's message regarding the 2011 pharma market?  Don't expect major growth in the Western markets and do expect high double digit growth (15-17%) in pharmerging markets - consistent with recent past.   The total global market size will reach $880 B.  The US will remain the number one market at $330 B - 37.5% of the world total - and grow at modest 3-5%.

The 17 pharmerging countries will not only grow at 15-17% but will constitute $180 B in sales or 20% of the world market.  China will grow at a near meteoric 25-27% to a size of $50 B and is NOW the 3rd largest market in the world. Japan will also grow a relatively robust (for an established market) 5-7%.

The European perspective doesn't look nearly as rosy.  The Five Major EU markets - Germany, France, Italy, Spain, and the UK - will only grow at 1-3%, as will North America's Canada.  Suppressed revenue growth is no doubt affected by heavy price controls being enacted in Europe and also reflects the impact of generics availability.  Spain and Canada are poster children for the combined impact of price controls and generics emergence.

One piece of good news for some drug innovators - despite a number of venerable drug franchises reaching their patent expiry and therefore seeing their share attacked by generics - there are 5 new potential blockbusters (projected sales > $1 B) expected to be launched in 2011. Cling to that thought.

 

Posted by Bruce Lehr October 8th 2010.

 

WSJ Predicts Sanofi-Genzyme Endgame

Ronald Barush in his WSJ blog outlines his take on possible endgame scenorios for the Sanofi-Genzyme acquisition dance that's been going on since the summer. He articulated his comments after Sanofi went public with a tender offer this week.

According to his analysis, Sanofi will eventually make a take-it-or-leave it offer to Genzyme management (and effectively the shareholders). He predicts Genzyme will flat out reject the offer - especially if it is in range of the $69/share proffered by Sanofi up to now.  Then the fun begins.

• Poison Pill will be adopted by Genzyme which will allow its board to take control of timing of takeover.  Sanofi can't make its move until Pill is redeemed
• Board Divisions (internal positioning or infighting) will ensue. The Icahn side of board won't be fixated on fighting off the acquisition but rather will want to extract the highest price.
• Proxy Fight (Oh boy!, Fight! fight!) follows. Sanofi tries to replace board at Genzyme annual meeting and inactivates the Pill. Could drag on to June under this scenario.

The easiest way for Sanofi to end the game is to raise its offer and make a deal Genzyme board can live with.  Genzyme of course is now scurrying off to find a White Knight to shift the dynamics and ratchet up the bid.

 

Posted by Bruce Lehr October 8th 2010.

 



Genzyme: Anybody seen a White Knight?

The WSJ reports that Genzyme while not exactly looking for a White Knight - well - is looking for a White Knight, if for no other reason than to establish their market value to force Sanofi to up its offer.  

"The company board, in order to be fully informed about the company's value in comparison with the company's stand-alone strategic plan, has authorized the company's advisers and management to probe and evaluate alternatives for the company and its assets, which will include contacting third parties," Genzyme said in a Securities and Exchange Commission filing. "These probes do not constitute authorization of a process to sell the company or any of its assets."

The paper also reported that Chris Viehbacher had offered Henri Termeer $69 to $80 per share to open negotiations. Termeer rejected Viehbacher's offer to open in this range because the range's low end wasn't good enough. If the Sanofi CEO "had said $75 to $80, it would have been a completely different ball game,'' a source commented. "It's pretty clear Viehbacher wants to get it [Genzyme] for between $69 and $75" a share.

Termeer is expected to offer "an updated view of what 2011 will look like." And the outlook will be far rosier than what company officials described this May, based on manufacturing improvements and signficant cost cuts.  Viehbacher has promoted Sanofi's offer by claming $69 represents 19 times Genzyme's 2011 expected earnings, based on the earlier forecast. "If he thinks 19 times is a fair price, it will have to be 19 times what the real number is" likely going to be next year.

So far, no rival bidders have emerged to challenge Sanofi in its pursuit of Genzyme. Earlier this year, Pfizer Inc., GlaxoSmithKline PLC and Johnson & Johnson made casual, preliminary approaches to remind Genzyme they could be interested if the company decided to sell itself. Time for Henri to go to his Rolodex.

Posted by Bruce Lehr October 7th 2010.

How To Speed Rare Disease R&D?

The Institute of Medicine (IOM) produced a new report replete with recommendations as to how to better harnass research and development efforts to attack rare diseases and develop more orphan therapies. Rare diseases are a problem as they affect millions. Unfortunately, those millions afflicted are dispersed among as many as 5000-8000 diseases - some afflicting only a few individuals and some affecting thousands.  I never thought about it before - but there may even be a pecking order within rare diseases themselves.

In general, traditional pharma companies have not attacked these diseases as it is very technically challenging and difficult to earn a return. Among the difficulties, one could count funding, access to adequate patient populations, clinical trial design and execution in small populations, etc.  With many of these diseases, not even the most basic mechanistic information about the disease is known.  If therapies exist, they tend to be very expensive - for obvious reasons. Given these problems the IOM was asked to review the situation and report its findings toward improving the R&D response toward therapies.

 The report calls for an integrated national strategy.  Let's call it 7 points of light:

• Public-private collaboration of government, commercial companies, academic institutions, and advocacy groups
• Application of science and technology that can make rare disease research and product development faster, easier and less expensive
• More trial design and use of analytical tools tailored to doing research in small populations
• Sharing research resources and infrastructure to better leverage scarce funding, data, biological specimens and rare disease-patient participation
• Reasonable rewards and incentives to private sector innovation and prudent use of public resources to meet targeted goals when appropriate
• Adequate staff with expertise on rare disease research and product development in public agencies funding biomedical research on rare diseases or regulating drugs
• Mechanisms for weighing priorities for rare disease research and measuring progress toward these goals

The IOM recommended the NIH develop a comprehensive action plan that covers all institutes and centers. The plan should cover program planning, grant review, training and coordination of all research. Further the NIH, should work with industry, academia, and voluntary organizations to develop a comprehensive system of shared resources for discovery research on rare diseases. This should include a public repository of available animal models (see Sigma-Aldrich SAGE Labs) for rare disorders that reflect disease mechanisms.  It should also include a public repository of biological and molecular mechanism data.

Mechanisms exist to encourage developement of orphan drugs for rare diseases like the Orphan Drug Act 1983 and NIH's Rare Diseases Clinical Research Network. IOM recommends more be done to identify and implement collaborative strategies with an eye toward reducing development costs. The NIH should coordinate the new Cures Acceleration Network with the Rare Diseases Clinical Research Network, the Clinical and Translational Science Awards program, and the grants programs of FDA's Office of Orphan Product Development.

Pulling it all together the IOM calls on the Secretary of DHHS to establish a national Task Force to see it through over the next 4 to 8 years.  Time to get busy.

 

Posted by Bruce Lehr October 7th 2010.

  

 

You Miss FDA Basic's Seminar on Generic Drugs?

The FDA Transparency blog has posted links to the agency's recent FDA Basics seminar on Generic Drugs.  This includes links to both slides and to the a 30 webcast of the seminar. There are also links to other FDA Basics seminars that have been archived.

Download FDA Generic Drugs  You can also access the slide here.  

 

 

Posted by Bruce Lehr October 7th 2010.

WSJ Speculates on Next Pharma Takeover Targets Post-Genzyme

The Source puts its analytical skills to the test in trying to suss out who might be the next logical takeover targets in the pharma industry once the Sanofi-Genzyme deal gets done. Their conclusion is the picking are getting slim and there likely won't be much more activity in the offing.

Their concensus middle-size US candidates are trimmed down to three companies: Allergan, Biogen Idec and Celegene.

• Allergan - offer diversification opportunities with its eye care products but its valuation is too high given its growth expectations
• Biogen Idec - has a reasonable portfolio of biologicals in the MS treatment area and is more reasonalby valued. But, its Tysabri has some well publicized risks potentially.
• Celegene - very good growth numbers expected in the mid-term but has high valuation and is one-drug heavy with its Revlimid providing most of the revenue. Could be attractive to Pfizer and GSK though.
• Shire -  Was identified  as a fourth candidate that lies outside the US.  It has good gowth potential and a diversified product line - but is relatively small at under $10 B.

Other than that, the authors name Eli Lilly, AstraZeneca and Novo-Nordisk as potential Big Pharma companies that might be pursued. They state this wold require heavy borrowing and it woudl amount to swapping expensive equity for much cheaper bonds.

Beyond that, there doesn't appear to be any other likely candidates in a big purchase merger. Big Pharma values will tend to decline until R&D productivity improves. "Drug companies, as it turns out, must make drugs in order to prosper." 

Posted by Bruce Lehr October 7th 2010.

More on G-men Looking into Foreign Drug Bribes

Pssst - Hey foreign goverment want to sell my drugs?

The US Department of Justice (DOJ) probe into big pharma corruption in foreign markets came to light back in August.  Here is an update on this investigation from yesterday's WSJ.  According to the WSJ, Merck, AZ, BMS, GSK, Lilly, Baxter and Sciclone have all received notice that they are part of the investigation of possible violations of the Foreign Corrupt Practices Act (FCPA).  No charges have been filed yet and may never eventuate.

The FCPA makes it illegal for companies whose stock is traded in the US to bribe government officials in other countries to obtain business. This investigation is focused on events that have occurred in Brazil, China, Germany, Italy, Poland, Russia and Saudi Arabia (looks like we're one BRIC shy of a load) - some of the fastest growing global markets where presumably companies are trying to gain a foothold/market share and competition is intense.

Four types of violations appear to be the focus of the investigation:

• Bribing government employed doctors to purchase drugs
• Paying company sales agents commissions that are passed along to government doctors
• Paying hospital committees to approve drug purchases
• Paying regulators to win drug approvals

Well, it looks like we have everyone in loop except patients covered.  Maybe some couponing for them.

Additonally, some bribes may have been made to physicians to influence drug trial results. Astute readers probably note that anothergoverment concern of late is the increasing number of drug trials going to foreign markets.  This becomes problematic as the FDA has fewer enforcement and inspection resources to devote to that activity - certainly fewer resources than they think they need to do a good job. The Senate has a bill under consideration to step up FDA enforcement capability.

Lanny Breuer, the head of the Justice Department's Criminal Division, told drug-company executives last year that investigating foreign bribery in the industry would be one of his priorities over the next several years, given the size and growth of its overseas sales.  Here. Here.

 Posted by Bruce Lehr October 6th 2010.

 

 

 

Medicare, Comparative Effectiveness and Reimbursement

Comparative effectiveness won't just retreat into the background.

The WSJ Health blog reports that two more researchers, Steven Pearson - president of the Insitute for Clinical and Economic Review and Peter Bach - an associate attending physician at Memorial Sloan-Kettering Cancer Center, are the latest to suggest Medicare should pay more for therapies that actually work. Hmmm. Novel thought. They term this a "dynamic pricing" model.  Sounds like comparative effectiveness to me.

Under their plan, a new therapy would be priced under existing formulas. After three years, with data in hand as to the benefit or lack thereof, the therapy could be repriced. Under current policy, Medicare covers therapies that meet a "reasonable and necessary" standard plus a profit margin. These authors suggest once a "reasonable and necessary" finding is reached that Medicare should also look at comparative effectiveness in setting the reimbursement rate.

They argue that for new treatments - companies and clinicians will now have greater incentive to generate appropriate data supporting the fac that their treatment actually works better than an existing one - in order to justify a reimbursement premium.  

 “A shift in Medicare’s fundamental approach to coverage and reimbursement decisions would require new legislative authorities and would be highly contested by those with a vested interest in existing reimbursement systems,” the authors write. The difficulty of changing legislative, regulatory and political processes “is hard to overstate,” they write.

Clearly, no change of this magnitude will come easy. However, economic reality is that more and more treatments need to pass an effectiveness test. There should be a requirement to show a medical or patient benefit in order to justify a pricing premium and to expect government or third party reimbursement.  Pricing can't be based solely on what it takes to earn a return on investment for the manufacturer - that's fine if there is also a measurable benefit - and its well past time that we start measuring.

 

 

Posted by Bruce Lehr October 6th 2010.

 

SAFC Completes High-Potency Fermentation Expansion in Israel

  

SAFC announced the completion of its state-of-the-art expansion of its Jerusalem, Israel facility. The additional capacity expands SAFC's contract manufacturing capabilities in large molecule recombinant proteins and small molecule Active Pharmaceutical Ingredients (APIs) through fermentation, including High Potent APIs (HPAPIs) and secondary metabolites.

The 50,000 sq. ft. cGMP fermentation expansion, which is expected to begin production in October 2010, will focus on niche fermentation of APIs and bulk drugs, producing secondary metabolites (antibiotic-like molecules), cytotoxins and large-molecule proteins. A 30,000 sq. ft. area of the new facility has been designed to be Biosafety Level 2 compliant - enabling manipulation of human pathogens. Capabilities include 1,000 and 4,000-liter tank capacities for bacterial and fungal fermentation, as well as explosion-proof suites.

"Fermentation is a long-standing technology, yet new applications have been recently discovered, including the synthesis of high potency compounds, which is a major growth area currently driving contract manufacturers such as SAFC to look beyond traditional active pharmaceutical ingredient (APIs)," said SAFC President, Gilles Cottier.  See here for full release.

 

 

 

 

Posted by Bruce Lehr October 6th 2010.

Private Equity as Genzyme's White Knight UnHorsed

Fortune opines that Genzyme and other observers should not hold their breaths for a private equity white knight to come riding to its rescue versus the Sanofi bid. Primarily, its a matter of price - at $69-$71/share - a private firm would need to have at least $7.5 billion if leveraged at 60%.  That seems too rich in this environment.

Sanofi on the other hand has been lining up its financing for months and that would not seem to be an issue.  Plus a buyer operating as an ongoing concern in the pharma business, has 100's of millions of additional svings that it can find post-acquisition via rationalization, consolidation and through the dreaded synergies.  These would not  be readily available to the PE group.

Fortune says that its research shows that there have been only 3 deals involving a PE takeover of a pharma company that exceeded $1 B in value.  That's a far cry from the $18-20 B needed to capture Genzyme. PE is unhorsed as a white knight.

 

Posted by Bruce Lehr October 6th 2010.

Fierce 2010 Biotech Graveyard - Bring Out Your Dead

This may be a bit mean, but I couldn't resist the temptation.  Fierce Biotech published its second annual Biotech Graveyard list.  The bad news, 8 companies went out of business without a buyer or money to forge onward.  The good news, that represents a 50% decrease from the 16 companies who went under in 2009.  Here is the 2010 Biotech Graveyard:

• Anesiva - South San Francisco - Feels no pain
• AutoImmune - Pasadena, CA - Self-liquidating!
• ConjuChem - Montreal, Canada  - Au revoir mon ami!
• Hawaii Biotech - Alea, HI - Aloha
• Middlebrook Pharmaceuticals - Westlake, TX - No more middleman
• Neuropharm - United Kingdom - Keep stiff upper lip, Chaps!
• Vio Pharmaceuticals - New Haven, CT - Shoulda' had more insurance
• VitalMedix - Hudson, WI - Vital signs are very weak!

 

Posted by Bruce Lehr October 5th 2010

No White Knight in Offing -- Sanofi Pressures Genzyme by Going Public

Sanofi's CEO Chris Viehbacher is ramping up the pressure on Henri Termeer and the Genzyme board by making a tender offer directly to its shareholders.  Most analysts believe the majority of these shareholders will not sell out at the $69/share that has been offered to date, but will support Viehbacher in pressuring Genzyme to the negotiating table.   This is especially tue as the stock currently is above $69/share but would be expected to plunge in the $50's if Sanofi takes a walk from the acquisition attempt.

For its part, Sanofi needs Genzyme to come to the bargaining table and begin sharing insider information to allow more appropriate due diligence.  Two key issues that need to have more light shed upon them: 1) Amount of time/money/effort it will take to get the Allston facility out from under the $175 M FDA consent decree, 2) Realistic expectations for Campath's peformance as a treatment for MS and its potential commercial value. Is it the $700  M/yr that several analysts have cited or a much higher figure preferred by Genzyme management.

After getting to the table and gaining this key information, Sanofi will be in a position to make a higher offer as appropriate -- in low $70's per share more than likely -- to induce shareholders to sell. By all accounts, Sanofi has been lining up its financing for months to allow this.  The more aggressive posture not only puts pressure on Genzyme but may also serve to keep any white knights from entering the picture at this late stage -- although Genzyme does appear to be a damsel in distress. See Seeking Alpha.

 

 

 

Posted by Bruce Lehr October 5th 2010.

Novartis Takes $590 M Direct Hit to Pipeline - Down goes Zalbin

Today Novartis and its partner Human Genome Sciences announced that they will terminate their collaboration on the hepatitis C drug, albinterferon alfa-2b aka Zalbin. The negatice FDA response letter they had received convinced them this was the only logical course of action.  This will result in Novartis setting aside a $230 M reserve in 2010.

If this wasn't good enough news, Novartis will also stop its development on Mycograb (aka efungumab), an antifungal agent being tested for use in invasive candidiasis, and set aside another $360 M as a reserve. Thus, there will be a $590 M write down on these two projects in the 4th Qtr.

See Fierce Biotech, PharmaGossip, and Market Watch.

 

Posted by Bruce Lehr October 5th 2010.  

 

EMA to Issue Guidelines for Biosimilar mAbs in November

According to Reuters interview with EMA executive director Thomas Lonngren, initial guidelines for biosimilar mAbs will be issued in November.  Guidelines will be subject to 6 months review by the external commentators before they are formally adopted in the latter part of 2011.

Europe has approved 13 biosimilars to date but no monoclonal antibodies. These include biosimilare versions of HGH, EPO and G-CSF.  So far, the EMA has had inquiries for scientific advice on 6 mAb biosimilar targets.

The EMA knows that it will require clinical trials for the mAbs to show they work similarly to the original licensed drug.  EMA says these will be "less onerous than the US" as the agency will not give a view on subsitutability of the biosimilar. Teva, Novartis and Hospira are among the companies that are expected to be first in line with biosimilar mAbs.  The EMA expects to see only 2-3 such applications per year given the greater complexity to produce these molecules.

Posted by Bruce Lehr October 4th 2010.

Singapore to Pour $1B into Focused Biomedical R&D

Bloomberg reports that Singapore's government will invest $1 B between 2011 and 2015 to promote more R&D in science and technology.  According to the country's Minister for Trade and Industry, Lim Hng Kiang, 70 percent of the investment will be aimed at projects to create "economic success".   Said Lim, "We will place greater emphasis on competitive funding, to spur innovation and bring out the best ideas for further support and development."  He indicated that Singapore needs to see a quicker return on its investment in R&D.

 The $1 B Industry Alignment Fund is aimed at making Singapore an "innovation-driven and knowledge-based economy".  One of its goals is to connect public and private sector researchers and to facilitate R&D investment. "How much we invest is important," Lim said. "But more important is what we invest it for and where we invest it."

I would refer readers to my previous post regarding PhRMA's appeal for a permanent R&D tax credit for the pharma industry in the US. I submit that this type of targetted tax policy is needed to compete with world goverments who are also backing development in the biomedical or biotech arena.  R&D investment and success clearly will have alot to do with who the winners will be in world pharma markets - especially as the global competition heats up.

Posted by Bruce Lehr October 4th 2010.

 

PhRMA Speaks With Forked Tongue on R&D Credits?

This from the PharmaTech Talk blog.   It questions whether PhRMA is credible in its lobbying for making the research and development tax credit in pharma permanent.  Recently, the Senate voted it down in a surprising move to some observers.  Both PhRMA and BIO have been advocating this bill as a means of stimulating investment in R&D and job growth.

The PharmaTech piece then goes on to recount the 2005 tax break given to big pharma to allow it to repatriate foreign profits - presumably with the idea that these would be reinvested to stimulate growth in the US (although I'm not sure why latter part follows logically) - with the result that the industry soon began laying off workers in US and increased outsourcing, often, to foreing markets. I'm not sure I see any cause and effect here - but I can see a perception issue among those voting for the tax cut.

Again, according to the post, some legislators are not in favor of granting further tax cuts to an industry they perceive as not paying its fair share so to speak. An example cited involves a Big Pharma member setting up tax-shelters, for activities like R&D or patenting, overseas to avoid taxes. The IRS eventually caught up with some of these practices - but damage done again.  The author's conclusion is that pharma may not have used past tax credits in a constructive manner so don't give them this one either -- and come up with alternative stimulus for investment.

However, I think this line of argument ignores the effects of R&D tax cuts. It seems to me that these are very targetted and go to promote investment into R&D in an indsutry that the US can still claim leadership in.  Wouldn't it make sense for our government to support policies that would tend to drive further investment into the sector and raise additional barriers to protect that leadership position?  Especially in an industry that most agree is innovation driven and R&D intense. I think it makes sense.   I think the examples cited above are irrelevant to this policy - but they may cause unnecessary perception problems for some Senators.  That's too bad, but shouldn't derail a good policy decision.

 

 

 

Posted by Bruce Lehr October 4th 2010.

 

 

 

 

Sanofi Turns Hostile in Genzyme Bid

Last week, Chris Viehbacher, CEO Sanofi, indicated that they plan to stay patient in their pursuit of Genzyme.  Apparently, that doesn't mean they'll stay passive.  Today, Sanofi indicated it will go directly to Genzyme shareholders with its $69/share bid (approx. $18.5 B offer) to acquire the company.

Viehbacher decried Genzyme CEO Henri Termeer's refusal to come to the bargaining table for meaningful discussions.  He indicated that significant numbers of Genzyme's shareholders whom he has contacted are "supportive of our initiative and, like us, are frustrated with your refusal to have meaningful discussions.."  Viehbacher further went on that Termeer is denying his "shareholders an opportunity...to realize immediate liquidity and to protect against [Genzyme business] risks".

In a final flourish, Viehbacher wrote to Termeer "Given your unwillingness to engage in constructive discussions with us, we had no choice but to commence a tender offer."

Let the battle for hearts and pocket books begin.  See Xconomy, Fierce Biotech and in-Pharma Technologist.

 

 

 

 

Posted by Bruce Lehr October 4th 2010.

 

Generics Patent Challenges Killing the Golden Goose

Watson Pharmaceuticals' president Paul Bisaro said in a Financial Times interview that the generic industry was in a "death spiral" caused by its increasingly aggressive patent challenges to new drug patents.  Says Bisaro, the industry is getting so good at challenging patents - even with as little as 6 months having elapsed since the innovator's launch - that we are "eating our young". 

Bisaro believes that the innovators are so tired of having their generic small molecules attacked so aggressively and early (and successfully) that they've slowed development of new drugs.  Further they are shifting their emphasis to the discovery of biomolecules which are harder to produce and to copy.  Boo hoo, a company like Watson won't be able to readily copy biologics and will need to restrict itself to sucking all the profit out of small molecules.  Bisaro admits that Watson has prototype generics in its pipeline that the innovator hasn't even launched yet.

 Mr. Bisaro also criticized the FTCs challenge to "pay for delay" deals which pay generics competitors to sit on the sidelines for a while rather then launch their cheaper medicine into the market.  Likewise, he criticized the FDAs long -- and getting longer -- 26 month average to approve a new generic drug application.

Better pick up the remaining golden eggs while you can.

Posted by Bruce Lehr October 3rd 2010.

 

Antipsychotic Drugs - Side Effects May Include Lawsuits Too!

In an article from the NY Times, really a corollary to a post I had a couple of days ago discussing whether "fines" for questionable behavior like off label marketing, the sad facts of how antipsycotic drugs have been cultivated and marketed are laid out. AND IT AIN'T PRETTY!

PharmaGossip: Antipsychotic Drugs - Side Effects May Include Lawsuits - NYTimes.com.

According to the Times, the new generation of antipsychotics has also become the single biggest target of the False Claims Act, a federal law once largely aimed at fraud among military contractors. Every major company selling the drugs — Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson — has either settled recent government cases for hundreds of millions of dollars or is currently under investigation for possible health care fraud.  Wow! Ethical pharmaceutical industry, huh.

Well, at least we're cracking down and fining these companies for wrong doing. That must be working right? Well..........maybe not quite.  The industry continues to market antipsychotics aggressively, leading analysts to question how drugs approved by the Food and Drug Administration for about 1 percent of the population have become the pharmaceutical industry’s biggest sellers — despite recent crackdowns.

Lew Morris, chief counsel for the inspector general of the Department of Health and Human Services, says he is serious about bolstering government efforts to reform or punish drug makers for illegal sales of antipsychotics.  “The message we want to send to the industry is it’s not just the same-old, same-old,” he said in an interview.

Over the next year, the government is adding at least 15 prosecutors and 100 investigators to pursue health care fraud.  Since more than 1,000 False Claims Act lawsuits are still under way, most of them focused on health care and many on lucrative antipsychotic drugs, these new lawyers should have plenty to do for years, and years, and years.  Sadly. 

For that reason alone, critics say they think the industry still hasn’t gone far enough to change questionable practices.  I'd say so.

Posted by Bruce Lehr October 3rd 2010.

 

Remicade Battle Over Billions

Seeking Alpha offers its take on the Merck - J&J arbitration hearing this past week concerning the fate of Remicade - a fate that could be worth billions of dollars.  The decision could either deliver a windfall to J&J, which already holds the domestic rights to Remicade; or, could make Merck’s $49.6 billion takeover last year of Schering-Plough a rare home run in M&A.  If Merck holds onto the Remicade rights acquired as part of the Schering-Plough deal, it would further boost Merck’s value to investors.

J&J had 2009 Remicade sales of $4.3 billion. It has the US rights. In addition, Merck and Schering-Plough’s sales of Remicade last year were $2.3 billion.  As Merck faces its upcoming patent cliff, the  Schering-Plough deal is crucial to Merck and also makes keeping Remicade rights very important.

Schering-Plough had a rights agreement with J&J owned Centocor.  Centocor had the option to cancel the agreement if there was a change in control of Schering-Plough. To avoid that, Merck structured its takeover of Schering-Plough as a reverse merger, with Schering-Plough technically acquiring Merck, and then renaming the company Merck.  How does that work?  J&J smells something fishy in that logic and wants to pursue Centocor's termination rights.  J&J also wants damages for the insult.

The decision is expected within 20 days of the arbitration hearing ending. This is high stakes.

 

Posted by Bruce Lehr October 3rd 2010.