Wednesday, December 20, 2006

BioShield Giveth, BioShield Taketh Away

Yesterday the Dept. of Health and Human Services notified Vaxgen that since the biotech was in default of its $877 million contract to provide the government with 75 million doses of anthrax vaccine for missing a milestone, HHS was canceling the order. The New York Times has the story here.

The grant--the largest chunk of the government's $5.6 billion Project Bioshield program--wasn't payable until Vaxgen started delivering vaccine. As such, the company is pretty much out of luck, although it can appeal HHS' decision. Making matters worse for the California biotech, HHS reserves the right to hold the company financially liable for costs associated with finding a replacement, noting that "Vaxgen's failure to perform is not excusable," according to a HHS letter sent to the company. Happy Holidays!

BioShield hasn't turned out as hoped. Most of the cash is earmarked for products only once they've neared or received approval, but deep-pocketed firms have been reluctant to assume the R&D risk for at-best uncertain financial gain. And the Vaxgen debacle illustrates some of the problems that those willing but much smaller firms with few resources can run into.

Congress may attempt to remedy the situation by throwing more money at it--as announced in mid-November. The proposed additional $1 billion could support research and early development at biotech companies. Critics suggest the boost is unlikely to fix BioShield, and regardless, whether HHS has any luck playing VC remains to be seen.

Tuesday, December 19, 2006

Move Over Erbitux

Genmab's fully human antibody HuMax-CD20 just took the title for the biggest single-product biopharma collaboration: up to $2.1 billion in biobucks with an impressive $1o2 million in cash and $357 million in equity (at a 50% premium to Genmab's previous 20-day average) up-front. The price tag underscores the rabid demand among pharma companies for new projects and the relative lack of available late-stage compounds.

While new partner GSK suddenly finds itself out a few hundred million bucks, it has landed global rights to one of--if not the--most promising unlicensed projects available. If Genmab had a list of conditions for a potential deal, it's fair to say they probably ticked all the boxes on that list. You can check out the details here.

HuMax-CD20 is being developed in chronic lymphocytic leukemia (B-CLL), follicular non-Hodgkin's lymphoma (NHL), and rheumatoid arthritis (RA). Expect expanded development--Genentech and Biogen Idec's anti-CD20 mab Rituxan, which boasted nearly $2 billion in US sales last year--is thought to be effective in a variety of oncology and autoimmune indications.

In October Genmab CEO Lisa Drakeman, PhD, told analysts that a deal was imminent. "I don't want to overpromise [on the timing]," she said at the company's R&D day in London. "We don't need more data, it's about finding the best possible fit." That same day she also noted that since Genmab had so far invested approximately $100 million in HuMax-CD20, any potential deal's upfront payment should reflect that expense. Job done.

Monday, December 04, 2006

Torcetrapfffffff: Pfizer's Big Bust

Pfizer's decision to discontinue the development of it's HDL-boosting torcetrapib candidate/savior over the weekend leaves the Big Pharma with little choice but to 1. accelerate its restructuring plans and 2. start eyeing up some of its pharmaceutical competitors for a 2007 snack.

It is unknown right now whether torcetrapib's fatal flaw--it raises systolic blood pressure along with HDL which led to more, instead of fewer, deaths and an increase in a raft of cardiovascular problems like angina--spells the end of the entire CETP (cholesterol ester transfer protein) class. Roche will have to decide whether to send the Phase II R1658, another CETP inhibitor, into pivotal trials next year. R1658 as well as Pfizer's early-stage torcetrapib backups allegedly do not raise systolic BP, but then again we didn't know about torcetrapib's problems until Pfizer's $800 million, 15,000-patient Phase III was well underway.

While it's been a disappointing couple of years for Pfizer shareholders torcetrapib was always the light at the end of the tunnel. Can they persevere in its absence? The company has, though belatedly at times, attempted to press all the right buttons: back in April 2005 it suggested it was open to change and that it would save $4 billion by 2008; this past summer an overdue management shake-up saw the elevation of Jeffrey Kindler, a relative outsider, to CEO; its R&D show had analysts in a forgiving mood, enjoying the newfound "transparency and accountability" from Pfizer management even while at the same time acknowledging the company had significant business development goals to accomplish if it were to return to growth after a flat 2007-8.

But despite all the upbeat prognosticating at that meeting ("we are first in class, we are best in class," etc.) torceptrapib tanked. A week before that, Pfizer bailed on asenapine, the Phase III antipsychotic it put a $100 million downpayment on in 2003 via a deal with Akzo Nobel, when that drug disappointed in pivotal trials.

The cuts to Pfizer's vaunted sales force announced in November will now likely be augmented with further restructuring. And in-licensing and M&A will be ramped up--but how? It's hard to see how continuing its string of interesting but relatively small acquisitions--Rinat, PowderMed, Vicuron, Idun, Angiosyn, even stretching back to Esperion in 2003--can fill the massive hole created by the genericization of atorvastatin (Lipitor) in 2011.

Torcetrapib was supposed to be by Pfizer's own estimation the most important new cardiovascular medication in years. What a difference a day makes.