The Big Red Biotech Blog

Maybe It's Just Me

When looking at all the fines that Big Pharma is absorbing -- primarily for violations of selling and marketing regulations around the world -- did you ever find yourself saying "ho-hum" business as usual.  Especially when the fines involved are much less than $1 B!  I do.

Just this week Pharmalot reported fines for Lilly ($29 M), Sanofi ($109 M) and Amgen ($762 M).  The Amgen is big enough for me to take more notice but the others -- "ho-hum".  That's kind of sad.

These pale next to some of the multi-billion dollar settlements we've seen in the past two years as well.

Posted by Bruce Lehr Dec 20th 2012.

Can a Young Biotech Go Long?

YES! That's the answer given by Katrine Bosley, former CEO of Avila Therapeutics, in a piece in today's Xconomy.

I liked her whole perspective in the piece.  She argues that if a company's management focuses on creating value -- then they will have the chance to grow into a fully integrated pharmaceutical company (FIPCO) or they may also be offered opportunities for other types of deals including being acquired.  The key is to focus on the value creation first -- so you will have something tangible to consider in making a 'go long" or M&A decision. 

If you do create value, you could have the chance to become an Ironwood, Aveo, Regeneron, or Onyx Pharmaceuticals. Or you coudl get a good purchase offer from a big pharma partner that is a good fit like those realized by Plexxikon, Adnexus, Avila, Intellikine, or Calistoga. 

Either way you can be successful in bringing new medicines to market and pleasing your investors.

Posted by Bruce Lehr Dec 20th

 

ADCs Prominent in Celgene-Sutro Deal

Sutro Biopharma and Celgene struck a deal that could be worth as much as $500 M plus royalties to Sutro if milestones are met.  Celgene will gain access to Sutro technology that enables it to make biologicals by  a cell free protein synthesis approach.  Sutro will make drugs from Celgenes pipeline including both bi-specific Abs and ADCs to two undisclosed targets. Sutro will get a "substantial [undisclosed]" cash upfront and Celgene will make an equity investment and provide R&D funding. 

The Sutro ADC technology is considered to be next generation compared to that of leaders Seattle Genetics and ImmunoGen.  Mainly, the Sutro technology can incorporate non-natural amino acids in specific sites to allow it to make single species ADCs by conjugation of linker and payload at the site. Sutro can also identify the optimal sites in antibodies to make these site specific insertions. This leads to more controlled molecules and shorter timelines in development.

Sutro has been on a bit of a roll with other development deals with the likes of Pfizer.  They also have from venture investments from Lilly and Amgen venture groups among others. I like to see ADCs becoming more successful in the market and look forward to more exploitation of this technology. See Xconomy and Fierce Biotech.

Posted by Bruce Lehr Dec 18th 2012.

Report Card on Late Stage Drug Development in Big Pharma

Deloitte and Thomson Reuters generated data on the late stage drug programs of the top 12 Big Pharma companies. The good news - more drugs were approved in 2011-12 (41) versus 2010-11 (32).  The bad news - forecasted revenues 2011-12 cohort ($211 B) versus 2010-11 ($309 B) -- an almost 32% drop. The latter translated into a 7.2% R&D return. The average cost of development was pegged at $1.1 B (see previous post where that figure was reported as $1.9 B). The D-TR Report further notes that 22 late stage drugs died in 2011-12 as compared to 19 the prior year.  This wiped away $73 B and $77 B of potential value respectively in those two years.

Deloitte's head analyst, Julian Remnant, noted that half of the top 12 companies experienced a decline in net value realized from product commercialization last year. This is exacerbated as goverments and third party payers exert downward pressure on prices -- or make it more difficult to get reimbursement without clear product benefits over existing competition. They suggest companies battle this challenge through better clinical trial design aimed at targeted patient populations to establish the clear comparative benefit.

In other words, companies need to show payers why they should buy the new drug by demonstrating enhanced clinical benefit to patients and or superior cost effectiveness in use.  As Mona Lisa Vito might say, "Oh my God.  What a f**king nightmare!"  See Fierce Biotech.

Posted by Bruce Lehr Dec 5th 2012.

 

 

 

 

 

Economists Agree - Drug Development Costs a Sh*tl**d!

Fierce Biotech reports this morning that the Office of Health Economics (UK think tank) says that the average cost of developing an approved drug has risen from $199 M in 1970 to more than $1.9 B today.  They cited four factors for this:

• Soaring out of pocket R&D costs
• A success rate that has been halved from 1:5 to 1:10
• A vast increase spent in clinical trials up from 6 years to 13.5 years
• Significant increase in cost of capital due to increasing regulatory complexity

Not everyone agrees with this of course, but if taken at face value the results are sobering.  The Financial Times after looking the report over said that the increase to 13.5 years alone was enough to scare off venture capitalists for good. 

Posted by Bruce Lehr Dec 2nd 2012.

Supreme Court to Review Myriad Case on "Gene Patent Eligibility"

Are human genes patentable?  That is the BIG question.

The US Supreme Court granted certiorari to petitioners to hear arguments in answer to this question, ostensibly by examing issues in the Myriad case.  There are many many (one could say myriad) petitioners from the ACLU, PubPat, and amici including academics, patients, doctors, and other advocacy groups opposed to gene patenting.

Myriad (the company) filed in opposition to the plaintiff's certiorari petition -- supporting patenting -- but obviously didn't prevent the case being heard.

US Supreme Court To Review Gene Patent Ruling // Pharmalot.

Myriad did however get its arguments on the record as to why the Supremes should not prevent genes being patented, and why the petitioners arguments are factually incorrect. For a really good discussion of the Myriad opposition filing see The Patent Docs blog. 

In addition to its many scientific, technical and legal arguments, Myriad also pointed out that "despite 30 years of isolated DNA patents, this case is the first and still only appellate decision to address the patent-eligibility of such compositions."  Always got to be a first time.  But, they further correctly state that many biotechnology companies have relied on precedent of standing DNA patents as important intellectual property protection that their investors rely upon to induce their financial participation in these companies.

Myriad argues the Court should not switch the rules of the game now, and that if a policy switch is to occur, it should emanate from the legislative policy-making process not by legal fiat. The Patent Doc blog author further advises that anyone with "skin in this game who sits on the sidelines should be ashamed."

Posted by Bruce Lehr Dec 3rd 2012.