Friday, August 29, 2008

DotW: Yes We Can

As the US prepares for its last chance to check out of the office early on Friday, Dems converged this week on the Mile High Stadium in Denver to listen to ordinariness and outstanding oratory. The GOP will be hard pressed to match the rhetoric as they bear down on the Twin Cities for their own back-slapping event.

There was no shortage of rhetoric in our industry either. Amylin and Lilly finally decided to publicly address Byetta's potential role in pancreatitis in a late day conference call Tuesday. Clearly the speechifying--"Yes we can get through what ought to be a non-event"-- didn't convince a majority of investors. The stock prices of both companies continue to suffer.

Also on Tuesday came news from BMS and Pfizer that their eagerly anticipated Phase III clotting drug Apixaban--pitted in a head-to-head against Sanofi-Aventis's Lovenox for the prevention of venous thromboembolism in knee replacement surgery patients--just barely failed to show non-inferiority. The market reacted--but more modestly--with the share price of each company dipping slightly as Wednesday's trading began. For Pfizer it was a "Yes we can weather another round of negative news" moment. For Bristol, it was proof that the company's risk-sharing strategy makes sense.

Then there was Cell Genensys's announcement that it was stopping a Phase III trial of its prostate cancer vaccine GVAX due to potential safety concerns. Many believe the drug's future is in question, though a different pivotal trial of the product is still on-going. At least the Cell Genesys team has this consolation: "Yes we can ink a lucrative deal with a mid-size Pharma on limited data."

And having failed to partner its lead program, faropenem, Replidyne announced it was restructuring, reducing headcount to just 5 employees and taking a charge of $3.1 million. Undoubtedly the remaining staffers will have a "yes we can moment" that involves selling everything not already nailed down, including their investigational drug to treat C. difficile infection and additional anti-infective compounds. With nearly $61 million in cash on hand, they might even say "Yes, we can pull off a reverse merger."

We aren't going to call roll and ask readers to vote for their favorite weekly run-down of news. It's official. By acclamation, we bring you...

GlaxoSmithKline/Valeant: GSK made another valiant--er, we mean Valeant--attempt to add late stage, specialty focused products to its pipeline this week. On Thursday it announced a tie-up with Valeant for the specialty pharma's late stage epilepsy drug retigabine in a co-commercialization deal worth $125 million up-front and more than $500 million in potential milestones. In addition, the deal also involves earlier stage Valeant programs, and gives GSK world-wide rights to both its VRX698 as well as downstream potassium channel opening drugs. Milestones for these candidates could eventually reach $150 million. The two companies expect to file for approval in both the EU and US for retigabine in early 2009. As The Pink Sheet Daily notes, the deal shores up a looming gap in GSK's epilepsy franchise. The pharma's Lamictal, which will go off patent in 2010, posted global sales of $2.2 billion last year. But GSK will have to master the potentially tricky side-effect profile that comes with retigabine's first-in-class mechanism. In one trial of the drug, nearly 27% of patients withdrew due to problems that included dizziness, somnolence, headache, and fatigue. For J. Michael Pearson, Valeant's CEO, the deal validates his turn-around vision for the specialty pharma. Since coming on-board in February, Pearson has made partnering the company's retigabine and Phase II HepC drug taribavirin a priority.

Genzyme/Medicines for Malaria Ventures/Advinus: There’s a certain irony to a company that’s made its fortune finding treatments for rare diseases to go after a mega-disease and eschew all profits from it. But that’s what Genzyme is doing with the not-for-profit MMV – one of a growing number of groups, operating largely through virtual organizations, focused on just one or two diseases that can be attacked via collaborations with academics and companies. It’s likely Genzyme, along with help from MIT’s Broad Institute and Harvard, will do most of the discovery work while the Indian Advinus – a unique combination CRO and biotech firm – will do most of the development. And while Genzyme is doing its work gratis, the Advinus collaboration will also advance its nascent ambitions in India, where it is one of the few major biotechs with an R&D presence--Roger Longman.

Isis/Novosom: So many targets, so little time. As Isis and others grapple with that dilemma a variety of smaller biotechs are maneuvering to gain access to sequence- or target-specific IP from platform players to move from technology purveyors to drug development companies. Germany’s Novosom—which boasts a nucleotide-agnostic, charge-reversible systemic and topical delivery platform called Smarticles—this week exercised its option (which it lined up in an April 2007 deal with the antisense specialist) to develop antisense oligos targeting CD40, a target in B-cell cancers and inflammatory diseases. That deal lands it worldwide rights to Isis’ CD40 related IP and “non-exclusive worldwide and sublicensable access to certain aspects of Isis’ core technology patents.” Isis gets upfront and milestone payments and royalties on sales. Smarticles (animation here) should not to be confused with Nestle’s Smarties, the colorfully coated chocolate candies that taste delicious but are crap at delivering RNAi and antisense molecules to the inside of cells--Chris Morrison.

QLT/Reckitt Benckiser: Canadian biopharma QLT says "yes we can" continue to sell off assets, announcing the licensing of its Atrigel drug delivery technology to Reckitt Benckiser Pharmaceuticals for $25 million plus potential milestones payments of up to $5 million. (This should give Replidyne hope.) As part of the deal, Reckitt took some of QLT's infrastructure off its hands, acquiring 18 employees and a facilty in Fort Collins Co. QLT has been selling off assets since January, when it announced its intention to focus on its macular degeneration treatment Visudyne. The company has already sold its headquarters, cut staff, and offloaded its acne gel, Aczone, to Allergan for $150 million. Next up: the company will sell QLT USA in its entirety.

Photo courtesy of Flickr user davidhanddotnet via a creative commons license.

RFP: Raise Temple's HDL

HDL-raising is a damaged surrogate. Or at least that's what FDA's Office of Medical Policy director Bob Temple says. And that should give some pause to any companies in the business of developing drugs to raise high-density lipoproteins or those making investments in those companies.

It's not that this class is dead in the water; FDA would love to see a major advancement in this area. But the burden of proof will be much higher and take longer compared to other classes of drugs.

Pfizer's investigational HDL-raising drug torcetrapib was supposed to be the next Lipitor and then some. But torcetrapib, which acts by inhibiting cholesterylester transfer protein (CETP), wound up getting scrapped because of too many deaths observed in clinical trials. That result cast a pall on the entire class.

Torcetrapib hasn't stopped other companies on betting that HDL-raising will be the next big thing. Merck is working on an HDL drug. Cerenis Therapeutics, founded by ex-Esperion executives, raised 25 million and 41 million Euros in 2005 and 2006, respectively, in its first two venture rounds. Cerenis, however, is investigating HDL drugs outside of CETP inhibition.

Pfizer, Roche and Resverlogix are all keeping their HDL hopes alive, looking at Apo-a-1, a major protein component of HDL in plasma.

So drug development in HDL is still alive and well. But FDA will want to see outcomes and long-term data.

Below is an excerpt from a roundtable discussion with FDA Office of New Drug director John Jenkins, Office of Surveillance and Epidemiology director Gerald Dal Pan and Temple (to see the full interview, click here for Part I and here for Part II).

The RPM Report: So low-density lipoprotein, LDL-lowering, you don’t need an outcomes study but if it were something else, you would ask for outcomes data?

Temple: It depends on what it is. If it were triglycerides, I don’t want to speak for that division—I don’t know what their decision on that is—but everyone is nervous about HDL because of the results of the single drug, torcetrapib.

The RPM Report: You discussed torcetrapib. Was this a drug you all were excited about?

Temple: Well, I was excited, my HDL is 30. I was looking forward to it. I was very disappointed.

Jenkins: I think that’s an example of an area where we might not have been excited about that particular drug but the idea of having drugs that can specifically raise HDL and hoping that would lead to a cardiovascular benefit, I’m sure there was a lot of surprise and disappointment internally and externally when that drug failed.

It’s important to distinguish between a torcetrapib finding and is that true of any drug that raises HDL? We don’t know that yet. But having laid that down as the first case, you’re probably going to want to see some good data before you start accepting that as a surrogate. That would require longer-term data before approval.

Temple: It’s a damaged surrogate.

Jenkins: It went against what everyone would have thought. Although I think the epidemiologic data haven’t been as strong for HDL-raising as they have been for LDL-lowering. Now you’ve got torcetrapib and it’s hard to ignore that finding, but it could be a drug-specific finding that other drugs that raise HDL may actually prove to be beneficial.

Temple: There were reasons to hope. For example, some of the LDL-lowering drugs in relatively normal people only worked in people whose HDL was low. So there were reasons to hope. I think everyone was quite surprised.

Wednesday, August 27, 2008

Miscommunicating Risk (Part 2): The Byetta Disconnect Continues...

Byetta's back in the news, and once again not in a good way. "Amylin Reports Four Additional Deaths With Byetta" is how Reuters has it.

As we wrote last week, the Byetta experience underscores some fundamental challenges facing the industry (and investors) in the new era of drug safety. This is a case where there seems to be a big disconnect between the seriousness of a safety issue from the regulatory perspective (where a safety "update" by FDA treated two deaths from pancreatitis as important information for prescribers, but not a call to action) compared to the reaction of investors ("The sky is falling!").

But, whether or not FDA intended to sound the alarm about Byetta, the stock market reaction made pancreatitis a big story. Or, put another way, the sky may not be falling but Amylin's stock price certainly did.

Now, a week after the news broke, Amylin tried its hand at communicating safety information, hosting a teleconference to offer "context" for the FDA safety update.

That included the news of four additional case reports of Byetta patients who experienced pancreatitis and died. For analysts on the call, though, that "news "sounded like a non-event. Amylin carefully explained that those four deaths, though all associated with pancreatitis, were already reported to FDA, before the agency issued its recent safety "update" on the GLP-1 anti-diabetic. In other words, the agency agreed with the sponsor that they weren't worth talking about publicly. In three of the four cases, Amylin says, it has obtained case reports that support the view that the cause of death was unrelated to pancreatitis or Byetta. In the fourth case, Amylin says it has been unable to obtain any additional information.

Amylin also discussed the deaths in the broader context of outlining the overall risk of pancreatitis seen with Byetta (about 1 in 3,000) and the more severe hemmorhagic/necrotizing pancreatitis that triggered the latest alert (less than 1 in 10,000). And, the company says, there is no indication whatsoever that the rate of pancreatitis associated with Byetta is any higher than the expected rate in the overall patient population.

Well, Amylin shares are down again today (as are marketing partner Lilly's).

This raises two more questions in our minds for others in industry to ponder as the new drug safety era takes shape.

(1) FDA recognizes that it needs to do better when it comes to risk communication. But do sponsors?
(2) In a world where the line between partner and prey (cf. Roche/Genentech, Bristol/ImClone) is always fuzzy at best, how does "Safety First" volatility affect the stability of partnerships?

Amylin's investors haven't been shy about voicing their feelings that FDA is being unduly alarmist about the pancreatitis issue. (And, privately, we've heard the same thing from executives who work for the sponsors.) But this is a case where FDA issued safety information in about the least alarmist way it could have--short of keeping its mouth shut.

And if you think keeping its mouth shut is an option for FDA right now, you haven't been paying attention.

But what about the sponsors? The question that begs to be asked is why Lilly and Amylin waited a week to hold a conference call. Analysts who put that question to Amylin say the answer was that the company didn't want to upset FDA by appearing to challenge or contradict its safety communication. (And in holding the call at last Amylin carefully avoid doing so.)

Our response to that objection is: what would an angry FDA do that is worse than what is already happening to Amylin? The stock was down 20% and investors are starting to write off hopes for Byetta LAR.

Still, if Amylin and Lilly were afraid of annoying FDA, then why hold a call at all? The delay made the issue seem ominous. Just the scheduling of the call caused Amylin shares to fall. Then the company said very little that isn't already in the public domain about the context of pancreatitis--and apparently by failing to offer anything new its reward is to see another stock price decline.

We don't claim to know the right way to manage investor communications about these kind of emerging safety issues, but we're pretty sure this isn't it.

What we do know is that sponsors have to prepare now for how they are going to handle a circumstance like this. Amylin and Lilly may have been caught flat-footed by the reaction to the FDA safety notice, but that is no excuse. In today's world, the news could just as easily have been sparked by an international regulator, or by a prominent academic (say, Steve Nissen has been quiet lately hasn't he?), or in the favorite phrase of former FDA deputy commissioner Scott Gottlieb, by any 18 year old with a computer and access to Wellpoint's database.

Our modest proposal for a better way: why not hold this conference call before FDA issues a safety update? It would take a brave sponsor to do that -- in effect announce to investors that it has submitted six fatality reports to FDA. Still, in hindsight, we bet Lilly and Amylin would be better off right now if that was the approach they took.

Which leads into the second issue, since an effective communication strategy presumes that the two sponsors have the same objectives in mind.

Viewed from the standpoint of the Byetta brand team, there is no doubt that the partners' interests are aligned and this safety scare is a huge problem.

But what about from a strategic perspective? The Roche/Genentech deal has already triggered speculation about other biotech buyouts to come, and Lilly/Amylin is on everyone's list of possibilities. Lilly, remember, already showed its willingness to go down this path when it bought its Cialis partner Icos.

If the market is overreacting to the pancreatitis issue, Lilly can do more than just assert its confidence. It can put its money where its mouth is and buy Amylin out. It wouldn't be cheap: Amylin is valued at just under $3 billion. But that is less than half its value a year ago before the pancreatitis issue first emerged.

Then there is this: a new posting on showing that Lilly is moving its own GLP-1 agent into Phase III. That certainly got investors' attention. Does Lilly think it has a better product than Byetta?

(Lilly may even have an extra incentive to buy Amylin: according to our Strategic Transactions database, the Byetta contract includes "option compounds" in both Lilly's and Amylin's pipelines to which the partners have reciprocal rights. While the names of the compounds and the option periods have been redacted out, our bet is that the "option compounds" represent possible competitors to Byetta. So if Amylin has got any claims to Lilly drugs -- maybe indeed this Lilly-discovered GLP-1 -- then Lilly would have some extra incentive to buy out Amylin now).

We don't pretend to know Lilly's plans for its Amylin partnership, but we do know that the challenges of mastering risk communication aren't any easier when there are two sponsors involved.

Apixaban: Bad News Highlights Good Strategy

The delay announced yesterday to Pfizer and BMS's apixaban blood clot prevention therapy is certainly a setback for the two pharmas, though they presented the news--and the market reacted--relatively smoothly.

Apixaban--pitted here in a head-to-head against current standard Lovenox, from Sanofi-Aventis, for the prevention of venous thromboembolism in knee replacement surgery patients--just barely failed to show non-inferiority, thanks to a much better than expected result for Sanofi's drug (see the companies' release for the statistical details). This was the first of eight Phase III trials planned for the compound, and ongoing studies aren't affected by yesterdays news, BMS apixaban program head Jack Lawrence told Reuters.

But still, the failure will add at least several months or more to the drug's development program and with rivaroxaban from Bayer/J&J already a half-step ahead, every little bit helps. An NDA for the compound, an oral Factor Xa inhibitor, won't be filed in 2009 as planned.

All of which validates Bristol's decision to go halvesies on the apixaban program with Pfizer in the first place, in a deal we've been fans of since it was announced back in April 2007.

To reacquaint you with the terms: in exchange for $250 million upfront cash and up to $750 million in development and regulatory milestones Pfizer gets an equal share of profits and foots an equal share of commercialization expenses, and Pfizer will fund 60% of any development costs from January 1, 2007 onward. (BMS's similarly risk-sharing and lucrative pact with AZ in the diabetes space provoked our admiration only a few months earlier.)

So with each setback, Bristol's strategy--sharing risk on important projects and increasingly biotech-like--seems cannier. That said, it's fair to ask just how many snafus Bristol's reputation can take before those nine-figure upfront payments dry up: after all, its other big risk-hedging adventure was on the now-dead muraglitazar PPAR deal with Merck & Co. back in 2004, which brought in $100 million upfront and at least $55 million in milestones before stumbling at FDA.

And it's not only Bristol among Big Pharma that's spreading the risk--and possibly the massive reward--on late stage development projects. We'll have more to say in the next IN VIVO about Eli Lilly's $300 million financing deal with TPG-Axon and Quintiles' NovaQuest on its two lead (Phase III) Alzheimer's disease treatments.

And who can forget our multiple pleas for your input on Amgen's potential future deal for denosumab? Certainly the project is now less risky/more expensive since Phase III results in its post-menopausal osteoporosis study were positive, but as Amgen's most important pipeline product in years perhaps (some day) the biggest sign that at least a few Big Pharma (and Big Biotech) now think differently about clinical and commercial risk.

Tuesday, August 26, 2008

Proteostasis Proves Platform Companies Still In Vogue

It pays to be fashionable. Anyone doubting that platform-based, big think biotech start-ups have gone by the wayside should think again. On Monday Proteostasis Therapeutics stepped out of stealth mode, announcing it had secured a cool $45 million in financing from a synidcate of backers that includes HealthCare Ventures, Fidelity Biosciences, New Enterprise Associates, Novartis Option Fund, and Genzyme Ventures.

The Cambridge Mass.-based company's Series A was one of the largest to date in 2008, eclipsed only by the $105 million raised earlier this summer by RaQualia Pharma, which spun out of Pfizer’s Nayoga research site with backing from the UK’s Coller Capital and Japan’s NIF SMBC Ventures.

But unlike RaQualia, which comes with three marketed products, six development programs, and a 70-strong team of researchers, Proteostasis is an early-stage platform company that is at least three to five years away from clinical candidates. The recent funding shows that at least some venture firms aren’t shying away from discovery-based companies, as long as there’s a potential platform that can be monetized.

Other companies announcing eyebrow-raising amounts of money this year include Constellation and Agios. In April, Constellation, a company focused on developing drugs based on an emerging field called epigenetics, pulled in $32 million in financing from Third Rock Ventures, The Column Group, and Venrock Associates. Meanwhile, Third Rock joined returning seed investors Flagship Ventures and Arch Venture Partners in July to fund Agios, which is focused on cancer metabolism and therapeutics targeting a poorly understood cellular process called autophagy.

Like Constellation and Agios, Proteostasis Therapeutics is of a type: A-list investors, top management, and hot science. Mention the company's scientific founders by name and VCs interested in staking high science start-ups morph into Pavlov's dogs. The three co-founders are Jeffery Kelly of Scripps Research Institute, Andrew Dillin of the Salk Institute, and Richard Morimoto of Northwestern University. Taking the helm as CEO is David Pendergast, who served as COO and CEO at Transkaryotic Therapies before its 2005 acquisition by Shire for nearly $1.6 billion.

Proteostasis hopes to develop first-in-class therapies for neurodegenerative diseases and certain genetic conditions by targeting the biological pathways that regulate the correct folding or placement of proteins within a cell. “It’s a fundamentally different way of looking at disease,” says investor Christopher Mirabelli, managing director of HealthCare Ventures.

To work correctly, proteins must undergo a poorly understood act of molecular origami that depends both on the primary amino acid sequence and the cellular milieu where the folding occurs. Once folded, the proteins must be sent to the right place in the cell – a process called trafficking – to do their job.

But mistakes happen in this complicated multistep process, and that’s when disease strikes. Misfolded proteins can overload the cell’s quality-control mechanisms, aggregating into toxic intermediates such as the debilitative amyloid beta plaques that are the hallmark of Alzheimer’s disease. When certain proteins – especially enzymes – misfold, they are no longer in the proper conformation to do their jobs. So-called molecular chaperones of the kind Proteostasis is interested in developing would cross the intracellular membrane and coax the misfolded molecules into their correct, biologically active conformations.

The company has spent the past 18 months in stealth mode, validating its hypotheses and generating small molecules that work in animal models and cell lines with a $1 million in seed money from HealthCare Ventures. Folks can get an early look at what might be the scientific rationale for the company. In the September 5 issue of Cell, Kelly's lab will publish a paper that shows that certain well known small molecule drugs can disturb the biological pathways involved in proteostasis.

If the company's business model sounds familiar, that's because it isn't entirely without precedent. VCs have been investing heavily in this space for the past several years in companies such as Amicus Therapeutics, which went public in 2007 and recently signed a licensing deal with Shire worth up to $200 million. Meanwhile, FoldRx, a company using molecular chaperones to treat diseases such as cystic fibrosis, Parkinson's Disease, and the rare neurodegenerative disorder familial TTR amyloidosis, also boasts Jeffery Kelly as a founder, and HealthCare Venures as a backer.

Mirabelli isn't worried, however, that FoldRx and Proteostasis will be competing either for partnerships or with potential therapeutics. "It's such a big space. There's room for a number of investment opportunities," claims Mirabelli.

In an interview, Mirabelli emphasized that the two start-ups are taking complementary approaches to the developing therapeutics based on protein homeostasis. While FoldRx has focused on salvaging individual misfolded proteins that play a role in disease, Proteostasis is taking a more global approach, attempting to use systems biology to track down regulators that involved in various diseases.

Though the company hasn't specifically outlined its therapeutic areas of interest, based on conversations with co-founder Kelly, Pendergast and Mirabelli, it seems that Proteostasis will also initially focus on different diseases than FoldRx, with a special eye on Huntington's Disease and the lysosomal storage diseases.

This focus on lysosomal storage diseases could make Proteostasis a direct competitor of Amicus-- if the technology bears fruit. And it's likely one of the reasons Genzyme Ventures got involved in the deal. Genzyme, after all, pioneered enzyme replacement therapy, developing Cerezyme for Gaucher Disease and Fabryzyme for Fabry disease. In 2007 alone, the two products generated over $1.5 billion in sales. Despite the fantastic success of these large molecule products, they don't work for all patients afflicted with the disease. Moreover, Shire's rich deal with Amicus suggests that Genzyme is attempting to hedge its bets by investing in a potential challenger.

The fact that Novartis Option Fund is also a backer suggests the potential breadth of Proteostasis's technology. As we described last year, Novartis Option Fund was designed to do two things: invest in early stage companies, but at the same time take an option on a promising therapeutic program, creating a cheaper "in" for the parent pharmaceutical company. Any potential licensing deal comes with a pre-negotiated price tag and can only be triggered by discreet events, such as lead optimization, pre-IND, and first-patient dosing. So that it's impossible for Novartis to exercise virtual control of a potention portfolio company, Novartis Option only invests in companies that have at least three programs.

The current market turmoil and difficulty exiting via the public markets mean Proteostasis's backers will likely carry the company for a long time. (It's worth keeping in mind that Amicus's backers poured at least $150 million into that company before it finally went public in 2007 after several attempts.) That's likely one of the reasons for the large Series A.

But Mirabelli insists that big science of this kind deserves big money. It was important he says, to have the company's executives focused on validating the theory and generating ideas. "We didn't want them to spend a lot of time on fund raising," he says.

(Photo courtesy of Flickr user malingerer via a creative commons license.)

The Politics of Merck’s Gardasil

Another tough week for Merck.

First, the Annals of Internal Medicine takes the company to task for running a "seeding" study of Vioxx at the start of the decade, a charge Merck disputes--but of course that only means more negative headlines.

Then, the New York Times upbraids the company for pretty much everything it has ever done with the HPV vaccine Gardasil—up to and including developing a vaccine for cervical cancer prevention in the first place.

The very next day (quite a coincidence, no?) the New England Journal of Medicine publishes an an article affirming the cost effectiveness of the vaccine in its currently indicated population of adolescent girls, but questioning the cost-effectiveness of vaccinating young women (aged 21-26). Not what you want to read when you have a supplement pending for use in the 27-45 population.

And, last but not least, another chapter in the Vytorin saga, with FDA issuing a public declaration that it is looking into the apparent association between the cholesterol drug combo and an increased risk of cancer seen in the SEAS trial. (And, no, as far as we know Merck has no studies suggesting that Gardasil prevents Vytorin-associated cancers.)

In that context, we think Merck may have dodged a bullet on Saturday morning, when Barack Obama issued the text message heard round the world, announcing Delaware Senator Joe Biden as his Vice Presidential running mate.

What does this have to do with Merck? We think the good news for the company is who Obama didn’t select—Virginia Governor Tim Kaine (pictured above). Kaine was an early front-runner for the pick, but was eclipsed in the home stretch when the Obama campaign decided to place a greater emphasis on foreign policy experience.

And Kaine is also featured in the New York Times piece, as a champion of mandatory vaccination as a condition of school entry. And, according to the Times, Merck did all kinds of stuff to make that happen, like (gasp!) investing in Virginia, and also (say it ain't so!) hiring lobbyists who used to work for the governor.

All kidding aside though, we’re guessing that Merck is just as happy not to have Gardasil so directly interjected into the Presidential campaign. At least, not right after the Times piece.

But we're betting that Gardasil will be talked about on the campaign trail this fall--and probably not in a context that Merck (or the rest of the industry) will welcome.

The HPV vaccine is, quite simply, a politically volatile project. Merck knows that better than anyone. During development, the company reached out to right-leaning religious organizations to help head off the perception that Gardasil would be a “sex vaccine.” But the company’s aggressive push for coverage mandates backfired with some negative publicity about the lobbying campaign—and even drew fire from politically liberal organizations that viewed coverage mandates as paternalistic or even patronizing.

And, somewhere along the way, Merck managed to alienate many in the public health community who you would think would welcome the vaccine with open arms. Including, for example, Diane Harper--one of the principal investigators on the Gardasil trials. Here is what the Times reports:

“Merck lobbied every opinion leader, women’s group, medical society, politicians, and went directly to the people — it created a sense of panic that says you have to have this vaccine now,” said Dr. Diane Harper, a professor of medicine at Dartmouth Medical School. Dr. Harper was a principal investigator on the clinical trials of both Gardasil and Cervarix, and she spent 2006-7 on sabbatical at the World Health Organization developing plans for cervical cancer vaccine programs around the world.

“Because Merck was so aggressive, it went too fast,” Dr. Harper said. “I would have liked to see it go much slower.”
(Conflict of interest mavens take note: The Times carefully chronicals some relatively modest payments by Merck to various experts who have spoken up on Gardasil's behalf, but does not offer any estimate of payments from Merck to Harper.)

Harper is not alone in expressing discomfort with Merck's sales approach. Public health advocates are excited to have so much investment in vaccines. But they are terrified that Big Pharma marketing tactics could taint the whole sector, and undermine the notion of vaccination altogether. (We've written extensively about this attitude before. Start here.)

Ironically, Merck's investors are having the exact opposite reaction. They are concerned that Gardasil sales are slowing down--as if the brand should replicate the Januvia-style growth curve, rather than the historic vaccine model. Imagine how disappointed they would be if Merck had taken the go-slow approach some of the public health advocates wanted!

So Merck finds itself in a bind: marketing a well-recognized pharmaceutical brand that raises red flags with some historically conservative groups (who still see a "sex" vaccine) and other traditionally liberal voices (who see in Merck's marketing of Gardasil all the worst of industry practices they want to change). Commercially, it is full steam ahead (because, after all, what choice does Merck really have except to make the most of its brands?)

There is some good news. Obama's health care reform agenda includes initiatives to expand insurance coverage to recent college graduates, an objective one Obama advisor described at a recent health policy forum sponsored by the National Journal as critical "now that we have things that are critical for young people, like HPV vaccines."

The question is: will that talking point be retired now that Gardasil may be just another short-hand for the problems of Big Pharma?

Monday, August 25, 2008

Kennedy's 2009 Mission: Universal Healthcare

If you have any doubts about Massachusetts Sen. Ted Kennedy's mission when he returns to the Senate in January 2009, he put them to rest with his speech at the Democratic National Convention.

In a very brief emotional speech that focused on the theme of hope, dreams and change, Kennedy mentioned only one specific legislative battle: universal healthcare. Here's what he said:

"For me this is a season of hope, new hope for a justice and fair prosperity for the many, and not just for the few--new hope.
And this is the cause of my life: new hope that we will break the old gridlock and guarantee that every American, north, south, east, west, young, old , will have decent, quality health care as a fundamental right and not a privilege."

Kennedy is reportedly working with ranking Senate Health Committee Republican Michael Enzi (Wyo.) on a universal healthcare proposal ready to be introduced early next year, just after the inauguration. If Sen. Barack Obama wins in November, it could be Kennedy, not Hillary Clinton, leading the healthcare reform charge.

While You Were Biden Your Time

For those of you expecting us to pay homage to Usain Bolt, we apologize, but we've moved on. As Beijing passed the torch to London, we bid zai jian to the Bird's Nest, the Cube, and the smog, and say 'ello luv to pub food, double decker buses, and East Enders. And we're pretty sure famed Leona Lewis didn't lip sync her version of 'Whole Lotta Love'.

Meantime Americans were treated to a new phase in a longer and potentially more grueling event than the decathlon--the 2008 election. The Dems finally have a ticket as the party convention gets underway in Denver this week.

But what about the wide world of health care?

  • The auction for Elan's drug delivery technologies business continues apace, with Ireland's Sunday Times reporting that Warburg Pincus has entered the fray, joining other private equity players like TPG and Bain Capital (via Reuters).
  • MGI Eisai and Helsinn Healthcare received approval for their oral formulation of the nausea and vomiting drug Aloxi over the weekend. The drug, used to treat nausea and vomiting associated with chemotherapy or surgery, is already available as an injection.
  • Pfizer has discontinued testing of PF-03187207 for glaucoma in Asia after Phase II results of the NO-donating prostaglandin analog failed to impress. Ex-Asia development was similarly halted earlier this year based on Phase II results in the US. Partner NicOx said this morning that it was in discussions with Pfizer to regain the worldwide rights to the compound, which it felt still had "certain commercial potential which should be realized."

Friday, August 22, 2008

DotW: Dog Days

As the dog days of summer come to an end, it's time for last-minute barbeques and beach trips before the frenetic fall calendar of investor and scientific meetings commences. It's been a week filled with news--though not necessarily of the biobucks variety.

Lilly and partner Daiichi Sankyo published positive Phase III data for their anti-platelet drug prasugrel in the European Heart Journal, while shares of Amylin took a bath thanks to concerns that the drugs may cause pancreatitis. Meantime, a group of Harvard researchers published a study in the New England Journal of Medicine this week questioning the cost-effectiveness of HPV vaccines such as Merck's Gardasil and GSK's Cervarix.

The Food and Drug Administration must have finally used up all its "approvable letter" stationery. Johnson & Johnson's Doribax, an IV-antibiotic already approved for intra-abdominal infections, has the dubious honor of receiving the agency's first "complete response" letter regarding its use to treat hospital-acquired pneumonia. J&J, which declined to make the letter available to journalists at The Pink Sheet Daily, is currently "reviewing the agency's letter and will work to resolve any outstanding questions," the pharma said in a statement.

But dog gonnit. We aren't just waiting with baited breath for J&J to respond to regulators. We continue to watch the Roche/Genentech chess match. Roughly one week after it rejected Roche's initial buy-out offer, Genentech announced a $371 million retention plan that covers "substantially all employees," including executive officers in lieu of the biotech's planned 2008 stock option grants. Whether the proposed payola is enough to convince senior execs to remain at the company is a subject of heated debate, as regular readers of both CafePharma and Derek Lowe's In the Pipeline already know.

As we enjoy the last hazy days of summer, here's a look at the week's deals....

BMS/PDL: PDL BioPharma is a biotech that has been dogged by troubles, but the company announced a bit of good news this week: the company partnered its Phase I antibody for multiple myeloma, elotuzumab (formerly known by the tongue-tripping moniker HuLuc63), to BMS in a deal worth a modest $30 million up-front and up to $480 million in additional development and regulatory milestones. The deal also gives BMS an option to expand the collaboration to include PDL241, another antibody still in preclinical trials. The deal is back-end loaded, requiring PDL to complete on-going Phase I studies and provide support for Phase II trials, but does allow for profit-sharing on elotuzumab sales in the US. (Outside the US, PDL will receive undisclosed sales royalties.) Still investors are likely to view the news as positive given the risky nature of elotuzumab, a first-in-class therapeutic that binds to a cell-surface protein called CS-1 that's found selectively on myeloma cells. And the announcement deflects concerns about recent or impending staff departures: Pat Gage, PDL's CEO left in late May and the company's CSO, Donald Richard Murray, will resign at the end of this month. For BMS, the deal shows the New York-based pharma is conducting business as usual despite the drama associated with its proposed takeover of ImClone. Moreover, it deepens the company's footprint in oncology, especially the multiple myeloma space, building on the pharma's May acquisition of Kosan, which has the Hsp90 inhibitor tanespimycin in Phase III trials.

TEVA/Cel-Sci: Cel-Sci announced Tuesday that it gave Teva the OK to market and distribute it's head and neck cancer drug Multikine in Israel and Turkey. Precise financial details weren't disclosed but once the drug has been approved, Cel-Sci will make the product, while the Israel giant will be responsible for sales. Teva will also participate in the global Phase III clinical trial and fund a portion of the studies. The stock bounced on the news but sharply retreated on a day generally associated with market turmoil. The steep drop prompted Geert Kersten, Cel-Sci's CEO to issue a letter to shareholders, saying:

You asked, "How is it possible that the stock can be down after such a good announcement?" As the company's largest shareholder...I am as puzzled andas disappointed as you.

We've noted before that licensing deals don't always give company stock prices a much needed bump. But in this case, Kersten and others believe something nefarious may be afoot as short sellers "painted the tape," illegally dumping large volumes of the stock just before the close of business August 19 in order to make the stock look weak and unattractive. Kersten implores his shareholders to contact their congressional representatives to convince regulators to delve into the trading records of the last several weeks to resolve the issue. Meantime The IN VIVO Blog will continue to follow the situation and update you with any further news.

Lilly/Monsanto: Lilly continues to pursue a diversified business strategy, announcing late Wednesday that it would pay $300 million for rights to Monsanto's synthetic milk-producing hormone, Posilac, which is better known as recombinant bovine somatotropin (rBST). In addition to global sales rights, Lilly also obtains the Georgia-based manufacturing plant as part of the deal. The announcement comes at at time of growing consumer opposition to the use of hormones, particularly in dairy and meat products. Still, for many pharmaceutical companies, the looming threats of patent expiries and increased regulatory scrutiny make diversified business models built on generics or consumer products-a la Novartis's stake in Alcon and Daiichi's purchase of a controlling interest in Ranbaxy--more attractive. And Lilly has showed in other ways its interest in mitigating risk. Earlier this summer, it partnered its Phase III Alzheimer's drug with private-equity play TPG-Axon and Quintile's NovaQuest unit and off-loaded its R&D risk by teaming up with Covance. For its own part, Monsanto's decision to sell-off Posilac is in keeping with a stated mission to divest of smaller animal units in order to concentrate efforts on popular crop-agriculture product lines, including the herbicide Roundup.

King/Alpharma: Latebreaker! King Pharmaceuticals takes top dog in biobucks this week with its $1.4 billion unsolicited bid to acquire Alpharma. The Tennessee-based specialty pharma is behaving more like a dog with a bone, threatening to turn hostile if Alpharma's board refuses to accept the bid, which it apparently presented to the company in early August. Alpharma execs weren't available for comment--of course--but Reuters reports that the company appears to have rejected the bid. King's offer of $33 a share represents a 37% premium over the $24.04 closing price of Alpharma's stock on August 21. Not too surprisingly, Alpharma shares surged 41% premarket to $34, while King fell 1% to $11.12. By disclosing the rejected bid, King appears to be putting pressure on Alpharma in hopes of completing a friendly deal. That King is willing to go to extreme measures shows its desperation. Earlier this month, King reported that its second-quarter net income tumbled 34% as sales of its blood-pressure drug Altace stalled thanks to competition from generics. After losing a patent case last year, King has sought to refocus its portfolio with an emphasis on pain therapeutics. With its extended release morphine product Kadian and the NSAID containing Flector patch, Alpharma would give King several branded products in this arena.

(Photo courtesy of Flickr user NinJA999 courtesy of a creative commons license.)

A Better Way to do Risk/Benefit? (Part 2)

As we discussed yesterday, FDA is taking a small step towards a potentially revolutionary goal: developing a more formal, systematic approach to making judgments about the risk/benefit ratio of prescription drugs (and other regulated products). And we highlighted all the reasons why many in industry and FDA think this is a terrific idea.

Be careful what you wish for.

We don’t think it is very likely that any quantitative model can succeed in drawing a bright line between drugs that are “unsafe” and drugs that are “safe enough." But if it does, such a tool would almost certainly be applied just as readily to determining whether a drug is or is not “worth it.”

Why? Because any conceivable approach is almost certain to rely on economic analyses, using concepts like quality-adjusted life-years or other metrics that attempt to assign common values to different types of health effects.

That at least was FDA’s conclusion from its initial work on modeling earlier this decade. And it is hard to imagine any other way to compare benefits like allergy relief against risks like heart attacks.

Neither FDA nor industry is eager to see economic analysis embedded too deeply in the regulatory process. We, at least, haven’t heard anyone in industry ready to argue that FDA should approve drugs based on a cost-effectiveness standard—because that is in effect what we are talking about here.

Of course, the US may be moving in that direction anyway. Certainly both Presidential candidates want to see more emphasis on the value of medical interventions—and both share the traditional emphasis on pharmaceuticals as key focal point.

So in fact there may be a case to make that industry would be better served by having this discussion in the context of the regulatory process it already relies on. It would certainly be preferable to having it in the context of a Breakthrough Drug Pricing Board of the type proposed during the Clinton health care reform era.

But there is a bigger issue: we just don’t think even the most robust, scientific risk/benefit analysis model will make regulatory decisions fundamentally easier or more predictable. When it comes to issues involving health, and especially the risk of death, the public consistently refuses to set aside emotion in favor of arguments based on even the soundest economic principles.

Consider the response to a proposal by the National Cancer Institute more than a decade ago to stop recommending routine mammograms for women aged 40-49.

NCI’s position at the time reflected a simple statement of the evidence – there was no demonstration that mammography led to any improved outcomes in women that young. But the agency came under intense pressure to reverse its position and thus restore the presumption that routine mammography would be covered in that age group.

Similar reactions have greeted analyses questioning the cost-effectiveness of interventions to protect the blood supply from HIV or other unknown pathogens, efforts to address the risk of “mad cow” disease in livestock, or even the assignment of benefits to victims of the World Trade Center attack in 2001 based on projected lifetime earnings.

In other words, we are a long way away from a world in which the public will accept regulatory decisions based on purely “scientific” measurements of risk and benefit.

On the other hand, as industry is all too well aware, there is no shortage of public support for arguments that drugs are overused or overpriced.

So, while a quantitative methodology to balance risks and benefits certainly has great promise for industry, it also has its perils. And it may be that both FDA and industry have to think carefully about the risks and benefits of going too far down the path of developing the perfect risk/benefit tool.

Thursday, August 21, 2008

A Better Way to do Risk/Benefit? (Part 1)

Our sharp-eyed colleagues at “The Pink Sheet” spotted an interesting document last week: a request for proposals issued by the Food & Drug Administration seeking a contractor to explore development of “a more formalized and comprehensive approach to the benefit/risk assessment” for new drugs.

In other words, the agency wants someone to help it create a quantitative tool to use in making the toughest of regulatory judgments: when, exactly, do the risks of a product outweigh its benefits?

It is easy to see the appeal of having such a tool. Among sponsors, there is a desire for a more predictable, rational climate for discussing post-marketing safety surveillance signals and pre-market risk versus benefit decisions. Put another way, many in industry believe a risk/benefit model will do more to capture the benefit side, which sponsors never believe gets enough weight—especially in a “Safety First” regulatory climate.

FDA likes the idea too. The agency wants to respond to concerns about the quality of drug safety oversight and to develop a common framework for weighing risks versus benefits in regulatory decisions.

On both sides, there is the hope that by developing better tools to analyze the risk-benefit ratio, it will be easier to explain to the public why, for example, a small risk of potentially fatal pancreatitis is offset by the broader benefits of blood glucose control in type 2 diabetics. (If you don’t think this matters much, look at what happened to Amylin and Byetta.)

And there is the unspoken desire to take some of the guesswork out of one of the toughest decisions an executive or a regulator in the drug industry will ever face: when is a drug too dangerous to stay on the market?

This is not a new idea. When the number of safety-related drug withdrawals began to creep up in the late 1990s—climaxing with the Vioxx removal in 2004—industry CEOs began to talk about the need for a more quantitative approach to judging risks versus benefits.

FDA also embraced the idea, and it was formally endorsed by the Institute of Medicine in its 2006 report on the drug safety system. FDA and industry even agreed as part of the latest Prescription Drug User Fee program to allow FDA to devote some of the fees to developing a model.

Hence the RFP. The agency is asking a contractor to study how a "more formalized risk/benefit analysis might compare to the human judgments, using less formal analyses, that were made in the FDA review." The contractor will test the model in four different cases--two drugs approved by the agency, and two that were not. If all goes well, FDA will have a report on the results six months after the contract is awarded. And, of course, that is still a long way away from having a useable tool to support regulatory decisions.

But let’s dare to dream. Imagine a world in which everyone—regulators, industry, and society at large—agrees on how to judge whether a relatively rare but serious risk does or does not outweigh a broad but milder benefit. In other words, a world in which there are reports of severe, potentially fatal pancreatitis with a new type 2 diabetes agent like Byetta, and everyone can immediately see whether that information fundamentally changes the rationale for using the drug (or even allowing it to remain on the market.)

Such a tool could revolutionize everything. Post-marketing surveillance would be less chaotic. The drug approval process would be much more predictable. Drug development would be more efficient, as sponsors apply the same methodology as regulators in making go/no go decisions on experimental compounds.

Here’s the thing: we don't think its going to work out that way. Tomorrow, we'll tell you why...

Venture Round: Covidien Ventures Out

The announcement that Covidien Ltd. launched a venture fund should come as no surprise to faithful IN VIVO readers. We reported on the groups's creation back in our May issue in a cover story on the company. Despite our prodding, the company opted not to provide details on the group until this week.

But the news still warrants review as this is a significant departure for Covidien, the former Tyco Healthcare. In its previous life, the group now known as Covidien had a dismal record when it came to investing in R&D and new technologies. (See chart, right.) In the late 1990s, Tyco grew its health care business through significant acquisitions of low margin hospital supplies and other mostly low-tech endeavors.

Trouble hit in 2002 when Tyco fell under the weight of its storied investigations. At the time, the company didn’t have the resources to commit to R&D even if it wanted to.

But all that is in the past. Covidien is a full year removed from its Tyco ties, and it’s working to restore its research and development capabilities.

The press release doesn’t give much information, but VentureWire Lifescience offers a bit more. Most interesting is the team Covidien assembled to make the investments (which will be $5 million on average in early stage companies.)

Covidien has built a team of three to manage its new venture wing. Daniel T. Sheehan, a former general partner at Affinity Capital Management, is heading the new operation as vice president of corporate venture capital. He is joined by Dave Neustaedter, former director of commercial strategy and advanced technologies at Stryker Development LLC, and Joseph Graham, who worked in strategic marketing for Covidien's patient care and safety business.

Covidien deserves credit for dipping into the venture business to find its new leader. Too often, corporations try to staff their venture groups from people within the organization. (Of course, it’s usually difficult to lure folks from the venture side back to the corporate venture side.) An experienced venture capitalist should come with the contacts to find deals that might not typically be shopped to corporate investors (i.e. VCs looking for some dumb corporate money.)

The additions of Neustaedter and Graham give the new group expertise both in corporate innovation as well as the ins and outs of Covidien itself, which is a far flung organization with businesses and divisions across the globe.

Covidien's move might be deemed a bit counter-culture as the number of corporate devices investors and acquirers is dwindling. But the company has been on a frenetic shopping spree over the past two years, buying eight companies over the past two years including some big-ticket buys like Vivant Medical and Confluent Surgical.

Still the company isn't taking big chances with its purchases. Instead, it's moving into opportunities that lie within or generously abut its current borders. "When you look at the acquisitions that we've done, they are focused and purpose-driven," Jose Almeida, head of Covidien's medical device segment, told us back in the spring. "They have niche specialties and market advantages, and they are synergized to our sales channels. They augment our technology base. They bring potential double-digit growth for the 10-year period that we analyze the sale."

We expect the venture group will take the same measured approach, but perhaps Covidien will let its hair fall down just a bit further.

Tuesday, August 19, 2008

Miscommunicating Risk: The Byetta Disconnect

First things first: we have no idea how serious the risk of pancreatitis with Amylin’s type 2 diabetes agent exenatide (Byetta) really is. Nor do we pretend to be able to guess how the brand will be affected commercially in the hypercompetitive diabetes market by the report of two deaths associated with the drug.

But this we do know: there seems to be a disconnect between the level of warning that FDA chose to issue for Byetta and the size of the financial market’s reaction. And that disconnect underscores an ongoing, critical issue facing the entire pharmaceutical industry in the world of “Safety First” regulation: how to communicate a risk associated with a product without scaring patients that could benefit.

You have to give the Food & Drug Administration credit for diagnosing the problem. The agency is the first to admit that it simply doesn’t know the best way to meet the public demand for transparency in regulatory actions—especially anything involving safety—without needlessly scaring patients, confusing providers, and sacrificing its ability to speak authoritatively on behalf of the public.

That, in a nutshell, is why the agency formed a new advisory committee on Risk Communication in the hopes of bringing a little science to the question of how best to warn consumers about emerging and inherently uncertain safety issues.

Based on what happened to Amylin yesterday, it’s safe to say there is still a lot of work to do.

In case you missed it, FDA issued an update for health care professionals on August 18 about the risk of pancreatitis associated with Byetta. FDA and the sponsors (Amylin and its partner Lilly) first alerted prescribers to the risk back in October, citing 30 reports of acute pancreatitis associated with the brand.

The update cites six new, more serious cases reported since then, involving what the agency describes as “hemorrhagic or necrotizing pancreatitis.” All six cases led to hospitalization, and two patients died. In light of the apparently more serious reports, FDA says it is working with Amylin and Lilly on stronger warnings and advises discontinuation of Byetta when there are any signs of pancreatitis in the meantime.

Amylin’s investors certainly think that’s a big deal: the company’s shares dropped 15% almost instantly on the news, stayed down to the close, and opened even lower today. You can't blame investors for being skittish. Byetta is a huge product for the biotech and has already been struggling a bit commercially. In this climate, the impact of even uncertain safety risks can be dramatic. (Remember Vytorin?)

Last but not least, the issue certainly raises more questions about the regulatory prospects for Amylin's long-acting version of Byetta. (We have written previously about why we think Byetta LAR could benefit from the focus on cardiovascular outcomes for type 2 diabetes products--but if there is some reason to suspect the long-acting version is worse for the pancreas, all bets are off.)

But here’s the thing: FDA chose to disclose the new information about Byetta without much fanfare, simply posting the update on its “MedWatch” drug safety page, with a prominent link on the “What’s New” column of the Center for Drug Evaluation & Research’s home page. The agency did not issue a press release, a formal public health advisory, or host a media conference call, the way it does in other cases where it wants to amplify its warning.

In fact, we first heard about it from the ever vigilant David Kliff, whose Diabetic Investor issued a note at 1:45 pm—by which time the sell off was well underway. (For the record, our copy of the alert via FDA's email list serve arrived at 2:52 pm.)

In other words, Wall Street’s reaction is driving coverage of this particular drug safety issue—not the public health judgment of the regulatory agency. Think about it: if Byetta happened to be sold by a privately held company, or exclusively by a global Big Pharma where it was not the exclusive focus of investor attention, the media coverage would certainly be much reduced.

Again, we don’t claim to know the right outcome here. Maybe it’s best if everyone stops using Byetta altogether. Maybe it’s best that no one stop. But it seems safe to bet that more people will be aware of this risk than would have been without the Wall Street reaction—and that means the impact of the FDA warning will be larger than the agency might otherwise have anticipated.

You don’t have to be an Amylin investor to think that may not be the best way for risk communication to work.

Monday, August 18, 2008

Obama's VP: Will It Be HRC?

Did we get your attention? Good. As the VP Derby enters the final turn this week, we figured we'd throw our hat in the ring because if Obama chooses one person in particular, it could have a tremendous impact on healthcare in general on the overall agenda if the Illinois Senator wins the election.
Quite simply, we don't think former First Lady and New York Senatory Hillary Rodham Clinton is completely out of the running for VP consideration, even if she is slated to have a roll-call vote at the Democratic Convention. If HRC somehow defies the conventional wisdom and is Obama's choice, that would put serious healthcare reform at the top of the first 100-days domestic agenda after Obama is inaugurated. You can read our previous posts about healthcare and the election by clicking here and here.

We recall a very smart comment from Families USA founding executive director Ron Pollack at a National Journal policy breakfast June 25. He noted that President Bill Clinton had used a lot of political capital on issues other than healthcare reform at the beginning of his administration. By the time universal coverage rolled around on the agenda in November 1993 in the form of real legislation, a lot of that "capital" had been spent. In other words, in order for broad healthcare reform to happen in 2009, it will have to begin right out of the gate.

[A very important note: We're not saying we think Hillary Clinton is Obama's choice, but we don't think it's out of the question, and if she is VP, healthcare becomes the top domestic focus immediately in our opinion.]

Remember this from Obama's victory speech in St. Paul, Minnesota on the last primary night?

"We've certainly had our differences over the last sixteen months. But as someone who's shared a stage with her many times, I can tell you that what gets Hillary Clinton up in the morning – even in the face of tough odds – is exactly what sent her and Bill Clinton to sign up for their first campaign in Texas all those years ago; what sent her to work at the Children's Defense Fund and made her fight for health care as First Lady; what led her to the United States Senate and fueled her barrier-breaking campaign for the presidency – an unyielding desire to improve the lives of ordinary Americans, no matter how difficult the fight may be. And you can rest assured that when we finally win the battle for universal health care in this country, she will be central to that victory. When we transform our energy policy and lift our children out of poverty, it will be because she worked to help make it happen. Our party and our country are better off because of her, and I am a better candidate for having had the honor to compete with Hillary Rodham Clinton."

We're just saying.

In addition to HRC, we thought we'd provide our dark horse list of VP candidates for our faithful readers to chew on. For a conventional list of Democratic VP candidates, click here.

1) Missouri Senator Claire McCaskill: She is a two-year Senator just like Obama, a single-mother of seven years who recently got married with a blended family of nine children, and most importantly, is from the critical state of Missouri. She serves on the Senate Armed Services and Homeland Security committees. To read her full bio, click here. Remember, as Missouri goes, so goes the election. The state has voted for the eventual winner in every election since 1904 with the exception of 1956 (Eisenhower). According to the most recent Rasmussen poll, Obama is trailing Republican John McCain by 7%. But Missouri was a must-have state for Obama, stemming the tide of big states Clinton won on Super Tuesday during the primary. McCaskill, one of the earliest Obama supporters, helped deliver the state to Obama with the thinnest of margins. We know, we know, she's a woman and it would be a slap in the face to Hillary Clinton supporters. We think they would find McCaskill palpable. After all, McCaskill made history herself as the first woman ever elected to the Senate from Missouri.

2) Former Missouri Congressman Richard Gephardt: See above. Obama needs Missouri. Gephardt has been the face of Missouri politics for years, is well known nationally, ran for President before and represents the exact, union-friendly demographics Clinton so effectively won over. Obviously, he's been out of the political picture for some time consulting to DLA Piper and Goldman Sachs but we think he would be a smart choice, even if he's not on the short list.

3) New York City Mayor Michael Bloomberg: It's a fight to the death for independents people! Who better to win them over than the man who was talking about starting an Independent Party to send the two-party system packing. Is there any better managerial experience than running New York? Rudy Giuliani would argue, "no." The former Republican has money, a name, and a lot of polling to back up his case as someone to be considered when he was pondering his own run for the White House.

4) Virginia Governor Tim Kaine: It's hard to call Kaine a dark horse because he has been on the short list for weeks, according to widespread reporting. But the Russia-Georgia situation and the resignation of Pakistan President Pervez Musharraf left many observers thinking Kaine was dead in the water because of his inexperience in foreign policy (he's a governor, duh) and entering his third year as a one-term governor (you only get one term in Virginia). But he was very, very good on Sunday's "Meet the Press", considered to be an audition for VP hopefuls. His attacks on McCain and counters to Karl Rove were effective. We think that performance may have revived his chances. He speaks fluent spanish and is significantly more conservative than Obama on the issue of abortion, which could help win over some conservative undecideds. Oh yeah, and Virginia is up for grabs (Rasmussen has it as a dead heat).

So who is it going to be? We'd love to hear your thoughts.

Who's Waving Red Flags at FDA?

FDA’s top drug reviewer John Jenkins wants to put to rest what he says is a commonly held misperception among sponsors: You can’t always blame the Office of Surveillance & Epidemiology for putting the brakes on an application due to safety concerns.

Sometimes, Jenkins says, it’s drug reviewers in his Office of New Drugs that flag a risky product that was otherwise cleared by OSE.

Given that OSE’s primary focus in reviewing a new drug application is the product’s safety profile, it’s understandable that the office would get most of the blame for holding up a product over concerns about risk. But Jenkins says that’s too simplistic a view of the review process.

“There’s the perception in the outside world that OND is always overruling OSE in a way that may be viewed as less focused on safety,” Jenkins says. “But there are cases where the OND perspective is more conservative on the safety issue than the feedback we’re getting from our OSE colleagues.”

“I hear occasionally of situations where my staff tell me that they’re taking a more safety-focused or conservative” course “than what they think they’re getting back in the recommendation from their OSE colleagues,” Jenkins says. “It’s not...unilateral in its direction of differences of opinion….It goes both ways.”

Jenkins talked about drug safety during a wide-ranging roundtable discussion with The RPM Report. For a complete transcript of the interview—which also included OSE director Gerald Dal Pan and Office of Medical Policy director Bob Temple—click here. (If you are not already a subscriber, you can sign up for a free trial to read the story.)

Jenkins’ comments were made in the context of a new memorandum of agreement that gives FDA’s drug safety office an “equal voice” in making decisions about significant safety issues. We blogged about that here, and we’ve put together a more extensive analysis of what it all means for drug sponsors in the latest issue of The RPM Report.

FDA officials think all the attention on the perceived differences on drug safety between OND and OSE is largely overblown. Still the very public disagreements on how to handle the cardiovascular signal seen with GlaxoSmithKline’s Avandia certainly haven't dispelled the notion. “The highly publicized differences of opinion are the exception, they’re not the rule,” Jenkins says.

Perhaps not. But one thing is clear: Based on Jenkins' assessment of the drug review process, if you think that convincing drug safety officials that your products is safe is enough, you probably need to think again.

While You Were...Making History

Kudos to Michael Phelps for making it eight straight gold medals and setting a new record for olympic bling in a single games. And don't forget Dara Torres, darling of middle-aged weekend warriors everywhere, proving she's still got the goods to medal against women--I use that term loosely--young enough to be her daughters. Outside of Beijing and South Ossetia, it was a slooow weekend for news. Here's a look at some of the stories you may have missed while you were plugged into your neglectomat.

  • The Pink Sheet Daily reports today that the Center for Drug Evaluation and Research's ability to review applications for new drugs and biologics within the timelines specified by the Prescription Drug User Fee Act has slipped a bit, dropping from 90% to 80%. But the drop has nothing to do with summer and those slackers at the FDA. Pink Sheet Daily notes that CDER's performance is better than might have been expected given the center's chronic staffing problems and increased workload.

  • Addicted to Roche/Genentech news? The East Bay Business Times reports that a Reuters survey of industry analysts predicts Roche will boost its offer for Genentech to $53 billion, or $107.50-a-share. As colleague Jessica Merrill at Pink Sheet Daily noted in a piece last week, that kind of price tag could prove troublesome for Roche, which might have to cut research budgets or worse in order to wring necessary financial efficiencies out of the deal. Want the inside scoop on the deal? Check out our FREE coverage here.

  • Investor's Business Daily has a review of the business strategy of The Medicines Co., which has eschewed blockbusters for more modest selling $200- to $300-million-a-year sellers instead, including the anticoagulant Angiomax and the high blood pressure drug Cleviprex. If the approach sounds familiar, that's because it's taken straight out of the little league manual. Get enough little hits--aka singles--and you score more runs than your opponent and win the game.

  • The WSJ reports that Phelps isn't the only one commanding attention in Beijing. J&J, the maker of athlete's foot cream for half a century, has helped rescue one of China's most precious archeological treasures--its terracotta warriors--from a damaging athlete's-foot-like fungus. By nursing one of China's national symbols back to health, J&J hopes to get "a lot of lverage" in China, Alex Valcke, a European J&J exec told the WSJ.

  • Finally, the NYT reports on the potential deadly side-effects associated with methadone. Once used mainly in addiction treatment centers to replace heroin, methadone is a synthetic form of opium being given out by family doctors, osteopaths and nurse practitioners for throbbing backs, joint injuries and a host of other severe pains. The drug, which is cheap, long-lasting, and powerful, has helped millions. But because it is also abused by thrill seekers and badly prescribed by doctors unfamiliar with its risks, methadone is now the fastest growing cause of narcotic deaths.

(Photo courtesy of Flickr user guano through a creative commons license.)

Friday, August 15, 2008

DotW: Going For Gold

Congratulations, Michael Phelps, on your sixth gold medal. We can only imagine the adrenaline rush as we tune in periodically from our own cube. (Kind of like the high we get writing these posts. NOT.)

But Phelps wasn't the only one turning in medal-worthy performances this week. Genentech certainly deserves at least a bronze for its neatly worded--some might even say restrained--reply to Roche's nearly $44 billion July 21 offer, which noted that the Swiss pharma "substantially undervalues the company." Go figure.

But lest you think there are hard feelings between the two companies, fear not. Charles Sanders, chair of the independent committee evaluating the offer, extended this olive branch to Severin Schwan and company: "In addition, we look forward to the company maintaining its successful relationship with Roche, regardless of ownership structure." (Certain politicos in Russia and Georgia might want to take note.)

As our sister publication The Pink Sheet Daily reports (subscription required), Genentech's response means Roche can now begin bargaining in earnest. Most analysts and industy experts expect Genentech will ultimately score gold (as in a lot more coinage). To seal the deal, Roche may have to offer upwards of $100-a-share to gain its biotech goose. The question is: can the Swiss giant still afford to feed the animal given the high cost? Or will the high price tag necessitate cost-cutting efforts that damage the high-flying culture Roche claims it's intent on preserving?

Speaking of getting air, in the high jump competition, keep your eyes on Oxford Biomedica, up more than 20% today after the beleaguered gene therapy company rejected a second takeover offer from GeneThera, and German generics play Stada, which rose 12% today on rumors of a buyout by always-acquisitive Teva Pharmaceuticals. Protherics could be the favorite to medal here, as the UK biotech was up a whopping 44% earlier in the week after it announced it was in talks with unidentified potential acquirers.

Olympic athletes know that speed isn't everything. Stamina is important too. (Imagine having the staying power to eat Michael Phelp's 12,000-calorie-a-day diet.) In our industry, the medal for stamina has to go to our favorite activist shareholder, Carl "oh yes, I can" Icahn, who bought up more shares of Biogen Idec after that biotech's stock price slipped on negative news associated with its MS drug Tysabri. Icahn's move suggests he may not be finished with the Massachusetts biotech, despite not being able to force a sale of the company roughly one year ago. (Meantime another Icahn holding, ImClone, also looks to be going for (more) gold. The company hasn't officially rejected BMS's $4.5 billion bid, but a NY Times story published August 5 suggests execs at the biotech are likely to oppose the sale at the current price.)

Your IN VIVO Blog team has stamina too. And someday we might even get a medal for the analysis we bring you week in and week out. (It won't be for the humor.) Until then, it's time for another edition of ...

AstraZeneca/Abbott: Carpe diem, says AstraZeneca’s Crestor group. It’s got a great opportunity to step-up its commercial attack on Lipitor (down about 10% in new prescription growth from a year ago) and, perhaps more importantly, Vytorin – down about 40% from a year ago, thanks to negative-sounding, albeit equivocal, data out of the ENHANCE trial and, more recently, similarly disturbing results from SEAS. Problem: AZ’s US business is sputtering, so now is not the time to add infrastructure. Meanwhile, Abbott’s big new launch, Simcor (Niaspan plus simvastatin), hasn’t tracked with expectations. So it's a perfect time for the partners who, since 2006, have been developing combinations of Crestor with Abbott’s new-generation fenofibrate (called TriLipix), to use a Crestor co-promotion to iron out, before the big test, some of the likely kinks in the joint commercialization of TriLipix/Crestor.

CSL/Talecris: Private equity took gold in this week's top bio-bucks deal. Cerberus Partners and Ampersand Ventures announced Tuesday that they were selling Talecris Biotherapeutics to the world's top maker of blood plasma products, Australia's CSL Ltd., for a hefty $3.1 billion. In addition, CSL will assume over $1 billion in debt amassed by the North Carolina player, which was started in 2005 when Ampersand and Cerberus snapped up Bayer AG's plasma products from Bayer's Biologics Products Division for $590 million. Talecris, which currently operates 56 plasma collection centres and two manufacturing facilities in the US, posted $1.2 billion in sales last year. The move by Talecris's backers has apparently been in the offing for months. Indeed Talecris may have been sniffing out M&A exits as early as last July, when it filed to go public. We've noted previously that many companies are now adopting a twin-tracking approach, entering preliminary talks with potential buyers while simultaneously filing for an IPO. Certainly given the stock-market turmoil and the lack of investors' appetite for risky IPOs, M&A was the quicker and more lucrative exit for Ampersand and Cerberus. By buying Talecris, CSL is betting the combined company will be able to capture a bigger share of the expanding market for plasma-based medicines, now a $7 billion-a-year market.

Schering-Plough/Shanghai Schering-Plough Pharmaceutical Co.: Schering-Plough caught Olympic fever, announcing this week that it has expanded its presence in China by acquiring shares of its former joint venture partners and folding them into a wholly-owned operation based in Shanghai. (Beijing is definitely too smoggy.) Financial details were not disclosed. (Clearly the Chinese already get S-P's corporate mantra: "earn trust, every day.) China has long been a focus of major pharmaceutical companies, of course. As drug pricing comes under tighter control in western countries and looming patent expiries will lower sales, the companies are looking for ways to expand into valuable developing markets such as China where an economic boom has created a thriving middle class eager to access Western medicines. AstraZeneca is among the leaders, with its Innovation Centre China, an R&D center based in Shanghai, and its strategic partnership with Peking University 3rd Hospital to open establish a Clinical Pharmacology Unit (CPU). In 2007, it took top selling honors from Pfizer in the country, increasing sales of its drugs from $85 million in 2001 to $423 million last year according to the WSJ.

Barr/BI: Barr Labs is busy showing us why Teva decided to plunk down nearly $9 billion (in cash, stock and assumed debt) to buy out its generics rival back in July. On Tuesday Barr announced agreements to settle its Mirapex (for Parkinson’s) and Aggrenox (an anticoagulant) patent challenges with Boehringer Ingelheim. Those drugs pulled in more than $700 million combined in the twelve months through May 2008, according to Barr. Not only has Barr nailed down early dates on which it can start to market its first-to-file generic versions of BI’s two drugs (2010 and 2015—10 months and 18 months earlier than the drugs’ challenged patents officially expire, respectively), it also inked a co-promotion deal with BI on Aggrenox. Barr’s Duramed division will co-promote the anticoagulant with its specialist women’s health sales force starting in March 2009 (BI will train them up in the interim), in exchange for undisclosed royalties. The two deals come not too long after Barr’s June victory in US District Court in the Mirapex litigation. That ruling found that BI had double-patented the Parkinson’s therapy, and likely forced the German company to enter into serious negotiations with Barr while it considered its appeal. Of course authorized generics deals have always seemed a bit sketchy in the eyes of Congress and the FTC, among others, so expect a thorough review.

Pfizer/Cytos: Swiss vaccines (jab-elin?) play Cytos Biotechnology this morning said it added Pfizer to its list of R&D partners. The Big Pharma is paying CHF10 million upfront and up to CHF140 million in milestones to access Cytos’ Immunodrug technology to develop vaccines against a set of predefined disease targets. Cytos will also receive research funding and potential royalties; Pfizer takes over development of any products at the preclinical stage. For Pfizer the move is the latest in a string of vaccines deals stretching back to the acquisition of PowderMed in late 2006; more recently the Big Pharma has bought Coley and inked a licensing deal with Avant for a brain cancer program in its efforts to beef up its vaccines efforts.

Thanks to Chris Morrison and Roger Longman, who pitched in with some additional reporting.