The Big Red Biotech Blog

Insightful or Self-serving Commentary on Deal-making from BIO?

Fierce Biotech quotes spokesmen from GSK, AstraZeneca, Merck and Roche -- who were participating in a BIO panel discussion on deal-making between Big Pharma and Biotechs.  Here's some of the choicer tidbits from the panel:

• The industry is focusing first on the best science when looking for deals
• There's a delicate balance between internal R&D efforts and the need for biotech deals
• Small biotech's main priority when looking for deals shouldn't be the biggest financial reward
• We're all trying to turn opportunities around in a much more thoughtful way
• The most important currency Big Pharma can bring to the deal is its R&D know-how
• Once a biotech has Phase I data, it's time to look for partnerships
• Before Phase I it is difficult to make any financial valuation

Hmmm!  Let's see.  We aren't satisfied with our internal R&D efforts but the biggest currency we can lend to the deal is R&D expertise.  We're looking for the best science -- so when you get yours to Phase I (not preclinical science apparently as we can't value it) bring it to us and don't look for the best price you can get. We'll take it from there with our superior science.

I get it. NOT!

Posted by Bruce Lehr June 30th 2011.

 

 

 

 

Lechleiter goes to Bully Pulpit to Back R&D Spending

Lilly CEO John Lechleiter again spoke out in favor of continued R&D spending to position Lilly for growth by 2014.  In marked contrast to many of his peer CEOs in Pharma, Lechleiter vigorously has resisted cutting R&D and termed it "nuts" to reduce R&D spending in an industry that is "development-based" and meant to look to "long term investment". 

Lilly says it is well positioned to recover (It is expected to see net income go down next year) by 2014 as it has grown the number of mid- to late-stage projects in its pipeline to 33 from 6 only six years ago. Lilly plans to take 10 new drugs into late phase by the end of 2011.

"Our progress in R&D....has built an R&D engine with global reach that can deliver new medicines accepted by regulators, reimbursed by payers, and benefiting patients, while generating a positive return for shareholders over the long term," said Lilly's Jan Lundberg, executive vice president, science and technology.  See Fierce Biotech.

Well, Lechleiter has remained consistent.  He clearly is backing a position that is not shared universally among his peers -- though Merck has similarly maintained R&D spending.  It's a position counter to many/most shareholders lobbying efforts -- twhich is to cut.  Lilly has at least two tough years to negotiate before this program can kick in with increased revenues.  We'll see how it goes.  It should be a bumpy ride but Lilly may emerge looking really good.  Or it may be acquired sometime during the next couple years when it is down.

 

 

Posted by Bruce Lehr June 30th 2011.

FDA Approves New Dendreon Factory in Los Angeles Area

Dendreon announced today that it has won FDA approval for its second factory in Los Angeles for the production of sipuleucel-T (Provenge), its treatment for prostate cancer.  This complements its original plant in New Jersey.  Dendreon is alos seeking FDA approval on a third plant in Atlanta that it hopes to bring on line by late August. 

The new capacity is good news for Dendreon which struggled most of last year and this in keeping up with Provenge demand.  The added capacity is essential for Dendreon to meet its 2011 sales forecast of $350 to $400 million.  See Xconomy.

 

 

Posted by Bruce Lehr June 30th 2011.

Innovation as the Antidote to Biosimilar Market Erosion?

Here is an interesting report created by RBC Capital Markets, entitled Biosimilars - A Wall Street Perspective that discusses the evolution of biosimilars and offers an opinion as to how the market will evolve.  One of the more interesting aspects is a discussion of modifications that can be made to innovator biologics to fend off challenges from biosimilars - including such technologies:

• Pegylation - reduce injections
• Ultra potent antibodies and ligand traps - less injections, subQ dosing, safety
• Bispecific antibodies and antibody fragments - potency, dual activity
• Antibody/drug conjugates (ADCs) - potency
• Glycoengineering - potency
• Fc engineering - potency, half-life modifications, novel functions

I post frequently here about some of the ADCs advancing through the clinic - the two most advanced being brentuximab vedotin (Seattle Genetics) and T-DM1 (Genetech/Immunogen).  Both drugs are in late stages phase III and are expecting approval.  There are at least another 34 programs identified publicly -- 22 of which are in phase I or II. We can expect to see a continuing cavalcade when the first two are approved and shown to be successful.

Here's a copy of the report: Download Wall Street report on biosimilars

Posted by Bruce Lehr June 29th 2011.  

 

Biotech Emerging Markets: Perspectives from Brazil, India, Argentina, and South Africa

At BIO's Partnering for Global Healthcare Forum - panel representatives from the emerging markets of Brazil, India, Argentina and Sout Africa addressed trends in healthcare.

PharmTech Talk » Biotech and Emerging Markets: Perspectives from Brazil, India, Argentina, and South Africa.

They noted that goverment's in these regions all had a goal of getting more people into the healthcare system and providing "healthcare for all".  Targeted goverment investment is up in healthcare in areas like diangostics and biosimilars.

Aging populations and an evolving middle class are among demographic features driving some of this. Speakers from Argentia and South Amercia also talked about their countries as serving as potential regional gateways to other countries/markets in their regions. There is also an expectation that healthcare will shift from a focus of treating acute illness to one focused on chronic care and prevention - as ailments like diabetes, hypertension and cancer grow in developing nations.

Posted by Bruce Lehr June 29th 2011.  

 

R&D Spending In India Is Projected To Mushroom

A recent Boston Consulting Group (BCG) study has projected that R&D spending in India will increase from $2 B last year to more than $25 B by 2025.  Much of this increase will be attributed to Big Pharma in the West shifting work to India.  In BCG interviews with 40 Big Pharma Execs, 70% indicated they were happy with their alliances in India and 75% said they expect to increase activities.

R&D Spending In India Is Projected To Mushroom // Pharmalot.

The reasons behind this shift are not hard to fathom:

• Lower costs.  Trials currently run 60% less than in the US.
• Good pool of treatment-naive patients. India sites also recruit 4x faster.
• Growing pool of qualified researchers

Among drugmakers, Pfizer, GSK, Lilly and Novartis ran the most trials -- together accounting for about 1/3 the total in India.  I guess Lechleiter is Ok with farming out all clinical trials despite all whinging about immigration policy and working in the US.

The most cited impediments to doig even more work in India, include: lack of coordination with alliance partners, insufficient support from senior management [at partners], and differences in executing plans. Regulatory uncertainty and the intellectual property landscape are also viewed as somewhat unsettled. None of this seems to be slowing down current growth -- and you can likely expect that to be maintained until cost advantages start leveling out as compared to the West.

 

 

 

 

Posted by Bruce Lehr June 29th 2011.

 

It's Dealers Choice for Big Pharma R&D

Several articles on R&D models, new drug acquisition and innovation coming out of BIO 2011 today in Fierce Biotech. 

First up, Merck's head of worldwide licensing strategy, David Nicholson, tells us (here) that it will be on the hunt for very early stage projects -- before proof of concepts -- to augment its product pipeline (rather than build technology base).  Merck says it does 50 "significant" deals per year. The acquisition of products will be aligned with the 11 disease categories that Merck has decided to focus on (like CVS disease, neuroscience or oncology - plus 8 more). Merck wants to get in early and to partner as its ticket to extracting maximum value in these deals. Merck says that it and its academic partners are more skilled now at valuing early stage assets and it is now easier to work with Tech Transfer offices than in the past. "The majority of the science is 'out there', not in Merck's labs" says Nicholson.

Fitch Ratings has published an analysis (here) of Big Pharma's drug development activity since the beginning of the year and 22 new late-stage programs were added to their pipelines, mostly from in-licensing and acquisition. The most active dealmakers -- Lilly, Pfizer, and J&J -- were among those companies looking to take the biggest hit via the patent cliff. The awards for best internal pipelines go to GSK, Novartis and BMS. The majority of companies though seem to be betting on a greater return from in-licensing over internal development from their own R&D.

Finally, Big Pharma's headed over the patent cliff are not only lookng to academia for help but are also scouring the countryside for deals with biotechs to increase their pipeline innovation quotients (here). For biotech's that is good news as there are more deals to be had at better terms to provide much needed funding. Should biotech's fear the increased attention being shown by Big Pharma to academia? "if you've got good stuff you don't need to feel threatened by big pharma's interst in academia" IF you have good stuff.

Posted by Bruce Lehr June 28th 2011.

New Digs for Shire and Novo

Shire received approval from the EMA for its second manufacturing facility in the USA for its Fabry's Disease drug, Replagel. It will be the first product made at the plant, and if things go well will be followed by Shire's Gaucher drug, Vpriv, next year. Both drugs were afforded better opportunity to penetrate the market due to Genzyme's serious problems in supplying their versions of these drugs, Fabrazyme and Cerezyme respectively. Replagel's sales grew 81% last year and reached $351 million. The 200,000 square foot facility is claimed to be the world's largest based on disposable manufacturing technology. See InPharm article.

 

Novo Nordisk also announced that it will be spending 1 billion Danish kroner to build a new factory in Denmark for making biologicals like hemophilia drugs and growth hormones. The expansion was planned to keep up with demand on current product plus provide additional capacity for new products in the pipeline. The packaging portion of the facility is expected on-line by 2013 with the manufacturing areas coming on-line in 2015. See PharmaNews.

 

Posted by Bruce Lehr June 28th 2011.

Pharma R&D: Don't Let Me Down

Well, here's an unwelcomed graph from the In the Pipeline blog.  It depicts R&D productivity in the pharma industry from 1950 to present day in inflation adjusted dollars -- and shows NMEs per $billion R&D spend.  Guess what? 

The trend has never been anything but down, down, down. It's steady, predictable and inexorable.  It would be great if we were talking costs or time to market but we're talking about productivity.  Yikes!  The reaction?  For the first time in 2010, the Big Pharma industry saw an absolute drop in R&D spending.  In 2010, about $68 B was spent as compared to $70 B in both 2008 and 2009.

It makes one wonder if all the talk about R&D models and new means of discovering drugs with academic or biotech partners can reasonably be expected to bear fruit -- at least in terms of higher efficiencies or productivity? 

 

Posted by Bruce Lehr June 28th 2011.

China to Spend $308 Billion to become Biotech Player

China plans to flex some financial muscle by investing $308 billion in governement funds between now and 2015 to generate 1 MILLION new biotech jobs.  The ambitious program is part of the 12th Five-Year Plan (2011-2015).  In the healthcare arena, the broad goal is to add one extra year of life expectancy and a lower infant mortality rate.

The government plans to make biotechnology into an "economic pillar".  It will reserve 20 billion yuan for new drug development and control of disease in the process. Don't look back US, somebody may be gaining on us!  Better get the biotech investment bill moving here too. See Fierce Biotech.

Posted by Bruce Lehr June 28th 2011.

Cha-Ching! Seattle Genetics Gets $5M Milestone from Takeda for ADC

Seattle Genetics has begun to cash in on its antibody drug conjugate (ADC), brentuximab vedotin, for reaching a key milestone by filing an MAA with the European Medicines Agency (EMA).  The milestone triggers a $5 M payment from its licensing partner The Takeda Oncology Company.

Seattle Genetics retains marketing rights to brentuximab vedotin in the US and Canada while Takeda has the rights in the rest of the world. The partners are splitting development costs 50:50. The drug will be targeted to the treatment of Hodgkin's lymphoma and anaplastic large cell lymphoma (ALCL). Seattle Genetics application with the US FDA is pending for both applications as well.

The review date with the FDA is scheduled on Bastille Day (July 14th) and the action date is August 30, 2011. See PBR story.

 

Posted by Bruce Lehr June 28th 2011.

Doing Deals With Biotechs Fails To Yield Results?

Here's some stats from a recent Thomson Reuters analysis of the pharma industry with respect to R&D spending and new drugs in the pipeline.  The study shows Big Pharma put the clamps on R&D spending while sharply reducing the number of new phase I and II trials and putting the brakes on phase III trials.

Doing Deals With Biotechs Fails To Yield Results? // Pharmalot.

The report shows that Big Pharma stopped 55 phase III trials in the past 3 years and that was 2x as many as had been terminated in the three previous years.  Additionally, phase I studies dropped by 47%, phase II studies by 53% and the number of new drugs entering phase III dropped by 55%. 

High failure rates, compounded by a big decrease in new NMEs, is a great concern to the industry. Only 21 NMEs were launched worldwide in 2010 and that followed only 26 the previous year.  This is the lowest number in a decade. It appears that the strategy of in-licensing more drugs for development is not yet paying off.  See Fierce Biotech.

Posted by Bruce Lehr June 27th 2011.

Pharma Transactions and Rumors

 A few transactions and rumors of transactions happened today in the pharma world.  Firstly, Biomarin announced that it will be acquiring Pfizer's Shanbally, Cork, Ireland manufacturing plant.  The price tag is $48.5 million - which Biomarin says is only 20% of the cost it would have to incur if it built a new plant from the ground.  Biomarin expects to make its mucopolysaccharidosis drug GALNS in the facility when it is approved in 2015. See In-Pharma Technologist.com.

Icagen shares went up 156 percent on the news that Pfizer may be acquiring the company for its new pain drugs.  The news became public through an SEC filing Pfizer made and the fact the firms were talking about something was confirmed by Icagen. Pfizer already has a deal in place with Icagen that calls for milestone payments up to $359 million and owns 14 percent of the company. See Fierce Biotech.

Genentech cut a novel deal with Forma Therapeutics to acquire an early stage cancer drug program from the latter.  The deal involves a therapeutic still in animal testing that blocks cancer cell metabolism.  Genetech will make an upfront payment, provide research support, and agrees to milestone payments if the drug hits certain development goals. Genentech can then acquire the program (asset) with no royalty payments.  The deal would however allow Forma to pay off its investors and remain and independent company to pursue other similar targets than could be sold in like deals. See Xconomy.

Posted by Bruce Lehr June 27th 2011.

 

 

 

Is Biotech Following in Big Pharma’s Footsteps?

The following blog post from PharmaTech talk wonders aloud if biotech is going down the same path as Big Pharma when it comes to reductions in R&D expense (down 1% in 2010) in response to dwindling funding sources (rather than dwindling revenues due to patent cliffs with Big Pharma). 

In Biotech's case, only 40 of the more than 270 publicly traded large-molecule companies are profitable, and the rest must rely on venture capital. Companies without products on the market are having a tougher time attracting funding these days. Up-front payments have decreased about 55% in the past five years, according to Ernst & Young. Money is increasingly contingent on achieving drug-development goals

PharmTech Talk » Is Biotech Following in Big Pharma’s Footsteps?.

The writer wonders aloud if this continuing trend could become a vicious cycle in which small biologics companies keep spending less on research, which in turn prevents them from discovering potentially marketable products that could keep them afloat.

I think not.  I don't know that all 270 companies should survive.  That would not be the case in most industry models.  I think the stronger companies will rise to the surface and will be able to continue bringing innovative products forward - whereupon they will be compensated through licensing for their properties or will be acquired.  Either way -- the value for the innovations will be recognized and the model will roll on albeit perhaps in a modified form. 

By the way, some of the Big Pharma companies may not survive either.  If you read this post from In the Pipeline last week analyzing Lilly and AZ's current situations, one might conclude that either or both are prime to be swallowed by a bigger player.  Thus, Lechleiter may spurn "mega-mergers" but he may end up on the received rather than the giving end of one.

 
Posted by Bruce Lehr June 27th 2011.

 

 

Pharma Lacks A Payer Perspective

This is an interesting article from Pharmalot that talks about the deal between Sanofi and Medco Health Solutions where the latter wil help design clinical trials in the future keepign the payers interests in mind.

Pharma Lacks A Payer Perspective: Epstein Explains // Pharmalot.

The move reflects a growing awareness among drugmakers that designing and testing a compound for FDA approval is no longer the only key hurdle to winning sales and market share. Medco will provide input on clinical trial design, help develop comparative effectiveness data and review usage of existing medications to improve patient adherence.

Bascially, the drug not only needs to work, it must represent some tanglible benefit over any drugs that precede it for a particular indication and it must be cost effective.  The bar has been raised and at least Sanofi is taking steps to enlist a partner in providing solutions at the trial design and executions phase to make it more market competitive -- which is a good thing.

 

 

Posted by Bruce Lehr June 26th 2011.

Biosimilars Draws Conglomerate Investment

Recent big conglomerate entrants into the global biosimilars race reminds me of the diversification moves by conglomerates into biotechs in the 1970's.  Everyone wants a piece of the action in a market that is exepcted to grow rapidly over the next 10 years -- but one that will also require big bucks to play on a global scale. On average, biosimilars will require about $100 million and five to six years to develop, reflecting the need for clinical trials to prove safety and efficacy in regulated markets such as Europe and the United States.

Reuters reports that major companies (and up to now NON biotech players) like Korea's Samsung and Hanwha, India's Reliance and Japan's Fuji (say cheese) are entering the race to develop biosimilars by partnering with companies in the biotech sphere. These companies see biosimilars as a next-generation business that will help them to diversify and provide a hedge against the possible decline in their mainstream operations.  But, few companies have all the manufacturing, development and marketing skills needed to produce and sell such products, so the hunt is on for smart partnerships.

Merck and Hanwha have hooked up on a copy of Amgen's Enbrel.  Samsung set up a biosimilar venture in partnership with Quintiles. Celltrion and LG Life Sciences are other South Korean players with global ambitions in biosimilars, while Dr Reddy's has been selling a copycat version of Roche's Rituxan cancer drug in India since 2007.  The global heavyweights are likely to include top makers of traditional generic drugs, such as Israel's Teva and Sandoz, the generics unit of Switzerland's Novartis, as well as Big Pharma interlopers like Merck and Pfizer, which inked a deal with India's Biocon last year.

The prize is huge. Over the next decade, patents on biotech drugs with global sales of 90 billion euros ($127.5 billion) are set to expire, according to the European Generic Medicines Association (EGA), opening the door to copycat products.

Posted by Bruce Lehr June 26th 2011.

Novartis Continues Pharma Expansion in Russia

A few days ago, AZ reported that it would be investing $1.5 billion over the next 5 years to expand in Russia with a manufacturing facility and a new drug testing center.  Novartis now announces that it will also be building a new manufacturing plant in St. Petersburg to make both innovative drugs and generics for the local market. The site is slated to come on line in 2014 and will employ 350. Novartis is planning to spend $0.5 billion over the next five years to further penetrate this growing market.

Novartis begins construction of new state-of-the-art pharmaceutical manufacturing plant in St. Petersburg, Russia.

"The establishment of the Novartis manufacturing facility demonstrated our commitment to invest in the Russian healthcare infrastructure and to contribute to the long-term goals of improving healthcare in Russia, set by the government", said Joseph Jimenez CEO, Novartis AG.

 

 

 

Posted by Bruce Lehr June 21st 2011.

 

 

FDA Sets Review Date on SGN-35 ADC

Seattle Genetics has its review date with the FDA set for July 14th to get an Advisory Committee decision on its antibody drug conjugate (ADC) brentuximab vedotin (SGN-35).  BLA's for the drug's use in the treatment of Hodgkin's and anaplastic large cell lymphoma will both be reviewed in back to back sessions.

SGN-35 remains on pace to be the first ADC approved.  And if the committe recommendation is positive as widely expected, Seattle Genetics will be really have something to celebrate (besides Bastille Day) as it moves to storm the market.

 

Posted by Bruce Lehr June 16th 2011.

AZ to Predict Drug Safety in Russian Center

AZ is planning to spend $1.2 billion to increase its presence in the fast emerging Russian market over the next 5 years.  Its latest project is an investment in advanced software to predict the safety and efficacy of drugs. It will open the Predictive Science Center in St. Petersburg and plans to employ Russians to develop biofinformatics, data analysis capabilities and new software tools. AZ will have 30 of its own employees at the center as well and is placing a bet that advanced computer systems will make its R&D more efficient.

Not surprisingly, the plan is backed by the Russian government no doubt eager for the investment and increased AZ presence. AZ is also building a $150 M drug manufacturing plant in the Kaluga region in Russia as part of its expansion.

"Russia is a dynamic economy where our growing investments will help us to offer to patients AstraZeneca's portfolio of innovative medicines," said AZ's CEO David Brennan. See Fierce Biotech.

 
Posted by Bruce Lehr June 16th 2011.

FDA Bests EMA on Speed to Cancer Drug Approvals

If you feel the need for speed, then you perhaps should pursue your new cancer drug approval through the FDA instead of the EMA to get on the market more quickly says a new study. Friends of Cancer Research in studying 23 new cancer drug submissions filed with both agencies found that ALL 23 made it through the FDA first. The FDA took only half the time too -- 350 days in EMA versus half that at FDA.

FDA Commissioner Margaret Hamburg said that the study "reflects FDA's commitment to foster access to effective therapies in a responsive and timely manner."  See Fierce Biotech.

 

 

Posted by Bruce Lehr June 16th 2011.

BMS Guides Kidney Drug through the FDA

BMS scores again this year with the announcement that the FDA has approved its new drug Nulojix (belatacept) for the prevention of kidney transplant rejections.  This comes on the heels of BMS' Yervoy (ipilumumab) receiving approval for the treatment of melanoma just a few months ago.

Nulojix is the first new kidney anti-rejection drug to be approved in more than 10 years.  It is a T-cell costimulation blocker to mitigate the bodies immune response.  It is designed to be used with other immunosuppressants like corticosteroids. Analysts are projecting peak sales for the drug in the $300 M to $500 M range.  See Fierce Biotech and Xconomy.

Posted by Bruce Lehr June 16th 2011.

Is Pharma Dealmaking Becoming More Difficult?

Yes it is.  No it isn't.  Depends upon whom you ask and when.

In a survey of 18- business development executives considering deals from 2006 through 2010, the responses were remarkably split I thought. The majority of biotech respondents (36%) said they could drive terms with pharma (though you can see 64% thought they were on equal footing or were more takers than givers of terms).

So we turn over to pharma.  well, 44% of pharma respondents (again the majority) said their negotiating power had increased with biotechs.

Is Pharma Dealmaking Becoming More Difficult? // Pharmalot.

What about upfront payments?  Biotechs (55%) said they had dropped - though 31% reported an increase. Flip sides of the coin to pharma, and 51% saw an increase with only 32% seeing a drop.  We in the same deals?  A more objective third party analysis of the reported deals shows about a 5% decrease in the upfront value for the 2006-2010 time period.

Average deal volumes and payments seemed to be pretty steady over the period.  Any loss of leverage pharma experienced due to dwindling pipelines and perhaps some desparation to license short-term revenues seems to have been counterbalanced by a bad funding-environment for the biotechs.  Status Quo.

Posted by Bruce Lehr June 16th 2011.

 

 

Vertex Deals with Alios on Hepatitis C Extension

Vertex Pharmaceuticals, fresh off its recent FDA approval of Incivek (telaprevir) for the treatment of hepatitis C infection, announced a new deal with Alios Pharmaceuticals for up to $775 million in development milestones for two programs - ALS 2200 and ALS 2158.  By acquiring these, Vertex hopes to develop hepatitis C cocktails that will cement its leadership position in the market by removing the need to continue the use of interferon.   

ALS 2000 and ALS 2158 are both nucleotide analogs that offer a high barrier to drug resistance, can be taken orally, and may only require a once a day dosage.  Further, both have fewer side effects than interferon that often causes flu-like symptoms to the patient. Thus the combined package of Incivek and the new drugs offer the opportunity to improve the safety, efficacy and ease of administration for the patient. See Fierce Biotech.

 

Posted by Bruce Lehr June 14th 2011.

Merck Partners with Hanwha to Develop Biosimilar Enbrel

Merck is joining forces with Hanwha (Korea) to go after a biosimilar form of Enbrel that will be coming off patent in October 2012.  Hanwha's HD203 is in phase III trials right now in Korea targeted against  rheumatoid arthritis.  The drug is Amgen's 2nd biggest seller and Pfizer's third highest seller with both companies seeing more than $800 M in the first quarter 2011.

GEN | News Highlights:Merck & Co. Partners Hanwha to Develop Biosimilar Enbrel.

Merck gains commercial rights to the drug worldwide except in Korea and Turkey.  Hanwha will receive an upfront payment, clinical milestones plus tiered sales royalties.  Specific financial terms were not released.

 

 

Posted by Bruce Lehr June 13th 2011.

 

 

Penn and Teller: Why Childhood Vaccinations Make Sense and Maintain Public Health

A big thank you to the Bio Job Blog for posting this YouTube video staring Penn and Teller explaining the benefits of childhood vaccination versus saying worrying about getting autism or other similar folly.

Penn and Teller: Why Childhood Vaccinations Make Sense and Maintain Public Health.

Simply stated, vaccines have saved more lives than any other form of medicine and it's not even close.  The now discredited Lancet publication may have been the most detrimental paper of the last century. 

Watch the Video people and get your children their vaccinations.

Posted by Bruce Lehr June 12th 2011