The Big Red Biotech Blog

Big Pharma Backs Off RNAi

Fierce Biotech reports on a New York Times feature article that recounts how Big Pharma is currently withdrawing from its previous activity with RNAi therapeutics. The story points out that Roche started the trend publicly last fall with its announced withdraw from the field.  But other companies like Abbott, and Pfizer have similarly cut their investment (see here).

Merck-Sirna and Novartis-Alnylam deals have also failed to show much in terms of deliverables though Novartis continues to work targets uncovered in its Alnylam deal but decided not to extend it further. Now Big Pharma companies who were pioneers working with the RNAi innovators are focusing their efforts elsewhere looking for more immediate payoffs. In some cases, RNAi may no longer be the only or even best means to effect certain cellular pathways thus reducing the need to rely on this technology.

It may be many many years before any therapies utilizing RNAi hit the clinics -- and the pioneer RNAi companies may be the ones who will back that play.

 

 

 

Posted by Bruce Lehr Feb 8th 2011.

Daiichi Forms R&D Hub in India

As reported in Rediff business, Daiichi has reorganized its R&D effort into 4 main hubs - including a new site in India resulting from its acquisition of Ranbaxy.  Daiichi currently owns 63% of Ranbaxy but 100% of the newly formed R&D group called Research Center in India (RCI) that consists of 170 researchers.

RCI will focus on inflammatory and infectious disease research.  Daiichi has transfer a half dozen early discovery programs from Japan to India.  The RCI mandate is to identify potential drug candidates that will then be transferred back to Japan for further development.

Daiichi also has R&D hubs in Japan, the US at Asubio Pharma, and in Germany at U3 Pharma.

 
Posted by Bruce Lehr Feb 8th 2011.

Can Angels Save UK's Sandwich?

In the Pipeline reports that George Freeman, Tory MP and biotech expert, is mustering entrepreneurs, VC groups and angel investors to potentially save the Sandwich R&D site -- specifically it's experienced staff recently displaced by Pfizer's decision to leave.

As reported in The Independent, the investment groups will try to determine if small company investors can employ former Pfizer scientists to create a new crop of spin-out ventures.  Apparently, there is some precedence for an effort of this sort to bear fruit as evidenced by several small businesses to emerge from the R&D staff at the soon to close AZ Charnwood site in Leicestershire. Biocity Nottingham enabled some of this activity and is looking to do similar things with the Pfizer staff.

It remains to be seen how many staff want to or are able to make this type of transition from Big Pharma to small company - albeit certain that less than 100% will have the opportunity. How many Angels are out there to offer some chance at salvation?

 

 

 

 

Posted by Bruce Lehr Feb 8th 2011.

 

Informex 2011: Tracking the Fortunes of Chemically Synthesized APIs

This article from the PharmaTech Talk blog comes to us from this year's Informex meeting in Charlotte, NC. It summarizes the pressures faced by US small molecule API manufacturers in a rapidly competitive and shifting environment.

PharmTech Talk » Informex 2011: Tracking the Fortunes of Chemically Synthesized APIs.

The gist?  Big Pharma is increasingly consolidating its vendor base.  It is looking to outsource more of its operations to gain flexibility. It is looking to both cut costs and to access emerging markets -- and can do so in one fell swoop by establishing more relationships with manufacturers in places like India and China.

Couple this with the issues Big Pharma is having with its dwindling pipeline, patent cliffs and recognition that large molecules, rather than small , are the more vigorous growth engines of the future -- you have a strong movement toward non-US API manufacturers.

Again, this is another reason, the US goverment needs to get behind our biotech industry to maintain its growth and prosperity so we can further develop a sustainable leadership position.  There are not that many industries where we still have clear leadership and it would be a monstrous mistake to let this one go too.

Posted by Bruce Lehr Feb 8th 2011.

More Late Stage Woe for AZ's Zibotentan

Fierce Biotech reports that AZ's zibotentan failed to meet its endpoints in another late stage clinical trial - this time for prostate cancer.  The plug was pulled on the trial when researchers' concluded the drug would not increase survival rates beyond standard therapy in this patient class. 

AZ is taking one more (and its last) bite at the apple in testign zibotentan plus chemotherapy in patients with metastatic prostate cancer.  This is still considered a long shot - and all hopes of this drug competing head to head with Dendreon's Provenge are gone.

AZ looks like it can add zibotentan to the list of late stage failures to accompany Recentin (colon cancer) and Vandetanib (NSCLC).  Cancer treatments failures continue to take a heavy toll in the industry's R&D pipeline - especially in phase III vs standard therapies.

 

 

Posted by Bruce Lehr Feb 7th 2011.

How Sanofi Could Start Off on the Right Foot in Cambridge

Here's an interesting post from Xconomy written by Steve Dickman, former venture capitalist and CEO of boutique consultants CBT Advisers.  In it, Dickman give Chris Viehbacher some unsolicited advice how to manage elements of the Genzyme R&D group that it will soon acquire and to spend Sanofi's money.

How Sanofi Could Start Off on the Right Foot in Cambridge.

The big idea proffered is for Sanofi to set up a "Sanofi Genzyme VC Fund" similar to those of big competitors like Lilly, GSK, J&J, Novartis, etc. In this fashion, Dickman argues that the value of Genzyme's R&D can be better preserved by transitioning some of its talent into new slots on the outside ushering in the next round of innovation in Boston.

The VC fund can also put Sanofi back on the corporate VC map and into a position of great influence amidst Boston life science innovation and link it to the active life science investment community in the area. The fund will help Sanofi managing innovation to augment its internal R&D efforts.

The article goes on to cite various characteristics the fund should think about in terms of the personnel who manage it, their compensation models, and the length of time (min 5-7 yrs) Sanofi gives the fund to bear fruits. It also suggests its total capitalization be in the $200 M range.

It may be a good idea, but it is easy to spend someone else's money. 

 

 

Posted by Bruce Lehr Feb 7th 2011.

Lilly Ties Employee Bonus To R&D Pipeline

As recounted in Pharmalot blog, Lilly has established a new "research metric" that will be one factor in calculating bonuses.  It is intended to measure progress of its products through the development pipeline as an indicator of "output and sustainability" for the company.  

Lilly Ties Employee Bonus To R&D Pipeline // Pharmalot.

The research metric will be in addition to usual measures around EPS and sales growth.  Lilly of course has had several celebrated failures (most notably its Alzheimer's drug) in late stages this year and is facing one of the industry's steepest patent cliffs. It remains to be seen how directly most employees can affect this development goal - especially in the near term. 

I will be interested to see how this metric resonates within the company as it rolls out. Also, I don't know the weight of the "research metric" versus the usual sales, profitability, etc type goals that companies usually follow.  Hopefully, we'l hear some feedback on how this is perceived and how it works in practice.

Concommitant with this new metric announcment, Lilly Executive managers did take some paycuts for 2011 - albeit from a position of considerable altitude.  We'll see how that affects perceptions as well.

Posted by Bruce Lehr Feb 7th 2011.

Sanofi-Genzyme Deal Imminent

The WSJ reports that Sanofi had hoped to announce its deal to buy Genzyme on Monday but may be slightly delayed while it finishes its due diligence work - particularly on the manufacturing issues at the Alston facility.  However, Sanofi still expects to announce the deal by the time it goes over its financial performance in 2010 for the analysts on Wednesday this week.

As widely reported last week, Sanofi is expected to have upped its cash offer to $74 per share and Genzye shareholders will also receive a CVR. The CVR will initially be valued at $2 per share but that can rise to $5-$6 per share if certain sales levels are met - in particular if Lemtrade sales come closer to peak annual sales of $3.5 B estimated by Genzyme rather than the $700 K that Sanofi predicts.

 

 

Posted by Bruce Lehr February 6th 2011.

Hedge Fund Urges Actelion to Seek Sale

Elliot Advisors, a Hedge Fund, has told Actelion's management that it should not try to maintain its independence but should be seeking buyers for the company.  Amgen has been rumored for several months to be looming in the background to acquire Actelion to provide it an better position in CVS markets. The fund controls 6% of Actelion stock.

Elliot Advisors also called for the resignation of Actelion's chairman and for its CEO to resign from the board.  If that weren't enough, GSK just pulled the plug on its joint development project with Actelion for an insomnia drug (almorexant). 

Actelion's CEO, Jean-Paul Clozel still seems to be clinging to the prospect that Actelion will remain an independent company in spite of any pressure or adversity. See Fierce Biotech.

 

 

Posted by Bruce Lehr Feb 5th 2011.

Delbiopharm Partners on RNAi with Marina Biotech

Delbiopharm and Marina Biotech will partner on the development of treatments against bladder cancer using Marina's RNAi technology.  Delbio will pay $25 M in R&D milestones and Marina will also receive royalties on sales of any therapeutic reaching commericialization.

In additon to bladder cancer, Marina's pipeline has therapies aimed at treating familial adenomatous polyposis and hepatocellular carcinoma.  See Fierce Biotech.

Posted by Bruce Lehr Feb 5th 2011.

 

In the Pipeline looks at Pfizer/Merck R&D Forked Paths Taken

The In the Pipeline blog weighs in with its commentary of the different choices made by Pfizer and Merck CEO's with regard to cuts to R&D and maintenance of EPS for the next couple of years (see previous post in the blog too).

On balance, I tend to be in agreement that I like Merck's approach better than Pfizer's -- at least based on my perceptions from the outside looking in.  It looks to me that Pfizer is behaving in a more short term "get the financial numbers to look good" fashion at the expense of its future R&D success - which I think is a BAD way to go in the pharma industry.  Merck to me looks more willing to stand up and take some criticism in the short term for financial short falls to protect future revenues that it expects from its R&D investment in the long term.

Obviously, we'll see which approach will work in the coming years.  Clearly, it is not all about spending the R&D money.  Just spending does NOT guarantee success.  You do have to spend on the right programs in the right way.  And, it is also true that you could supplment your internal R&D effort with acquisitions or partnerships from the outside -- in fact probably should do so in the world of today.  But, it's not clear to me from Pfizer's statements that is what it is doing.  It really looks more like an austerity program.  I think focusing on fewer programs is good -- but one could argue that you could have diverted more of the existing budget to fewer programs rather than cut the programs and cut the budget. 

Merck will of course have to actually deliver on the R&D programs it chooses to pursue.  That is and has always been the case -- now we will see if they can actually boost their success rate with the programs they've chosen to pursue. It will be interesting to see which of the two companies is successful with their approach.

Hopefully, one of the path's forks is right, and we don't have another path not taken.

 

Posted by Bruce Lehr Feb 5th 2011.

 

 

Pfizer and Merck Take Opposite Tack on R&D vs EPS

The WSJ notes that Pfizer and Merck, the number one and number two sized Big Pharmas in the world, took different tacks when confronted with prospect of cutting R&D or maintaining EPS for the coming year. Pfizer cut R&D.  Merck cut its future earnings estimates.  Let's take a look.

Pfizer reduced R&D so that it will spend approximately $6.5 to $7 B in 2012 vs the $9.3 B it spent in 2010.  That necessitated closing its Kent facility and cutting heavily at its Groton site.  It also cut several programs to "focus" its R&D efforts on a lesser number of programs. The market gave Pfizer a short-term reward by raising its stock price about 4% since the Tuesday announcement.

Merck on the other hand reduced its EPS estimate from $3.82 to a range of $3.65-$3.76.  It plans to up the R&D budget from $8.1 B in 2010 to $8.5 B in 2011.  Merck's CEO Ken Frazier said he "wouldn't make deeper cuts" as it woudl jeopardize Merck's future development.  The market promptly responded to this long-term strategy (like pharma and investing is supposed to be) by chopping Merck's stock by 3.3%.

If I had to place my bet right now, I'd say that the company that invest in R&D and innovation will do better in offering its shareholders a long-term ROI than one that continues to reduce its R&D efforts - especially to boost short-term EPS gains.  Where's the drive to innovation to meet unmet medical need in that?  I guess Pfizer CEO Mr. Read gets to stay in place another quarter.

 
Posted by Bruce Lehr Feb 3rd 2011.

Roche Weathers Tough Year - Looks to Pipeline in 2011

Roche had a tough 2010.  It reported its pharma sales were down 2% to CHF 37.05 billion.  The drop was led by Tamiflu which saw its sales plummet by 71% with the end of the flu pandemic. 

 

Roche weathers tough year and looks to pipeline for 2011 | InPharm.

Otherwise, the bright spot for Roche were its oncology sales.  This division's sales were up 7% and account for more than 50% of the total pharma revenues.  Despite sales decreases overall profits did increase by 4% year over year -- albeit took an 5% cut in R&D to help achieve that mark.

In looking at 2011, Roche advised that its blockbuster Avastin could see sales drop from CHF 9 billion to CHF 6-7 billion due to various regulatory rulings that will limit or stop its use in certain indications.  Roche is looking for other parts of its pipeline oncology portfolio to rise to the top in 2011.  It expects to seek approval for 3 key oncology drugs, namely RG7204 for melanoma, pertuzumab in combination with Herceptin of HER2+ breast cancer, and GDC-0449 for basal cell carcinoma. The three drugs are expect to boost sales to offset losses or slow downs in other areas.

 

Posted by Bruce Lehr Feb 3rd 2011.

How are Pharma CEO's like the Ostrich?

Can you guess from this photo?  Here's the rest of the story from PharmaManufacturing.com.

Posted by Bruce Lehr feb 3rd 2011.  

Kohl Bill Proposes Ban to Pay for Delay Deals

Senator Kohl has introduced another bill that attempts to ban "pay-for-delay" deals between brand name pharma and its generic competitors.  The Senator notes that Waxman-Hatch has been very successful in the past in spurring generic drug competition.  He cited that 67% of all prescritpions filled are now for generics although these represent only 20% of the cost outlay.  He further claims because of this price disparity, deals between brand name producers and generic makers to delay competition are more profitable than competing in the market -- and therefore these deals will become more common if left unchecked.

Pay-for-delay in the Senator's view (and in the view of DOJ and FTC) are "contrary to free competition, the interests of consumers, and the principles underlying antitrust law."  The bill would allow the FTC to initiate an enforcement proceeding against any parties entering an agreement to settle a patent infringement claim in connection with a sale of a drug product. Such agreements will be deemed anticompetitive on their face and the parties involved will have the burden of showing that "procompetitive benefits of the agreement outweigh the anti-competitive effects of the agreement."

This is the thrid straight Congress in which Kohl has introduced such legislation.  Let's see if three times is a charm in terms of its passage. See the Patent Doc blog for more.

 

 

 

Posted by Bruce Lehr Feb 3rd 2011.

Merck Drops Earnings Estimate -- Saves R&D -- for Now

Merck's CEO Kenneth Frazier advised investors that Merck had reduced its EPS estimate for 2011 to $3.64 to $3.76 per share versus analysts expectatins for $3.82 per share. The revised forecast came with news that Merck had stopped development of vorapaxar and took a $1.7 B write down of intangible assets related to the drug.

Vorapaxar was one of the prime reasons Merck acquired Schering-Plough as analysts had pegged it as a potential megablockbuster with estimated peak revenues in the $3-$5 B per year range.  Now it is dead. Merck shares are down 6% YTD and fell 3.3% on the revised forecast news.

Merck also faces the prospect of losing perhaps more revenue relative to the S-P deal as it is currently embroiled in an arbitration dispute with J&J over the fate of its Remicade and Simponi drugs. These represent multi-billion dollar sales for Merck and are growing in low double digits.  One consequence of the arbitration decision could be that J&J gains all rights to these drugs.  A decision is expected this year.

Despite all the gloomy news, Merck also announced that it will not cut its R&D staff further -- unlike its rival Pfizer did in order to maintain its EPS forecast for 2012.   Merck's Frazier said deeper R&D cuts would result in "significant underinvestment" for the company's future.  Frazier intends to keep spending on the company's late stage pipeline -- including its potential blockbuster hepatitis C drug boceprevir which is receiving expedited FDA review right now. Merck is willing to take the EPS hit now for the potential gain in the future.  See WSJ.

 

 

Posted by Bruce Lehr Feb 3rd 2011.

Genzyme Could Be Sanofi's by Next Week

According to Reuters (citing a Le Figaro article), Sanofi could announce a deal to acquire Genzyme by next week.  The sides are considered very close.  The deal will likely call for a cash payment in the $72-73 per share range with another component based on a CVR for Lemtrada in the $2-5 per share range depending on milestones achieved. 

Thus the final deal will have a cash plus CVR value in the high $70's (up to $78) per share.  Genzyme is pushing for highest cash possible and smaller CVR while naturally Sanofi would like to lower cash and offer higher CVR.  It would be good for Sanofi to be able to announce a deal with its earning call scheduled on Wednesday nof next week when it is also expected to report a drop in earnings of 3.2% per share n the 4th quarter.

 

 

Posted by Bruce Lehr Feb 3rd 2011.

 

Punxsutawney Phil - Early Spring but Mum on Steelers-Packers

Punxsutawney Phil is no Psychic Octopus. 

All he could do today was predict that Spring is only 6 short weeks away (probably missed that one!).

 

But on the really important question - Who will win the Superbowl this weekend?  Punxsutawney Phil is staying mum. “Two years ago, Phil’s forecast also acknowledged the Steelers’ Super Bowl XLIII win the night before. This year, Sunday’s game was mentioned in the forecast but no winner was predicted between the Steelers and the Green Bay Packers,” writes AP.

Too bad. Phil had the chance to grab fame and glory by correctly predicting a 28-24 win by Steelers.

 
 

Posted by Bruce Lehr Feb 2nd 2011.

Sanofi: "My GLP-1 Can Beat Your GLP-1 (Byetta)"

Sanofi reported that its GLP-1, lixisenatide, bested the GLP-1 Byetta, exenatide, in a head to head trial of type 2 diabetes patients.  The lixisenatide arm experienced many fewer hypoglycemia events (about 6-fold fewer). 

Sanofi's GLP-1 drug when approved will take on Novo Nordisk's Victoza and Amylin/Lilly's Byetta.  It's being billed as a blockbuster candidate by many analysts.  This is especially true with the world's diabetic population expected to explode from 285 million to more than 435 million in the next 20 years - keep eating that quality Western diet. 

Sanofi is playing catch up with its GLP-1 version so this type of result with a putative direct competitor product is a good shot in the arm.

 

 

 

 

 

 Posted by Bruce Lehr Feb 2nd 2011.

Roche Details Marcadia Buy

Fierce Biotech reported on Roche's buy-out terms for Marcadia in December 2010 to acquire its portfolio of diabetes drugs (see here) orginally licensed from an Eli Lilly scientist.  Roche paid $287 M upfront with additional milestones that could reach $250 M.

Marcadia is now trying to regain control on one glucagon compound targeted to treat hypoglycemia and start a new venture - since the last one cashed out so unexpectedly well.

 

 

Posted by Bruce Lehr Feb 2nd 2011.

A Fork in the Road for Pharmaceuticals

This post from WSJ via PharmaGossip.   It chronicles the problems popping up in Big Pharma now that we're on top of that nasty patent cliff - which turns out to be real afterall.

PharmaGossip: A Fork in the Road for Pharmaceuticals - WSJ.com.

The article outlines various approaches Big Pharma appears to be using to deal with the revenue gap and still deliver good EPS numbers for its shareholders.  These include:

• Cost-cutting, usually R&D, Sales & Marketing or both - didn't need them anyway
• Selling non-core businesses - like diagnostics (Ed. Note Wonder what will happen when companion diagnostics become all the rage in next couple years)
• Stock-buy backs - you can increase the numerator or decrease the denominator to boost EPS
• Buy another company's revenues, i.e. acquisition - usually at a high price for acquirer's shareholders
• Enter another business like vaccines or consumer health products

So what's an investor to do when evaluating the wisdom of these choices? I notice actually introducing innovative drugs to meet clear medical need is conspicuously missing from the above list - but I digress.

I can only pass on the advice of one of my favorite St. Louis philosphers - one Lawrence "Yogi" Berra.  When you come to a fork in the road? Take it!

 
Posted by Bruce Lehr Feb 2nd 2011.

Seattle Genetics Raises $155M to Support Selling First Drug

As reported in Xconomy, Seattle Genetics has raised another $155 M through sale of its stock to fund the anticipated launch of its antibody drug conjugate SGN-35 - a so-called empowered antibody.  The money will go to hiring a "lot of people" to introduce the drug to the US market.

Seattle Genetics Reloads Cash Reserves With $155M, On Cusp of Selling First Drug.

SGN-35 or brentuximab vedotin was developed with Seattle Genetics partner Millenium (now owned by Takeda) and is aimed for use in treating Hodgkin's disease and anaplastic large cell lymphoma.  The drug has performed extremely well in phase III trials and its approval is much anticipated.

SeaGen stock has increased by nearly 60% in 2010 and it closed at $16.17 yesterday.  In it's offering, the company sold 10 million shares at $15.50 per share (dilution). The compnay also reported having $315.6 M on its books as of September 30th 2010.

Posted by Bruce Lehr Feb 2nd 2011.

 

Vertex Urges CDC to Adopt Hep C Screening to Spur New Wave of Patients

Now that Vertex has convinced the FDA to give its Hepatitis C drug, telaprevir, expedited review, it is now working on convincing the CDC to help it get more patients. Xconomy reports that Vertex is lobbying the CDC to recommend that most people over 50 get blood tests for hepatitis C infection.

Vertex Urges CDC to Recommend Hep C Screening, To Nudge Second Tsunami of Patients.

Vertex is working with other companies in the Viral Hepatitis Action Coalition to fund a $3.6 M research study to assess whether this type of screening program would be cost effective.  There are currently 600,000 patients in the US who are expected to seek treatment for hepatitis C from either Vertex's telaprevir or Merck's similar drug (also receiving expedited review).  However, the screening program envisioned could generate an additional 1 M patients for both companies - out of an estimated 3 to 3.9 M persons in the US with chronic hepatitis C infections.

With such an untapped patient market, and a better therapy to boot, analysts are predicting that Vertex's telaprevir could be a more than $2 B blockbuster at annual peak sales. To make sure it gets there, Vertex is spending money on a public awareness campaign for hepatitis C and also is working hard to get the CDC's support for screening. 

 

Posted by Bruce Lehr Feb 2nd 2011.

 

Genzyme Sells Intermediates Business to ICIG

As reported in In-Pharma Technologist, Genzyme will sell its pharmaceuticals Intermediates business to International Chemical Investors Group (ICIG).  Thus, Genzyme has fulfilled its goal of selling its 3 non-pharma businesses (genetic testing, diagnostics and pharma intermediates) to allow it to focus on the core pharma business.

Genzyme to sell intermediates biz to ICIG.

The pharma intermediates unit makes lipids, peptides, carbohydrates, oligos and custom small molecules for pharma customers. It will be renamed Corden Pharma and will continue to operate out of Liestal, Switzerland. ICIG will continue to make clinical trial supplies for Genzyme's phase III Gaucher's disease drug, eliglustat tartrate. ICIG will make make other drugs too used in early clinical trials.

 

Posted by Bruce Lehr Feb 2nd 2011.

Sanofi Shows Genzyme the Money!

The WSJ reports that Sanofi has upped its cash bid for Genzyme in "range of $74 per share".  Genzyme CEO Henri Termeer said all along he wanted to see a bid of $74-75 per share to get the due diligence process rolling. The deal with sweetened cash terms and a CVR, that will range from $2 in the beginning up to $5-$6 if milestones are achieved, might close within the week according to sources (who are?). The higher value of the CVR is NOT guaranteed according to same sources.

Looks like we have a deal.  All we need to do is cross the t's and dot the i's.  And all it took was for Sanofi to take Henri at his word, "Show Me the Money!"

 

 

Posted by Bruce Lehr Feb 1st 2011.