Thursday, April 30, 2009

The IN VIVO Blog Podcast: PSO Panel on Health Care Reform, Part 1

As promised we've got more podcast love for you this week, and you're in for a special treat. A delicious morsel of health care reform chatter served up courtesy of Ramsey Baghdadi's panel at our recent Pharmaceutical Strategic Outlook conference in New York.

Joining Ramsey for the April 14 discussion were Arthur D Little managing director John Brennan, Rock Creek Policy Group principal Ian Spatz, and Foley Hoag partner Paul Kim. Today you're getting Part 1 of the discussion, Part 2 is queued up for next week, swine flu permitting.

Just click the button below to get started. And don't forget, you can access the podcast via iTunes also.

Wednesday, April 29, 2009

Roche Rocks? With Impedance!

There are times when a picture--or a video--is worth a thousand words and simultaneously leaves you speechless. This is one of those times. (email/RSS subscribers if you can't see the video, click here to view it.)

Call Roche's XCelligence rock video a piece of intelligent (marketing) design--we aren't completely sure what the rock band is trying to sell. Hair products? Leather? Tattoos? An '80s rock compilation? How about a pioneering "microelectronic biosensor system for cell-based assays providing dynamic, real-time, label-free cellular analysis for a variety of research applications in drug development, toxicology, cancer, medical microbiology, and virology"? Seriously, WTF?

Take a moment and savor the Def Leppard/Poison/Guns N Roses/Van Halen mash-up that harkens back to a different time, when real men wore headbands and codpieces.

It's tempting to speculate that this video and a companion ballad piece (because all great Heavy Metal bands have a sensitive side too--see the ballad below) are the true reason behind Art Levinson's departure from Genentech. He doesn't have the locks--or the ink or the tongue (?)--to be the David Lee Roth/Gene Simmons wannabee.

Or maybe it just proves what Genentech lovers have said all along: Roche clearly could afford to spend more than $95-a-share on the iconic biotech. At the very least we hope the videos make you smile.

Bio-rad? Your move.

Tuesday, April 28, 2009

IN VIVO Blog Enters the Terrible Twos

awww, you didn't have to bake us a steak

That's right gang, The IN VIVO Blog's birthday is upon us. Yes we've been posting since 2006 (see here for some no-frills IVB nostalgia) but it has been just over two years since we pulled back the curtain. We'll try to keep the tantrums to a minimum. Promise.

As always, thanks for reading, commenting, linking and heckling. And now back to your regularly scheduled programming.

image from flickrer This Year's Love used under a creative commons license.

The IN VIVO Blog Podcast: Is Primary Care Dead?

Now you may have been wondering--is the IVB Podcast dead? We're sorry to have missed a couple weeks but we hope to have a double-shot of podcast for you this week to make up for it.

First up, our very own Wendy Diller talks to Bain & Co.'s Chuck Farkas about the future of primary care businesses. Just click the button below to get started. And don't forget, you can access the podcast via iTunes also.

Pandemic Flu: Opportunities and Opportunism

Just in case you hadn’t noticed by now, swine flu is not just a public health threat, it’s also a business opportunity.

Now that can be a legitimate business opportunity – for example, companies like Roche, with its antiviral Tamiflu (oseltamivir), and GlaxoSmithKline, with its Relenza (zanamivir), have already capitalized through the stockpiling of their products in preparation for pandemic flu. After this weekend’s spread of the swine flu news, on Monday both manufacturers made public their efforts to provide more supply for the swine flu outbreak, and to make clear that they can ramp up production (as the WSJ reports).

Although those are the only products approved at the moment that can be of assistance for the outbreak, other manufacturers are jumping on the opportunity to start developing a H1N1 vaccine. Novartis and Baxter are each reportedly working with the World Health Organization to get samples of the swine flu strain and start on vaccines, which will take probably in the neighborhood of six months. Other companies are getting a warm embrace from the market because of the recognition of the potential for their technologies to be harnessed for swine flu (or just because of the newfound appreciation of the value of vaccine technology), such as Novavax and BioCryst.

Novavax shares were up a whopping 150% or so before closing up (merely) 80% on the day, at $2.55. Only four weeks ago Novavax raised a $11 million, a needed "capital infusion" from the sale of shares at $0.88. BioCryst jumped too, ending the day up about 75%, at $3.88. Neither of these companies falls into the category of "troubled biotechs," (BioCryst even reported net income last year--how very un-biotechlike) though it would seem logical for either company to raise money while raisin' is good. If that isn't too unseemly.

Other technology companies hoping to ride the wave that Novavax and BioCryst have caught include Vical (hey, check out our technology too!, says today's release--Vical shares rose yesterday, but only a more pedestrian 6.7%.).

But then there’s also a cadre of companies playing up the ability of their goods and services to meet the needs of the swine flu situation that don’t exactly seem in the spirit of helping out in a public health threat – let’s call them the opportunists. Here are some of IVB’s current favorites, please let us hear about your own faves in the comments.

  • Coming out of the “steer clear of swine” field is Capsuline, a kosher-friendly gelatin capsule manufacturer that acknowledges it “is strangely benefiting” from the porcine flu outbreak. “Whether warranted or not, the Porcine Flu outbreak gives a bad rap to all pork-based products,” the Pompano Beach, Florida-based firm’s April 27 press release notes. Capsuline’s hard gelatin capsules are bovine, not porcine-based. Since the news of the swine flu situation broke, the company has seen a 300% increase in call volume. That’s a welcome respite for a company that usually has more to fear from mad cow concerns – fear of bovine spongiform encephalopathy has had a dampening effect on gelatin products in the past. Of course, Capsuline may be out at the forefront of the pig-product backlash because of their past experience being on the other side.

  • Another blog favorite is Cannabis Science, “an emerging pharmaceutical cannabis company” that rushed out with a press release on its whole-cannabis lozenge. We’re not entirely clear on the relevance – something about the endocannabinoid system and hyper-inflammatory responses triggered by influenza. Citing preliminary anecdotal results about the anti-inflammatory properties of their lozenges, Cannabis Science suggests the whole-cannabis lozenges could present an effective and non-toxic treatment for minimizing the symptoms and harm from influenza infections. And, they note, because there is “no time for the usual bureaucratic process,” they could legally access the supply of medical marijuana available in California “to produce millions of life saving doses within a relatively short period of time.” The press release, sent out at 8:41 a.m. EDT on April 27, does include a caution that while the beneficial pharmacological agents are present in marijuana, smoking it will not effectively prevent the excessive inflammatory response, and, in fact, may make things worse.
Maybe In Vivo blog should just seize this as a public service announcement opportunity to say if you have been afflicted with swine flu, don’t smoke pot. --Mary Jo Laffler

photo by invivoblog.

Pfi-Wy Let The Good Times Roll--Without Corey Goodman

It's been 20 days since Pfizer and Wyeth announced their much heralded reorganization, putting 8 Wyeth execs in senior management positions at the newly bulked up company.

At the time, we noted that the appointments--especially of Mikael Dolsten to head large molecule R&D and Emilio Emini as chief vaccine guru--sent a clear message to employees that having an existing Pfizer business card would not necessarily translate into an advantage at the larger pharma.

And now we begin to see the fall out from the reorg. In SEC filings released late Monday afternoon, Pfizer revealed that Corey Goodman, hired in October 2007 as senior vice president of the pharma's BioTherapeutics and BioInnovation Center, had tendered his resignation over the weekend. Goodman's last official day with Pfizer will be May 31.

But he won't have much of a hands on role in the interim. Prior to his resignation, "Dr. Goodman will be on a paid leave of absence from Pfizer, with all of his current compensation and benefits arrangements remaining in full force and effect until his Resignation Date," according to the separation and settlement agreement filed with the SEC.

Perhaps the news isn't all that surprising. When Pfizer announced the new operating structure April 7, the five page news release trumpeting the company's vision referred to the BBC only once--the group would report to Dolsten who's official title is head of the BioTherapeutics Research Group--and made absolutely no mention of Corey Goodman's role in the larger organization.

In an interview with "The Pink Sheet" DAILY and later in a podcast with the IN VIVO Blog (you can listen here), Dolsten confirmed "there is a strong commitment to the BBC" with this latest reorganization. "They are now part of a bigger family with additional expertise in protein, peptide, and vaccine technologies. We want to promote and strengthen a great concept-the BBC unit," he said.

But Dolsten declined to discuss Goodman's evolving role in the interview, noting that the April 7 announcement focused "only on the executive leadership team and the operating model." However, Dolsten did emphasize Goodman will continue to be a critical player at Pfizer and was one of the principal architects of this new structure.

Susan Anderson, in Pfizer's public reations group, confirmed Goodman's involvement. In an email dated April 7, she noted:

"The BBC will continue as it is--a federation of the distinct research units--and will have an even greater opportunity to advance its scientific programs by working in combination with PGRD and WYE scientists within the BioPharmaceuticals Research Group under Mikael Dolsten. Corey is fully supportive of this new organizational model, which he worked with Pfizer and Wyeth leaders to create."

But not so supportive that he's willing to stay on post-Wyeth integration and report to Dolsten. Up until the acquisition of Wyeth, Goodman had a plum job with a high degree of visibility. Hired in 2007 with an annual salary of $725K, Goodman had a direct line into CEO Jeff Kindler's office and a mandate to move Pfizer in a biotech-like direction reminiscent of GSK's Centres for Excellence in Drug Development experiment (the CEDDs). Goodman was important. The BBC was important; the loose federation of biotechs was going to be the spring-board for Pfizer's great leap into biologics and prove that there was a better way for big drugmakers to do R&D.

But that mandate undoubtedly shrank with Pfizer's $68 billion take-out of Wyeth and the creation of bifurcated R&D structure headed up by Dolsten and Martin Mackay (currently head of PGRD). With Dolsten running the show, Goodman, who co-founded the biotechs Exelixis and Renovis and ran successful labs at Stanford University and UC Berkeley, mightn't have relished taking a back seat at a suddenly much bigger organization. We tried to reach Goodman for a quick comment but he was unavailable.

And let's be honest, Goodman probably didn't have much incentive to stay on. Financial security wasn't likely to be much of an issue. Goodman could have cashed out after the IPOs of either Exelixis or Renovis--or Evotec's 2007 $160 million purchase of Renovis, for that matter--and gone sailing. And his compensation package at Pfizer was nothing to sneer at. In addition to his salary, Goodman received a $3.4 million signing bonus, half of which was contingent on two years of service with the pharma.

Even though Goodman's been with the pharmaceutical company just 18 months, he'll keep that second $1.7 million in lieu of a severance package. (We should all be so lucky.)

Goodman's departure shows the peril of the stand-alone biotech within pharma and how hard it can be to retain innovators even as drug makers feel the need to grow bigger to navigate the complexity that is drug development. (Indeed, Art Levinson and Susan Desmond-Hellman are already on their way out just a few blocks away at DNA's campus.)

We aren't sure if Dolsten and Mackay will succeed with their "empowered CSO model"--or if the BBC will continue to thrive in the absence of Goodman. We do know Goodman is likely to be a hot commodity--VCs on Sand Hill Road are almost certain to be calling him--if they haven't done so already.

image by flickr user saraab used under a creative commons license

Monday, April 27, 2009

While You Were Declaring a Public Health Emergency


Look at that face. The last thing this colossal oinker wants is for you to come down with a nasty case of swine flu, but sadly the new look for Spring might turn out to be those trendy blue or white masks everyone on the news is wearing. The US declared a public health emergency--just a routine declaration to enable release of federal funding, according to Homeland Security Sec. Napolitano--over the weekend; so far the death toll from the A (H1N1) strain of flu virus stands at more than 100. The WSJ has a nice primer here.

Of course Roche and GSK got a stock boost on the flu scare, as the makers of Tamiflu and Relenza saw shares jump in early trading on Monday, Reuters reports. And we've already seen a smattering of press releases for various anti-swine flu masks and disinfectants, demonstrating that preparedness borne from previous SARS and avian flu scares is not limited to government health organizations.

Speaking of preparedness, we were all set to link around to the mountains of data coming out of the European Association for the Study of the Liver this morning, might as well get to it, swine flu be damned.

So, while you were getting eliminated ...
  • Roche, Intermune and Pharmasset said over the weekend that their interferon-free combo study of an HCV protease inhibitor plus polymerase inhibitor was a success. The 14-day Phase I INFORM-1 study was the first trial to combine two direct acting antivirals without standard interferon plus ribavirin therapy. Most importantly for an early trial, there were no serious adverse events reported.
  • Swinging now from early- to late-stage analysis, Vertex said it saw 'unprecedented' sustained viral response (SVR) rates in patients treated with its protease inhibitor telaprevir who had failed previous rounds of therapy. PROVE-3 is a Phase IIb trial of telaprevir plus interferon/ribavirin who did not respond to IFN/ribavirin alone, a difficult-to-treat population.
  • Also noteworthy from EASL over the weekend: Human Genome Sciences reported final results from its Phase III studies of the long-acting interferon Albuferon. That the drug met its non-inferiority endpoint has been known since last month, though analysts had been hoping for better efficacy.
  • Leaving the liver now, Ben Goldacre tackles the often sketchy practice of clinical trial subgroup analysis in his latest Bad Science column in the Guardian.
  • Your weekly dose of the good sheet: Matt Hobbs reports in the Pink Sheet that FOBs legislation may be coming off the boil thanks to competing priorities in Henry Waxman's Energy and Commerce committee ($).
  • The New York Times reports on the growing tension between primary care docs and specialists, as Obama administration officials try to walk the line between easy access to health care and increased costs of that care.
  • Bayer and Onyx report disappointing news for Nexavar, which failed a Phase III trial in chemotherapy naive stage III/IV melanoma patients. Interim analysis from a data monitoring committee suggested the trial would not meet its goals. The news marks the second high-profile melanoma failure in three months, following Synta/GSK's elesclomol setback in roughly the same patient population.
  • Thanks to those who expressed sympathy after the Flyers succumbed to Penguin Flu this weekend. We weren't all that confident of victory for the orange and black (hence no 'Flyers in five' predictions this year) but it's disappointing nonetheless.
image from flickrers Brent and MariLynn used under a creative commons license

Friday, April 24, 2009

DotW: Slip Sliding Away

Perhaps we are too taken with the slide metaphor, but given the results of two major reports released this week by IMS Health and Ernst & Young, it's hard not to feel as the health of the industry is slipping away. (Maybe we are just at the nadir and it's all sunshine and roses from here on out...either that or some companies will be pushing up daisies a year from now.)

On April 22, IMS Health released a revised outlook for the 2009 global pharma market. Proving once again that there is no such thing as a recession-proof industry, IMS predicts anemic sales growth of just 2.5% -3.5% for pharmaceuticals this year. That's two percentage points less than IMS forecasted last October. In dollar terms, our sister pub "The Pink Sheet" DAILY reports the industry will haul in about $70 billion less than expected, though IMS attributes most of the evaporating revenue - $55 billion - to currency fluctuations. That's likely to be cold comfort for many biopharma execs since the remaining losses--$15 billion--are attributed to so-called behavioral changes by patients, who are delaying doctor visits and filling fewer prescriptions.

But it isn't just patients who are keeping a tighter hold on their wallets. On April 23, E&Y issued its own report on the top ten risks facing life sciences companies. Given the tough economic climate (aren't you tired of that phrase?), access to capital emerged near the top of the industry risk list, earning the number two spot. What was the numero uno risk? Demonstrating value amid pricing pressures.

The UK's National Institute of Clinical Excellence has nicely made it part of its mandate to guide centrally-made coverage decisions for the Brits. With healthcare reform one of the major themes of the Obama administration and a groundswell of support for coverage decisions tied to comparative effectiveness, E&Y warns that drug makers better think about such constraints in the US as well.

And the pay-to-play deal Merck anounced with Cigna this week for the Type 2 diabetes meds Januvia and Janumet shows that at least one big pharma is thinking about it seriously. As Andy Pollack notes over at the NYT, Sanofi-Aventis/Proctor & Gamble are taking a similar approach with their osteoporosis drug Actonel, reimbursing insurer Health Alliance for the cost of treating fractures suffered by patients taking that particular medicine.

Who--or what--else slid in the wrong direction this week? Lackluster earnings reports showed Amgen's dependence on new drugs like denosumab and Merck's need for Schering. The possible approval date for the awkwardly named Onglyza, the DPP-IV inhibitor from BMS and AstraZeneca, has shifted from April 30 to July 30. The reason? The drug makers and FDA need to agree on a proposed cardiovascular outcomes trial that will likely be a post-marketing study requirement upon approval.

Meantime, Roche's stock slid 10% on news that data from the infamous C-08 trial didn't support Avastin's use as an adjuvant therapy for colorectal cancer. Almost immediately after the news broke, investors and analysts--and journalists--were asking: "DID ROCHE PAY TOO MUCH FOR GENENTECH?"

It would take a whole blog post--and then some--to answer that question.

In the meantime, we leave you with a little Simon and Garfunkle to get the weekend started off on the right note

We're workin' our jobs, collect our pay. Believe we're gliding down the highway, when in fact we're slip sliding away."

Hopefully into...

GSK/Stiefel Laboratories: This week, GSK stepped into the M&A ring, taking out privately held Stiefel Labs for $2.9 billion in cash. The deal also calls for GSK to pay another $300 million contingent on future performance, and assume about $400 million of Stiefel debt. GSK will combine its existing prescription dermatology business with Stiefel's to create a new, specialist global business operating within GSK but under the Stiefel name. The combined operations would have about $1.5 billion in sales ($900 million of which come from Stiefel) and 8 percent of the global market for prescription dermatology products. Size-wise, the GSK/Stiefel tie-up isn't the mega-deal to which we've--for better or worse--grown accustomed, but GSK's Andrew Witty has said all along that he's not a big fan of the concept. But it does bear the hallmarks of Pfizer/Wyeth and Sanofi's stream of generics buys, including Mexico's Laboratorios Kendrick and the Brazilian firm Medley, in its effort to diversify and derisk GSK. As we wrote yesterday, it represents GSK's slide away from innovation. The buy-out adds hundreds of marketed drugs to GSK's small existing dermatology portfolio--recall that GSK essentially got out of the prescription derm biz in 2005, when it sold its holdings to Altana, now a division of NycoMed. Important Stiefel products include Duac for acne, the dermatitis treatment Olux E, and Soriatane for severe psoriasis. Perhaps more importantly, Stiefel brings GSK about $300 million of consumer sales thanks to products such as Impruv, a line of dry skin care treatments sold at Walgreens. The company also provides GSK with a foothold in the aesthetic skin health market. Thanks to its 2008 acquisition of the French groups ABR Invent and ABR Development for Atlean, Stiefel also has rights to a dermal filler product used for facial sculpting and remodeling. Even as the economy sours, many drug companies are eagerly seeking self-pay products that further hedge their exposure to government and payer-driven reimbursement policies. Indeed, this deal "is yet another example of CEO Witty pursuing his strategy of de-risking and reducing the cyclicality of the business through focusing on growth through consumer and emerging markets rather than the traditional pharma R&D model," Citigroup analyst Kevin Wilson wrote in an April 20 note. Stiefel's sale comes as no surprise, since the company - which is partly owned by the Blackstone private equity group - put itself on the block earlier this year. According to reports at the time Stiefel attracted several suitors looking to buy back into a market they had previously abandoned. This deal, which is about 3.5 times Stiefel's 2008 revenues, is likely to represent healthy returns for Blackstone Group, which acquired a minority stake in the group for $500 million in August 2007.

Merck/Galapagos: In the same week that Merck announced its quarterly global sales had declined 8% year over year, the New Jersey-based pharma struck a pair of deals. In one, Merck increased its involvement with Belgium’s Galapagos, paying $2.9 million upfront in a multi-year option deal to co-develop anti-inflammatory therapies. Milestones under the deal could total $248 million, with Galapagos also eligible to receive royalties on any product from the collaboration that reaches market. Using its SilenceSelect drug-discovery platform to screen potential targets, Galapagos will manage discovery, preclinical development and possibly some Phase I studies, with Merck holding an exclusive option to step in and license candidates, taking them through the remaining development and commercialization process. Earlier this year, the two companies partnered to develop type 2 diabetes and obesity drugs. Galapagos also has tie-ups with Lilly, Janssen and GlaxoSmithKline. The Belgian firms says its multiple, option-based deal strategy will help it fund R&D while enabling it to remain independent. CEO Onno van de Stolpe said Galapagos’ numerous collaborations make it “extremely unlikely” that any suitor would want to buy a company with so many already partnered assets. That strategy could pose challenges in the future, however. If the biotech’s wealth of Big Pharma partners translates into a dearth of M&A options, the company will be more dependent on future downstream milestone payments to fund itself—and that means actually delivering on the promised clinical milestones. In today's economic climate, Galapagos certainly can’t look to public investors, given the lack of tolerance for risk and innovation currently--Joseph Haas.

Merck/Medarex/Massachusetts Biologic Laboratories: In its other deal this week, Merck paid $60 million upfront for the worldwide license to Medarex’s anti-toxin cocktail for Clostridium difficile, a normally innocuous gut-dwelling bacterium that can turn pernicious after patients have been subjected to powerful antibiotic therapy (usually either in a hospital or long-term care facility setting). As part of the agreement, Merck acquires two monoclonal antibodies (MDX-066/CDA-1 and MDX-1388/CDB-1) that attack the two disease-causing toxins secreted by C. diff. If the anti-toxin cocktail helps stave off recurrence of the infection, the deal could yield the Princeton, N.J. biotech and its development partner, Massachusetts Biologic Laboratories, additional development and regulatory milestones totaling $165 million. In Phase II trial data unveiled last November, Medarex showed a 70 percent reduction in the C. diff infection recurrence when the two antibodies were combined with standard of care--either metronidazole or vancomycin—compared with SOC alone. Medarex’s chief financial officer Chris Schade said his firm looked forward to Merck’s ability to fully exploit the combination’s market potential given the pharma’s expertise and global reach. The deal brings fruition to Medarex’s longstanding collaboration with MBL, a nonprofit affiliated with the University of Massachusetts. It also shows Medarex’s determination to remain true to its core focus—oncology--Joseph Haas.

Pfizer/University College London: On Friday, Pfizer's regenerative medicine group announced a collaboration and licensing agreement with UCL scientists aimed at developing stem cell therapies for wet and dry forms of age-related macular degeneration (AMD). Under the terms of the agreement, Pfizer will provide research funding into the development of stem cell-based therapies for AMD and other retinal diseases. In return, after the completion of preclinical studies, Pfizer has the option to conduct clinical trials and commercialize any ophthalmology related therapeutics that result from the work. (Pfizer also gains worldwide rights to said products.) The tie-up show yet again how pharma companies are turning to academia in search of access to lower cost innovation. Any doubts, recall these recent industry-academia tie-ups: J&J's Janssen and Centocor units recently inked collaborations with Vanderbilty University and University of Michigan, while AstraZeneca signed a deal with the Mayo Clinic and the Virginia Polytechnic Institute. And then there was GSK's recent deal with UCL spin-out Pentraxin to develop a novel treatment for amyloidosis. Interestingly, Pfizer's agreement with UCL recalls many of the themes we wrote about when we dove into the GSK/Pentraxin deal. Again, it comes back to the smaller is better R&D structure that GSK has made a cornerstone of its Centres for Excellence in Drug Discovery/Discovery Performance Units, an architecture Pfizer is trying to replicate with its empowered CSOs post Wyeth-merger. It also shows the continued and unwavering interest in specialist-focused diseases. (Okay, we know AMD is a huge problem but any stem cell products aren't likely to be a primary sales call.) If imitation is the sincerest form of flattery, then Pfizer's CEO Kindler must find a lot to like at GSK these days. Last week, the two companies formally acknowledged their love for one another in an HIV joint venture that marries GSK's marketing muscle and established products with Pfizer's newer offerings. WSJ notes that Intercytex Group could be another big winner as a result of the Pfizer/UCL deal. That's because one experimental stem cell-based treatments UCL is working with is SHEF-1, which was develolped by Axordia, a company Intercytex acquired back in December.

(Image courtesy of flickrer Leo Reynolds, used with permission through a creative commons license.)

At Least the Europeans Appreciate Novo's Victoza

It’s all smiles again at Novo Nordisk following yesterday’s news that EMEA has recommended approval of its GLP-1 agonist liraglutide (Victoza).

The positive opinion followed a decidedly lukewarm US advisory committee outcome earlier this month, where concerns were raised not over cardiovascular safety (a possibility, given FDA’s more stringent diabetes guidelines) but over a raised incidence of thyroid c-cell tumors in rodents during pre-clinical trials. (We cheekily suggested thereafter that Novo might not mind so much about GLP-1s anyway.)

The European regulators, however, appear to agree with Novo’s CSO Mads Thomsen that “the mechanism [behind the raised incidence of thyroid c-cell tumors] is one that mice and rats are sensitive to, but that monkeys and humans are not.”

The regulators haven’t even requested that the company take any additional measures—such as thyroid cancer screening—to rule out the potential risk. “There are no restrictions on usage” as a result of the pre-clinical thyroid cancer data, Thomsen told The IN VIVO Blog. “It was a clean approval.”

Well, a clean recommendation anyway; the European Commission must still issue the final marketing authorization, expected in about two months. With that in hand, Novo will begin to sell Victoza in various European markets over the summer.

This un-restricted European thumbs-up for Victoza matters not just for the drug’s EU commercial potential. China, for instance—a key emerging market for Novo--requires a sponsor to have home-market approval before it can even submit a new therapy. And there will be positive knock-on effects of a European approval in other markets, too, adds Thomsen, since "some countries simply base their approval decisions on the European outcome."

Unfortunately, the US is not one of them. FDA is due to decide late next month whether to approve Victoza, but based on the split advisory panel outcome and an almost entirely risk-focused (as opposed to benefit-focused) discussion, things don’t look good. Analysts including Matthew Osborne, SVP at Lazard Capital Markets, reckon that the best case would be that Victoza launches on time during the second half of the year but with a black box warning and/or monitoring for thyroid cancer. Other options: a 6-12 month-delay due to a request for additional data, or outright rejection. Not a great outlook for a drug predicted to become a blockbuster by 2012.

This isn't the first time European regulators have approved a drug that FDA has rejected or at least prevaricated over. Sanofi-Aventis' obesity candidate rimonabant (Acomplia; Zimulti in the US) was another. Given what happened to that (rejection in the US, withdrawal in Europe), it's interesting--comforting?--to see that FDA's ultra-risk-focused conservatism isn't rubbing off too hard on the Europeans just yet.

image by flikrer sean-b used under a creative commons licence

Thursday, April 23, 2009

GSK Slides Away From Innovation

Two news items this week reminded us of GSK's flight from innovation. First, its re-entry into dermatology, via the $3.6 billion acquisition of privately-held Stiefel Labs (see our Pink Sheet DAILY coverage here)--the largest buy on CEO Andrew Witty's watch so far. The second news item that heralds the demise of the R&D-based pharmaceutical company? GSK this week got the green light to launch Alli, an OTC version of Roche's Xenical in the EU.

Okay, so we recognize that these moves amount to GSK (among others) taking a stab at general "healthcare" or "wellness". It is an "R&D based pharmaceutical and healthcare company" after all.

It's also an attempt by GSK to get closer to customers. GSK's take-out of Stiefel proves that derm--a low-margin zone with, until now, little sex appeal (GSK sold out in 2005) is attractive again, as is any other reliable revenue source in this R&D productivity drought.

Now sure, there's innovation in derm. Most of Stiefel's business is in prescription drugs (though that doesn't necessarily equate to innovation). But a good chunk of it--about a third--is OTC and a growing aesthetic business. Think dermal fillers and anti-wrinkle creams. In fact, only about 5% of dermatologists are purely focused on medically necessary products; most deal with the cosmetic side as well.

Indeed, "dermatology is more of an art than a science," Stiefel's President Bill Humphries told The In Vivo Blog the day after the deal was announced. "There aren't many blockbusters nor many cures," he elaborated. But GSK's diving in nevertheless.

Plenty of analysts and press--including ourselves--duly report the Stiefel acquisition as an example of Witty's very sensible diversification and de-risking approach. Reducing cyclicality 'n all that. But what about innovation? Is GSK now to be all about Sensodyne toothpaste and diet pills?

Speaking of diet pills....Alli sold £29 million (about $42 million) in the US this last quarter, a tidy sum for an OTC product. This week's EU approval means Alli should be a nice little earner in (increasingly fat) Europe--especially given the medicine's cost of £50 per month in the UK.

Why would an overweight European punter pay for the drug instead of getting double the dosage on prescription, for free? Because, says a GSK spokesperson, "if someone wants to shed a few stone, the vast majority would want to manage that themselves, seek solutions on the high street, in slimming clubs for instance." (Will GSK invest in slimming clubs next? Talk about diversification. We can't wait to see that press release.)

"We've trained 7000 pharmacists" in the UK on how to dispense Alli appropriately, says the GSK spokesperson. Alli-shoppers will have to prove their BMI is 28 or more, and be over 18 to purchase the medicine.

The idea of being weighed or having your waist measured in your local pharmacy may provide enough incentive to diet. If it doesn't, Alli will. The drug's by-now renowned side-effect is oily stool. The way to avoid that, the GSK spokesperson continues, "is to follow the recommended low-fat diet."

It makes sense, economically and socially, to help prevent patients getting heart disease and diabetes in the first place, rather than only providing snazzy, often expensive, treatments. And yes, we acknowledge that GSK's doing a bunch of interesting things to get its R&D going, to be fair. But too many more diet pills and anti-wrinkle creams, GSK, and you'll have to drop the "research-based pharmaceutical company" bit.

(Photo courtesy of flickr user Scott Abelman, used with permission through a creative commons license.)

Wednesday, April 22, 2009

Follow-On Biologics: 1984 All Over Again?

Orwellian resonances aside, the year 1984 is a turning point in the history of the biopharmaceutical industry. That is the year when the generic drug industry was born, thanks to a critical and unlikely compromise between Senate Republican Orrin Hatch and Democratic Rep. Henry Waxman.

Their landmark bill created an abbreviated approval process (championed by Waxman) in exchange for enhanced patent and data exclusivity protections for innovator companies (pushed by Hatch). So critical were those two lawmakers to the crafting of the legislation that the entire generic approval/patent restoration process in the US is now known simply as Waxman/Hatch (or Hatch/Waxman, depending on which party is in the ascendancy).

As 2009 gets under way, one key question for biopharma companies of all shapes and size is: can history repeat itself?

It sure looks like the stars are aligned for another historic compromise, this time over a regulatory system for abbreviated approval of biologic products coupled with some version of data exclusivity for innovators. And, as fate would have it, Henry Waxman and Orrin Hatch find themselves add odds over some key points.

Waxman, as chair of the Energy & Commerce Committee in the House, will be at the center of any legislative work on follow-on biologics this year. And he has already put a stake in the ground, offering legislation that gives innovators the same five year data exclusivity that pharmaceuticals get under the 1984 law.

Hatch is not in the same leadership position he held as a member of the Republican majority in 1984, but he is working closing with Senate Health Committee Chairman Edward Kennedy on FOB legislation. Hatch and Kennedy were among a group of senators that forged a compromise in 2007, one that would have granted 12 years of data exclusivity to innovators.

That compromise failed to reach enactment—in no small part because Waxman refused to sign on to push for action in the House.

As Congress gets back to work in 2009, it sure doesn’t sound like a compromise is close. As we reported in The Pink Sheet DAILY, Ann Witt—the key staffer to Waxman on FOBs—sure didn’t sound optimistic about getting a bill done this year when she spoke during a forum sponsored by the Jefferson School of Population Health yesterday.

Then today, Hatch himself addressed the Food & Drug Law Institute annual conference. Like Witt, he did not make any optimistic sounding assessments about the prospects for speedy enactment, saying only that “we are working on it.”

Instead, he highlighted his frustration with New York Democratic Sen. Chuck Schumer for, in effect, defecting back to Henry Waxman's camp in 2009.

"I have some very serious reservations about some of the bills that have been recently introduced," Hatch said. "Sen. Schumer’s bill mirrors Chairman Henry Waxman’s….I was surprised to see Sen. Schumer pushing for this new approach, especially since he was the one who really sealed the deal for 12 years of data exclusivity in the last Congress with us. He came along and realized it was an important thing to do. It is frustrating to me to see that we are so quick to wipe out the incentives for innovation."

This whole exclusivity question sure does get people fired up. Indeed, your humble blogger can testify that innovators and would-be follow-on companies seem very far apart on the question of exclusivity, having gotten an earful from both sides for suggesting during a presentation at the Jefferson School event that the whole question of how much exclusivity is less important than what the follow-on biologics marketplace will actually look like. (A webcast of the event is available here.)

Generic companies, in the words of Boston University Economics Professor Laurence Kotlikoff described industry’s “support” for follow-on biologics in exchange for 14 years of exclusivity protection as simply an effort to “kill biogenerics.” Away from the dais, representatives of innovator biotech companies suggested five years of exclusivity would kill innovation.

Still, as David Nash, Dean of the Jefferson School of Population Health, said in his closing summary of the event: Despite the “fireworks,” most observers can see that there “will be some kind of a compromise” on exclusivity.

And it sounds like Hatch at least is ready to try to make that happen. With Waxman due at the FDLI conference tomorrow, Hatch enlisted the audience to help: “When Congressman Waxman is here, you might encourage him to come on board.”

“Let me tell you something. Henry knows I’m serious. He knows I’m bipartisan. He knows I want this done. I care a great deal for him,” Hatch said. He joked about that unlikely turn of events: “We’ve been good friends for all these years, although he comes from Hollywood and you can’t be any more whacked out than that that group, but he for some reason comes through. He’s a very, very complicated but a very, very good, bright guy.”

“I want this to be the Hatch/Waxman—or let’s make it Waxman/Hatch” of the biologics era, Hatch declared.

But, he added, “Henry’s going to have to come up. He was at zero, then he was at five.” President Obama’s budget proposes seven years of data exclusivity, Hatch added, indicating that too would be too low for him.

Is a compromise likely any time soon? It sure seems like the answer is no, that the two sides are--if anything--more entrenched than ever in their respective corners. But a compromise certainly didn't seem inevitable in 1984, a point that Hatch made in his opening comments to the FDLI conference.

"I can vouch for the fact that the negotiations on Hatch Waxman were, shall we say, trying at times," Hatch said. In fact, "who knows what would have happened had I not needed a root canal right in the middle of negotiations. I threatened to kill every doggone negotiator."

"Toward the end, the two leading negotiators, one for the generic industry one for the innovator industry, they jumped up and said, 'We’re outta here,' and they ran to the door, and they both arrived at the door at the same time and they got stuck in the door. It was one of the greatest days of my life."

Right now it sounds like both sides are heading to the door. Whether they actually get out the other side, we will have to wait and see...

Pharma Will Stop “Resorting” To Influence Clinical Trial Investigators

PhRMA is extending its ban on lavish entertainments from sales contacts with clinical practitioners to the contact between sponsors and clinical trial investigators.

The trade association of the biggest U.S. drug companies, the Pharmaceutical Research & Manufacturers of America, unveiled a new version of its “Principles on Conduct of Clinical Trials” on April 20. Part of the principles call for drug companies to apply PhRMA’s new Puritanism to dealings with clinical investigators.

No more nice resorts to plan clinical trials or bring together investigators. The “Principles” specifically define the types of location and entertainment that will be acceptable for clinical trial teams to get together. “Resorts are not appropriate venues,” the Principles state bluntly.

“While modest meals or receptions may be appropriate during company-sponsored meetings with investigators, companies should not provide recreational or entertainment events in conjunction with those meetings,” the business-like code declares.

And guests are not welcome: “It is not appropriate to pay honoraria or travel or lodging expenses for those who are not involved in the clinical trial.”

The clinical trials principles essentially adopt the same restrictions on entertainment applied by PhRMA to marketing contacts in a separate code adopted last summer.

And the reasoning is clear again. PhRMA’s President Billy Tauzin has a politician’s innate sense of the right argument for the right climate: now is no time to flaunt lavish entertainment of customers or clinical trial investigators. This is a time for the business to adopt a parsimonious demeanor – of course, the new frugality does not extend to lobbying expenses where PhRMA is extending its giving to new constituencies like labor consultants (but that’s a different story).

And these changes in entertaining patterns will slowly affect the cost structure of the industry – skinning away some of the marketing/entertaining fat. That’s not an untimely change for an industry that is losing some of its biggest revenue producers.

The new version of the clinical trial principles is the third update for the voluntary code, which was first adopted by the industry in 2001. The newest version of the code can be called the “disclosure edition” because its primary purpose is to address the key issues of public openness about the existence of specific trials, the results of trials, and a clearer definition of the roles played by each named contributor in published results.

There are important commitments to openness about listing trials and trial results from the drug companies – and some equally important exclusions about the types of trials that PhRMA does not believe its members should have to post on the government trials database. PhRMA does not believe, for example, that it helps patients to tell the public about the existence of Phase I research.

The code is simple and defines a more open clinical trial process and one with less unseemly influence (in the form of entertainment, etc.) on investigators. From that perspective, it is an improvement. Whether it will be enough to restore the public confidence in the accuracy and unbiased results of trials is a question of a different magnitude.

Tuesday, April 21, 2009

Rahmulus and Remus

Rome wasn't built in a day. Neither will a bill on health care reform. But Congress has about a five-week stretch to start building legislation, according to White House Chief of Staff Rahm Emanuel.

Rahm Emanuel is a legend in many respects but we're only half-joking when comparing him to the founders of Rome fathered by the God of War, Mars. But only half.

Emanuel appeared on "This Week with George Stephanopoulos" and health care reform came up surprisingly often in a short conversation. "I think, in this next five weeks, you'll see tremendous effort at the committee level to get that done," he said of writing reform legislation. In other words, by the beginning of June, the parameters of a bill should be established. In fact, Senate Finance Committee and Senate HELP Committee Chairmen Max Baucus and Ted Kennedy wrote an April 20 letter to President Obama saying they will mark up a bill in early June.

There were a number of interesting tidbits to come out of the conversation between Emanuel and Stephanopoulos. The first question asked by Stephanopoulos was a response from the White House Chief of Staff to a New York Times front page story on Obama having "soft hands" when it comes to taking on the special interests in Washington. To read the full story, click here.

After mentioning the banking services industry, Emanuel went straight to health care and the proposal in the President's federal budget for competitive bidding among Medicare Advantage plans which are paid at 115% of the rate paid to traditional Medicare:

"In the area of health care reform and getting costs under control, we said to the insurance industry, we're eliminating your subsidies and only going to pay you 100 cents on the dollar, but not 115 cents on the dollar, and you're going to compete for that money. And that saves the taxpayers about $170 billion."

Emanuel then moved to an extremely important point on health care reform that may seem obvious, but made more significant coming from the gatekeeper to the President.

In response to Stephanopoulos' question on whether President Obama would consider a proposal to tax health benefits, he said the first objective of any reforms are to lower costs. Lower costs, not raise revenue, and not expand coverage. "We set the goals. The goals are getting health care costs under control."

He continued: "First of all, what we have to do is squeeze out all the basic costs in the system, before we talk about any other type of revenue. There's a lot that has to be changed. Unfortunately, I know a little about health care reform from my family. The fact is, we had all the wrong incentives in the health care system. And if you change the incentives toward medical I.T., which we put in place, the resources to start basically having a way to control costs there; if we change the way the doctors are paid -- so, rather than fee for service, we pay for outcomes; and reward people who take care of themselves and get their health together."

Emanuel explained that Obama was opposed to the idea of taxing health benefits during the election and it isn't the priority for health reform--getting costs under control is. "What you have to do, as he believes, is make the cuts in the system that we have today because we're overpaying for a lot of things; and second, is change the incentives before you get to immediately going to a default position that you have to raise taxes."

Washington translation: taxing health benefits is very much on the negotiating table.

Monday, April 20, 2009

A "Sophie's Choice" for Pharma in Tax Policy: R&D or Marketing?

The tax write off available for pharmaceutical marketing costs has been a popular political target for industry critics for more than 20 years—and all the moreso in the era of broadcast direct to consumer advertising. Many in Congress want to ban DTC ads outright; that almost certainly won’t pass First Amendment scrutiny, so making advertising more expensive by changing the tax code is an appealing alternative.

Still, while it makes a good talking point, advertising critics have never succeeded in pushing the idea through to enactment.

Now the Democratic leadership in Congress is considering a new twist, a proposal to give pharma companies a choice: write off R&D costs or write off marketing costs. Not both.

That, according to Polsinelli Shugart public policy group Chair Jim Davidson during his update to the DTC National Congress April 15, was an idea offered by former Rep. Rahm Emanuel during a closed door meeting with some advertising types last year.

The idea sure sent a ripple through the 400 or so pharma, ad agency and media attendees at the DTC Congress.

Emanuel has since left Congress to serve as chief of staff to President Obama, which does nothing to blunt concerns among advertisers about the potential for the tax policy proposal to slip into legislation this year, especially in the context of finding new revenues to cover costs of expanded health care coverage. (Read more about Emanuel’s recent statements here.)

Coalition for Healthcare Communications Director John Kamp noted the threat of Emanuel’s proposal, describing it as presenting a “Sophie’s choice” to industry by asking, in effect, whether companies love their marketing departments or their R&D organization more. It is a classic divide-and-conquer maneuver, Kamp says, since it is sure to exploit the tensions that already exist within pharma companies over that very question.

“Think about your own companies,” Kamp told the brand managers in the audience.

Well, it certainly got us to thinking…and quickly got us thinking that maybe this “Sophie’s choice” wouldn’t be all bad.

Now, let’s be clear: biopharma companies will fight this proposal, as will advertising and media companies. And, if history is any guide, they will win. Pharma, in particular, has a good track record in working the intricacies of tax policy. No reason to expect a different outcome here. Nor do we seriously think pharma should support a tax hike on itself in any event.

It is just that this could be a case where a policy threat would force a healthy business adjustment.

The new tax policy would, in effect, force pharma companies to choose between a reduced return-on-investment from their R&D or a reduced RoI on marketing, since the elimination of the tax deduction in effect amounts to a reduced return on the dollars devoted to the affected activities.

So the first step would be to force senior management to take a stand on which actually delivers a better RoI in the first place.

In some cases, it is easy. Most biotech companies, for instance, only wish they had marketing costs to write off, and even those that do wouldn’t have too much trouble choosing to keep writing off R&D. On the other hand, “specialty” companies like Forest or Ovation would surely want to write off marketing costs, since they tend to in-license late-stage projects rather than shoulder the full R&D burden themselves.

But what would Pfizer do? The company spends billions on R&D and billions on marketing, and so could ill afford to accept higher taxes on either front.

Surely one option would be to divide into smaller companies that more clearly fit the biotech (R&D-first) or specialty (commercial-first) models. That happens to be exactly what some of us have been suggesting for a long time now.

Indeed, one way to view the Pfizer/GlaxoSmithKline HIV partnership is as a baby step (or maybe a toddler step) in that direction. Glaxo/Pfizer HIV Inc. would surely choose to keep its R&D deduction. (As would, presumably, a stand-alone Pfizer oncology unit.)

Pfizer itself, on the other hand—if it indeed continues to consolidate towards a GE style health care marketing colossus—would probably end up protecting the deductibility of its marketing costs. In fact, its hard to see how R&D fits long term in that GE model anyway. (You can read coverage of Roger Longman’s latest take on this topic in “The Pink Sheet” here.)

See how fun it is to play what ifs?

And that’s the point. Pharma companies are right to oppose the policy, but there is surely value in playing out this “Sophie’s choice” anyway. It may turn out to be good business for pharma to focus on one side or the other of the great pharma divide between R&D and marketing, even if Congress doesn’t force that choice upon them.

While You Were Travelling

OK so the above photo from your invivoblogger has little to do with AACR, M&A, or any other acronym that isn't MLB. But it epitomizes the springtimey weekend we enjoyed when we weren't finishing off IN VIVO stories, and the nice Philly trifecta on Sunday afternoon: Flyers and Sixers getting big playoff wins, and the Phils gaining a nice early-season come-from-behind victory.

Meanwhile, while you were bulking up in dermatology ...

  • Is GSK buying dermatology player Stiefel for up to $3.6 billion? WSJ says yes. GSK confirms, the release is here.
  • The AACR news releases are starting to roll in thick and fast. Get all your cancer research news here.
  • The Philly Inquirer writes about Wyeth's--and others'--vaccine bets, and the outlook for Prevnar 13.
  • As we've pointed out in the Pink Sheet Daily coverage of PSO last week, Merck isn't letting the Schering-Plough deal slow the pace of smaller dealmaking. This morning the company and Galapagos announced a tie-up in inflammatory diseases. (Reuters)
  • RIP J.G. Ballard.

Friday, April 17, 2009

DotW: The Yogi Berra Edition

Lest their be any doubts, this blogger is officially ABY* whenever the Yankees take the field. Still it's impossible not to like the endearing Yogi Berra, who blessed the Yankees' new stadium by throwing out the ceremonial first pitch in the April 16 home opener. Who else can state the obvious with such wit?

Take, for instance, the old saw "the future ain't what it used to be." It's a phrase that could be be used to describe a number of happenings in our industry this week, including the scene at Infinity Pharmaceuticals, which suffered a clinical setback with its HSP90 program. Remember that's the compound it took back from AstraZeneca in December because the pharma (theoretically) wasn't interested in such a small market--GIST (gastro-intestinal stromal tumors)--and the evolutionary incompatibility of the AZ/Infinity relationship.

Or perhaps the saying is better applied to the "Rochification" of Genentech. It certainly didn't take long for the long arms of the Swiss pharma to reach California. Hours after David Mott, former MedImmune CEO and general partner at NEA, discussed the challenges of running stand-alone biotechs within pharma at our annual PSO meeting, we saw a changing of the guard at the iconic biotech, with Art Levinson stepping aside as CEO of the company to be replaced by Pascal Soriot, Roche's commercial pharma head.

Another Genentech star, Sue Desmond-Hellman, is also apparently headed for the exit. Like Levinson, who will be serving in an advisory capacity, Desmond-Hellman is distancing herself from day-to-day operations. The changes aren't terribly surprising, but they did come sooner than many expected. leaving the door open to a future sale or other moves.

In the case of Genentech, maybe another Yogi-ism also applies: "it isn't over until it's over". After all, notable scientists such as Marc Tessier-Lavigne and Richard Scheller are sticking around--for now--according to this story in "The Pink Sheet" DAILY.

Undoubtedly execs at Dendreon have embraced the optimism of "it isn't over until it's over" as well. The biotech's share price surged from $7.30 to well over $20 on April 14, when news broke that the Seattle biotech's therapeutic prostate cancer vaccine Provenge "met" its primary endpoint of overall survival. Dendreon investors certainly have strong stomachs--this is not the first time the biotech's share price has swung wildly (at least time movement was in positive territory). Will it plummet in the future? Much depends on the actual data, which won't be released until April 28, and whether or not regulators actually approve the drug. Indeed, it isn't over until it's over.

Alternatively, take the news "with a grin of salt." That's good advice generally and certainly when it comes to speculation about potential M&A activity. Take Actavis, the Iceland generic maker, which has been on the block since January. On Thursday, Reuters reported that a potential sale of the company had been officially halted because of disagreements over price and a dearth of suitors, according to several unnamed sources. An Actavis spokeswoman declined to comment on the auction but said: "All strategic options continue to be reviewed and evaluated". In other words, make sure to have some salt grains handy.

When you see a fork in the road, do you take it? It's certain that "if you don't know where you are going, you will wind up somewhere else". Fortunately IVB brings you a weekly road-map to the industry's deal-making activity...

GlaxoSmithKline/Pfizer: The big deal-making news this week was, of course, the announcement by GSK and Pfizer that they were joining forces to create a new HIV company with 11 marketed assets and another six in the pipeline. “This is an innovative deal and will reenergize Glaxo’s presence in HIV treatments,” said GSK CEO Andrew Witty, who noted the new company will hold a 19% share of the global HIV market. Witty might have put it another way: "We have deep depth." Control of the as yet unnamed newco is in the hands of GSK, which has an 85% stake in the outfit, as well as seven of nine board seats. This pooling of resources is a creative solution to the problem of a weak pipeline, and it offers both big pharmas plenty of potential upside. In Pfizer's case, the drug maker is contributing very little cash while getting a better opportunity to commercialize its CCR5 inhibitor, Selzentry, which has so far has failed to live up to its potential according to analysts. For GSK, the advantages include gaining a much deeper pipeline of drugs while simultaneously avoiding the cost of having to license them from another company. Moreover, by joining forces, Glaxo and Pfizer may eventually find it easier to unlock the value of their existing HIV drugs as well as those that make it out of the lab--provided they can spin off the new company in the process. Indeed that's likely to be the real value of the deal. Analysts note that even when combined, the assets of GSK and Pfizer aren't likely to unseat Gilead as the number 1 player in HIV. And given the absence of Phase III compounds and the odd 85/15 ownership structure--it's been a long time since this blogger's taken math, but isn't a JV usually 50/50?-- what does GSK really stand to gain unless it can bundle the assets up and sell them to some one else? Especially since, as Dow Jones points out, "the combination of the two companies' assets, along with any savings realized, would fetch a price greater than the two franchises sold individually." Of course, when asked about the prospect of a future spin-off, both Pfizer and GSK execs played it cool. “I wouldn’t rule that out. Right now, we’re looking at what is the best way that we can handle the large portfolio we have,” Martin Mackay, who heads Pfizer’s global research and development and is also a board member of the new company, told "The Pink Sheet" DAILY. Witty, meantime, declined to discuss speculation of a spin-off, noting efforts were focused on creating "sustained value". How boring. We think Witty should practice the following Yogi-ism, since interest in the J/V is unlikely to taper anytime soon: "I wish I had an answer to that because I'm tired of answering that question."

Sanofi-Aventis/BiPar: Another week, another Sanofi deal. Only this time we aren't talking about a tie-up between the French pharma and a generics maker in an emerging market. Nope, this week's deal is about accessing hot targets in an equally hot space: poly ADP-ribose polymerase (PARP) inhibitors in oncology. The acquisition, which is expected to close in the second quarter, could be worth up to $500 million in upfront and milestone payments, but the companies are not disclosing specifics. In other words, "a nickel ain't worth a dime anymore." Based in Brisbane, Calif., BiPar's lead candidate is BSI-201, now in Phase II testing for the so-called triple-negative breast cancer,tough-to-treat tumors that are negative for three common biomarkers, including HER2. Interest in BiPar's PARP inhibitor program has been growing steadily. Last fall, the molecule earned a place in the top 10 most partnerable oncology assets at Windhover Information's Therapeutic Area Partnerships conference in Philadelphia. One month later the company reported positive safety and efficacy data for the drug at the San Antonio Breast Cancer Symposium. The safety findings, along with potential application in multiple cancers, helped pave the way for the deal with Sanofi, BiPar board member Wende Hutton, a general partner at Canaan Partners, told "The Pink Sheet" DAILY. It's hard to know based on the biobucks, however, just how good the exit was for Canaan Partners and the other investors in the privately-held BiPar. According to FDC/Windhover's Strategic Transactions database, BiPar has raised over $70 million--including $20 million this past January--since its founding in 2004. As we've reported in the past, structured acquisitions, where the bulk of the return comes only after pre-determined milestones are met, are becoming increasingly common in a buyer's market given the emphasis on a desire to share both financial and development risk. An eventual exit of $500 million for BiPar's investors, which beside Canaan Partners include Domain Associates and Vulcan Capital, fits the on-going trend and means the backers won't have to finance the Phase III trials of BSI-201. And BiPar isn't the kind of biotech Sanofi plans to keep at arms' length. The group will be integrated into Sanofi, with a core development team from the company working from the California base.

Image from flickrer Bari D. used under a creative commons license.

*ABY = Anybody But the Yankees

Pfizer Follows GSK R & D Lead…

…and holds its hand in HIV, too.

Yesterday saw that rare thing in the drug industry: two Big Pharma creating a new company together, carving out both parents’ HIV assets from discovery through commercialization.

The new offspring (which, from the PR, doesn’t appear to have a name yet) will look far more like GSK than Pfizer, since GSK put in most of the booty, and thus owns 85% of the equity. But Pfizer’s minority contribution—basically Selzentry and some pipeline—will nevertheless make a business that’s “more sustainable and broader in scope than either company’s individually…with a 19% market share,” say the companies.

It’s still not going to make much of a mark on Gilead or Bristol, though, as we reported in the Pink Sheet DAILY yesterday. Thus given that GSK’s portfolio’s old, and Pfizer’s never really took off at all, it’s hard to believe this isn’t the precursor to a spin-off or sale—something that Pfizer’s R&D chief Martin McKay acknowledged was a possibility.

GSK and Pfizer aren’t just allied in packaging up sub-sized assets, though. They’re betting on similar R&D strategies, too. As the details emerge of Pfizer’s post-Wyeth reorg, (elaborated upon here) it’s clear that Pfizer’s copying GSK’s plan to create small, accountable biotech-like structures. At GSK they’re DPUs, at Pfizer they’re TA-focused units with about 100 scientists—or “no bigger than 150,” according to SVP worldwide discovery research Rod MacKenzie (who sits within the small-molecule half of Pfizer’s newly-divided operation).

The CSOs that head these units are being held accountable for delivering the right stuff. But “we’re moving away from metrics-based goals,” MacKenzie added during a panel at Windhover’s Pharmaceutical Strategic Outlook conference in New York earlier this week (so they might be keeping a good number of Wyeth’s senior R&D guys, but they aren’t taking Wyeth’s R&D productivity-booster idea). Success will instead be measured in terms of “value-based goals” including positive proof-of-concept.

Ok, we’re not quite sure either, but whatever the goals, “it’s certainly a possibility” that the accountable folk will be fired if they’re not met, said MacKenzie. That's akin to GSK’s DPU and CEDD chiefs who are on a three-year funding cycle and had better deliver if they want more after that. (Read this if you haven't already.)

But in this bid to re-create real-world biotech within Big Pharma walls, is it a case of the blind leading the blind? After all, GSK’s new model is hardly proven, just as its last iteration—the CEDDs Part I—wasn’t either.

And the two R&D head-structure Pfizer espouses--with Mikael Dolsten responsible for the large molecule universe and Martin Mackay responsible for the small molecule world--leads to some potentially unnecessary complexity, especially since those "empowered CSOs" will be developing mixed portfolios of compounds. One long-time industry consultant noted the structure "makes the accountability for productivity of those CSOs unnecessarily diffuse and undermines the power of the two heads". Mackay and Dolsten disagree, of course. To hear them in their own words, check out this podcast from last week.

The larger question, however, is why re-create biotech inside, when it’s working perfectly well outside? In response to that question on the panel on Wednesday, Pfizer' s Mackenzie noted “combining the spirit of small, with the power of scale—if you get it right--is the most powerful model you can have.”

If neither of them do get it right, the spin-off model might start looking pretty powerful, too.

image from flickr Adam Foster used under a creative commons license

Thursday, April 16, 2009

Provenge: The Real Impact of IMPACT

It appears as though Dendreon put out some long-awaited good news on the Provenge therapeutic prostate cancer vaccine.

The vaccine intended for men with advanced prostate cancer “met” its primary endpoint of overall survival in the 512-patient IMPACT study, according to the company. The primary endpoint was a 22% reduction in risk of death compared to placebo, according to previous disclosures.

“The magnitude of the survival difference observed in the intent to treat population resulted in the study successfully achieving the pre-specified level of statistical significance defined by the study's design,” the company said in a statement.

“Survival is the gold standard outcome for oncology clinical trials, and overall survival was the primary endpoint of the IMPACT trial. The positive results from this landmark study provide confirmatory evidence demonstrating that treatment with PROVENGE may prolong survival,” according to Dendreon CEO Mitchell Gold.

That’s essentially all the public will get until April 28 when the full study is released at the American Urological Association meeting in Chicago.

Despite the lack of real clarity, investors made some big bets on the results. Volume went from 12,775,310 shares on April 13 to 65,410,443 shares at close on April 14. The stock went from $7.30 a share to $16.99—and reached a high of $22.10—over the same period, according to Google Finance.

Based on our conversations over time with a number of people familiar with this therapy, we’re withholding judgment on the approvability of Provenge until the full results are out and we can understand why a drug that missed it’s primary endpoint twice, hit it a third time.

Let’s just say the burden of proof on Dendreon will be quite high.

Provenge represents the first in a new class of active cellular immunotherapies that “engage the patient's own immune system against cancer,” in the company’s own words.

Dendreon says that because the study results meet the criteria of a special protocol assessment agreement with FDA, the company will file an amended BLA in the last three months of the year to gain market approval.

“The successful outcome from the Phase 3 IMPACT study provides validation of the long-pursued goal of harnessing the human immune system against a patient’s own cancer,” Gold said in the statement.

It’s statements like this from company CEOs of high profile therapies that always raise a red flag to us. We’ve seen and heard far too many stories that are similar to Provenge where a combination of hopes and dreams and fevered market speculation can sometimes lead in exactly the wrong direction. Those experiences are cause for caution when trying to bet on FDA approval of the cancer vaccine.

Remember, in October 2008, the IMPACT study interim results showed the vaccine failed to meet the primary endpoint of overall survival—Provenge demonstrated a 20% reduction in risk of death but was short of the 22% mark.

If after the details of the study and the data are released, and the results are compelling, it will be a great victory for Dendreon, its CEO Gold, and a motivated and mobilized patient advocacy community intent on seeing the therapeutic vaccine get to market.

But we’ll have to wait until April 28 at least. In reality, we’ll have to wait for FDA to comb through the data before we know for sure. And until then, we’re managing expectations.

Wednesday, April 15, 2009

PSO: Highlights from Day 1

Greetings from New York, where our Pharmaceutical Strategic Outlook conference is in full swing. Here are a few of the highlights so far:

  • Merck's Chief Strategy Officer Merv Turner. Entertaining (as always) in his discussion of the key metric at Merck: ITPS (it's the pipeline, stupid). Our Pink Sheet Daily coverage of that Big Pharma M&A panel focuses on Merck's commitment to continued business development activity despite the Schering-Plough acquisition--think Cardiome alliance. You can find it here. Noteworthy also was that much of the discussion diverted to the growing importance of China in the health care universe (in part since Turner had just returned from his latest scouting trip there). Our favorite part of the panel, though, was when Credit Suisse analyst Catherine Arnold pointed out during a discussion of the merits of Big Pharma diversification that Pfizer, as a result of the Wyeth acquisition, could now diversify into follow-on biologics. "I'd advise against it," joked Turner, who is the architect behind Merck's own FOBs strategy. (He also gave a cheer when a majority of our high-caliber audience, in an interactive voting session, chose FOBs as one of the most sensible routes out of the fug for Big Pharma.)

  • David Mott. We'll let Reuters do the heavy lifting here, but suffice to say that the panel on running stand-alone biotechs within pharma drew a lot of interest. And not just because the ex-MedImmune CEO recalled an interesting conversation with Roche's Franz Humer that in retrospect could raise eyebrows. See the Reuters story here. We also sense some degree of tension in the Millennium-Takeda tie-up (or stand-off, perhaps?). But what do we know?

  • Health Care Reform panel. What did we learn? Don't be afraid of comparative effectiveness--embrace it! Unless of course it becomes part of FDA's decision-making process. (After all, you want to make drugs that are better than those of your rivals, right?) And the exclusivity period for FOBs might matter less than people think--instead of focusing on how much exclusivity will be in the bill that gets through Congress, said the panelists, how about thinking a little about what actually happens when that exclusivity expires.

Today's panels feature activist shareholdes, heads of pharma discovery (reminding us why pharm still does discovery), and the future of primary care. We'll try to tweet a bit more today too, so look for us on Twitter: @invivoblogchris and @invivoblogellen.