Friday, July 29, 2011

Deals of the Week Is On Deadline

Even as summertime drags its lazy weight across the Northern Hemisphere, some among us are feeling the intensity of impending deadlines. Okay, the NFL owners and players' union beat the clock and are on track for an opening night kickoff. But the lack of adult behavior inside the Washington beltway means the Prez and Congress have just four days to decide whether to risk a plunge into another nationwide recession. And though the San Francisco Giants may have welcomed their newest team member (pictured above, though still channeling his 2009 season per his vintage Web site), other teams are still scrambling to move high-value players in exchange for prospects (or vice versa, depending on pennant chances).

Even Deals of the Week itself is feeling the pinch on this summer Friday afternoon.

Not everyone is under the same time pressures, however. If Valeant Pharmaceuticals really has made an approach to buy out Sweden's Meda AB, things appear to be moving along at a snail's pace. The Wall Street Journal reported Wednesday that Valeant, a Canadian specialty pharma with a robust appetite for acquisitions, has made Meda an offer that could range above $4 billion, sometime in the last two weeks.

Meda, for its part, swiftly refuted the Journal's story without explicitly denying that a deal could be in progress, saying only that Meda "has not received an approach of the kind that is described in the article." Maybe they're just waiting for someone to get back from vacation and check his voice mail. It's the slow season, after all.

If the parties are indeed moving toward a deal, however slowly, it wouldn't be out of character for either. The two have joint ventures in Canada, Mexico, and Australia, and Meda has already licensed a couple of drugs to Valeant, taking $76 million up-front for dermatitis cream Elidel (pimecrolimus) and cold sore treatment Xerese (acyclovir/hydrocortisone) in a June partnership. Meanwhile, Valeant has already shown a willingness to spend big this year. It attempted but ultimately failed to buy Cephalon for $5.7 billion this spring, but instead settled for a spree of other acquisitions, among them dermatology units Dermik and Ortho Dermatologics, Lithuanian specialty pharma Sanitas, and generics seller PharmaSwiss.

The Journal story suggests that Meda is open to a sale, but is willing to take its time in finding the right buyer. Some of us, however, don't have that luxury (damn editors). The clock's ticking and time's a-wasting, so let's move it along to...

Ironwood/Depomed: Still enjoying the fruits of its 2010 IPO, Ironwood Pharmaceuticals is trying to expand its pipeline beyond its lead program linaclotide, a Phase III constipation and irritable bowel syndrome drug developed with Forest Laboratories that would be its first marketed product. The biotech inked a deal with Menlo Park, Ca-based Depomed on July 27 that will allow Ironwood rights to Depomed’s AcuForm gastric retentive drug delivery technology, which it intends to use with one of its early-stage development programs. The company did not disclose to which program the technology would be applied. The technology works to deliver targeted, extended release drugs directly to the upper GI tract at the desired rate. AcuForm technology is already approved with the use of two other drugs: Santarus’ diabetes drug Glumetza and Abbott Laboratories’ post-herpetic neuralgia drug Gralise. Depomed will receive an undisclosed upfront fee, as well as milestone and royalty payments on any products that result from the collaboration. Ironwood, which raised $188 million in its February 2010 public offering, will handle development and commercialization of the product, but Depomed will help with initial product formulation. – Lisa LaMotta

Trius/Bayer: Trius Therapeutics said Wednesday, July 27, Bayer Pharma has licensed regional commercial rights for the Phase III antibiotic torezolid. For an upfront fee of $25 million, Bayer receives rights to all countries in Africa, Latin America, the Middle East and Asia, except for North and South Korea, where rights are held by Dong-A Pharmaceuticals. Bayer will pay 25% of development costs toward global approval in skin infection and pneumonia, up to $69 million in milestones and double-digit sales royalties. Trius retains all rights in the US, Canada and Europe. Torezolid is one of several antibiotics being developed to treat emerging drug-resistant bacteria such as Methicillin-resistant Staphylococcus aureus (MRSA). Many clinicians say the efforts are not sufficient to head off widespread infection from the new organisms, prompting new efforts to spur development and ease regulatory burden. The deal comes as Trius pushes torezolid toward the regulatory finish line after the FDA spent years rewriting its guidance on antibiotic approval criteria. When FDA issued its new guidance for acute bacterial skin and skin structure infection (aBSSSI) in early 2010, the firm stepped back to revise its Phase III trial and a few months later agreed with the agency on a Special Protocol Assessment. Trius, which soon will begin pivotal trials of an intravenous version of torezolid, hopes to have top-line data for the Phase III study of the orally dosed version early next year. -- Alex Lash

Merck/Astellas - Merck is acquiring North American rights to intravenous vernakalant from Astellas Pharma’s U.S. subsidiary, Merck announced on July 26. The agreement will consolidate its interest in the cardiovascular drug to include worldwide rights to both the IV and oral formulations. Until now, Merck’s ownership included global rights to the oral drug and ex-North American rights to the IV formulation, which is already approved and marketed in the EU, Iceland and Norway under the brand name Brinavess as a treatment for acute atrial fibrillation. Financial terms were not disclosed but Merck will pay Astellas an upfront fee along with potential development, regulatory and sales milestones. As part of the agreement, Merck assumes the responsibilities Astellas undertook in 2003, when the Japanese pharma licensed the IV formulation from the drug’s discoverer, Cardiome Pharma. Cardiome will continue to bear 25% of development costs, while Merck will be responsible for 75% of development costs and all manufacturing and marketing costs. Merck had acquired ex-North American rights to IV vernakalant from Cardiome in 2009, along with worldwide rights to an oral formulation currently in Phase II for prevention of chronic AF and maintenance of normal heart rhythm. For its efforts, Cardiome received $60 million upfront, along with the potential for up to $540 million in milestones and tiered royalties on product sales.—Joseph Haas

Fujifilm/Dr. Reddy's: In its latest step intended to transform itself into a medical and life sciences company, Japan's Fujifilm has partnered with Indian generic drug maker Dr. Reddy's Laboratories for a joint venture that will bring generics to the Japanese market. Ownership of the JV will be split 51%-49% in favor of Fujifilm. The photo supply maker says it will draw upon its own advanced quality control techniques while incorporating Hyderabad-based Dr. Reddy's pharma expertise as a manufacturer and global supplier. Generics account for nearly a quarter of Japanese drug sales by volume, according to Fujifilm; the companies hope to target the country's aging population with generics that fit the overall marketplace. The joint venture is aiming to launch its first products within three to four years. Fujifilm has expanded beyond film in recent years, and now manufactures materials for flat panel displays, graphic systems and optical devices as well as the life sciences industry. - Paul Bonanos

Image of the awesome Carlos Beltran courtesy of Flickr user Keith Allison, reproduced under Creative Commons license.

Wednesday, July 27, 2011

Let's Fall in Love (With New Business Models)

How does the song go?

Adimab does it / Ablexis does it
Even Stemmer's Amunix has done it
Let's do it / Let's find a new corporate structure that allows us to separate drug discovery from development so that we can sell the assets more easily!


It needs work. Cole Porter's version was a little snappier.

But our toes are tapping because, yet again, an early-stage firm with a promising technology -- or in this case, an experienced drug-discovery team -- is launching with a novel structure tailored to the new reality of the biotech business. The firm is Inception Sciences, and its two founders, Brad Bolzon and Peppi Prasit, are fresh off the pending sale of Amira Biosciences to Bristol-Myers Squibb, which you can read about here.

The next edition of "The Pink Sheet" Daily will have a more detailed explanation of Inception, which, like the movie, is a bit tough to get the old noggin wrapped around. In general, however, Inception follows in the footsteps of other biotechs that want to:

- Keep the platform or discovery technology in a holding company and the development-stage assets in separate corporate entities, thus creating the opportunity for more streamlined acquisitions.

- Let investors invest "a la carte."

- Find a way to return cash to investors faster without selling the underlying science.
There are several variations on the theme, as our little ditty above indicates. Amunix has created a half life-extension technology now behind products in two spin-outs: Versartis and Diartis. There's also Nimbus Discovery, which our START-UP colleagues wrote about here, and the antibody platform firm Adimab and its clone Arsanis.

Still, not everyone can hum the tune: the extra layers of administration and bureaucracy can be too much for a lean biotech with inexperienced backers. But in a business where the people with the cash are growing ever-more impatient, it's not a trend going away soon.

Friday, July 22, 2011

DOTW: It's Hot, Hot, Hot

There's nothing like a big deal to get the blood pumping, especially given the lassitude-inducing temperatures hitting most of the US. And just as journos were reminiscing about the good ol' days of hostile then friendly pharma-biotech tie-ups, Express Scripts and Medco deliver a deal with enough uncertainty to keep tongues wagging for months -- or at least until the FTC makes a ruling on whether the marriage merits its blessing.

Who knew pharmacy benefits could be so sexy?

As "The Pink Sheet", WSJ, Fortune, and other pubs have noted, anti-trust concerns are the primary question for investors. And given Medco's stock price mid-day July 22 -- shares were up 18% relative to the day before news of the tie-up broke but still well below Express Scripts' $71.36-a-share offer -- the market clearly believes this ain't a deal that will definitely get done.

Aside from the "Will they? Won't they?" questions tied to FTC, there are plenty of other uncertainties bubbling up (like apple pie fresh from the oven or hot asphalt on the Garden State Parkway). For starters, how will this deal impact drug companies and the kinds of rebates they need to offer to get their drugs covered by such a PBM behemoth? Ross Muken of Deutsche Bank estimates Express Scripts and Medco together process a whopping 35% of all US prescriptions and the WSJ's "Heard on the Street" column pegs the rebates both PBMs collected in 2010 at around $12 billion.

That's a lot of dough -- and could be a reason FTC will eye the merger sympathetically. Rebates after all get passed on to customers -- the employers and health plans who contract with the likes of Express Scripts and Medco to manage their pharmacy spend. Theoretically, the ability to negotiate better rebates means greater control over drug costs, one of the major factors tied to spiraling health care spend. Not surprisingly that was a message management from both PBMs played up in their joint conference call announcing the deal.

Of central interest to drug makers ought to be how a combined Express Scripts-Medco will negotiate rebates for specialty drugs like cancer medicines. Pharmas have doubled down on nichier areas because the high unmet medical need and grievous nature of diseases like cancer, lupus, and rheumatoid arthritis has -- at least historically -- offered tremendous pricing freedom. That's starting to change; the increasing number of oncologics for renal cell cancer, for instance, means payers can choose -- based on efficacy and cost -- which medicines to prioritize without being crucified for denying care. With so much profit stemming from specialty medicines, drug makers are sure to be wary about the negotiating power of an enlarged Express Scripts: more rebating to get coverage for their meds will definitely start to eat into profits.

We'll have more to say about the implications for specialty drug spend in the coming issue of "The Pink Sheet", even as we try to understand another key unknown: how will this merger impact personalized medicine initiatives already underway at both companies?

With integration plans likely focused on simply making this massive entity work logistically, how much energy will be devoted to the interesting (but admittedly not explicitly bottom-line focused) research efforts spearheaded by Felix Frueh and company at Medco Research Institute? Paradoxically any de-emphasis on those initiatives ought to give drug cos something to cheer about. Frueh's team after all has helped resurrect warfarin use and the group looks to be doing the same thing in RA with methotrexate.

With so many questions, it's no wonder debate about the deal has reached a fevered pitch. While we dig for answers, bide your time with a spin through biopharma's latest wheeling and dealing. It's ...

AMAG/Allos: Mergers of equals can be a hard sell to shareholders (remember Biogen and Idec?). Thus it's hardly surprising that Wall Street -- and pundits -- reacted quickly and skeptically to the proposed merger between AMAG and Allos, announced July 20. Execs from both companies argue the deal helps their one-product companies move into the black, and speeds growth, helping to overcome the disappointing launches of the iron deficiency therapy Feraheme (AMAG), and oncology drug Folotyn (Allos). The companies plan to combine their sales forces to sell both drugs, via a combined team of about 75 reps. In addition, the companies claim they can achieve cost synergies of between $55 million to $60 million, by cutting R&D and administrative overhead. Yet it's hard to see the synergies afforded by two very different products. Can the sames sales reps really detail both products given the lack of overlap? Folotyn, after all, is a high-priced drug aimed at specialist doctors and a small patient population, while Feraheme has a much broader patient population and prescriber base. Thus, analysts worry the proposed merger resulted because the companies lacked any better options. (It's a case of 1+1 not even equaling 2, let alone the 3 you'd want to get to justify the integration upheaval.) It will be interesting to see if shareholders get fired up about the merger in the coming weeks; it wouldn't be surprising if significant AMAG investors like Palo Alto Investors and Adage Capital Partners objected. These firms could just as easily argue a dividend is more likely to add value than the proposed merger. --Lisa LaMotta and EFL

Pfizer/Icagen: Pfizer announced July 20 plans to buy its partner Icagen, which develops sodium ion channel modifiers for pain, as part of efforts to bolster the big pharma's capabilities in this therapeutic area and expand its newly created Neusentis research unit. Under the terms of the deal, Pfizer will acquire the outstanding 8.3 million shares of Icagen it does not already own for $6 per share. The deal is valued at $56 million, including the 11% of Icagen Pfizer already owns, the firms said. Recall the two companies have been partners since 2007 when they entered into a collaboration for the discovery, development and commercialization of compounds that modify three sodium ion channels. Over the next two years, Pfizer invested $38 million upfront, including $15 million in equity and $11 million in R&D funding. Meantime, Pfizer clearly believes there is significant market potential in new pain meds; just months after CEO Ian Read announced a restructuring to refocus Pfizer around its innovative core, the drug maker established Neusentis in Cambridge, England to develop new therapies for pain, sensory disorders and regenerative medicines. Ruth McKernan, who heads the newly minted CNS group, told "The Pink Sheet" DAILY Pfizer was increasingly interested in potential new therapies targeting ion channels. Based on this, she claims a strategic partnership with Icagen "made more sense" than relegating the biotech to working on just one or two programs. --Jessica Merrill

Allergan/Vicept Therapeutics: Wasn't it only last week that J. Michael Pearson, CEO of Valeant, notched two acquisitions in his quest to build that specialty-focused, anti-R&D outfit into an dermatological power-house "bigger than anyone else's"? Looks like Allergan is going to give Valeant a run for its money. The maker of Botox has been building its medical dermatology portfolio, and the acquisition this week of privately-held Vicept Therapeutics aids this ambition, providing the bigger spec pharma with V-101, a Phase II daily topical cream to treat the redness associated with rosacea. Under the terms of the deal, Allergan has agreed to pay $75 million upfront plus another $200 million in regulatory and development milestones. Vicept investors are also eligible to receive undisclosed payments should certain sales milestones be reached. That's a tidy -- and quick -- exit for Vicept's backers, which include Sofinnova, Vivo Ventures, and Fidelity Biosciences. The VCs only staked Vicept two years ago with a $16 million Series A, meaning the upfront payment alone affords them a 4.6x step-up on their venture dollars. (Add in the known earn-outs and the theoretical return jumps to around 17x.) With the entrance of Valeant as a prime derm player, the number of potentially interested acquirers of products in this space continues to increase. Long-considered a pharmaceutical back water with innovation essentially meaning reformulation of existing medicines into topicals, dermatology is enjoying a renaissance. Who knows? With a few more exits like Vicept's, this particular TA could have VCs crooning "I've got you under my skin."--EFL

BMS/Amira: The latest addition to Bristol-Myers Squibb’s pipeline-refreshing “string of pearls” strategy is Amira Pharmaceuticals, which BMS acquired July 21 for $325 million up-front. The deal, which could bring in another $150 million in milestone payments, centers on Amira’s fibrotic disease holdings, including idiopathic pulmonary fibrosis and scleroderma treatment AM152. Scheduled to enter Phase II later this year, the drug is one of several racing to become the first approved IPF treatment in the US. BMS also gets Amira’s autotaxin program, which has shown preclinical promise in neuropathic pain and cancer metastases. The acquisition represents a strong exit for Amira stakeholders including Avalon Ventures, Prospect Venture Partners, Versant Ventures and Novo Ventures, which have supplied Amira with $28 million in two rounds since 2005. The deal doesn’t cover certain Amira assets which will be spun out, however; a new LLC shell company has been organized to collect ongoing revenues from an existing partnership with GSK around a Phase II asthma treatment, and another has been set up for its unpartnered asthma and COPD programs, which Avalon’s Kevin Kinsella said are likely to be sold. BMS will retain San Diego-based Amira’s key scientific staff following the deal. – Paul Bonanos

Image courtesy of flickrer Lori Greig via a creative commons license.

Financings of the Fortnight Tries to Beat the Summer Heat

First, the good news. We had our favorite scrumptious local ice cream treat to finish off lunch today. You really should try one. (Not the one pictured above, but it's still good. Trust us.)

Wait, there's other good news: venture capitalists invested $1.24 billion in biotech in the second quarter of 2011, a 46% jump from the previous quarter. It's the highest quarter since... since....! Well, since the 2nd quarter last year ($1.37 billion). So, it "bounces back" from what, exactly? Even the dismal year of 2009 had a similar figure, $1.19 billion raised in the fourth quarter. It's a nice short-term bump, but not necessarily the breakthrough everyone's looking for.

[UPDATE: DowJones VentureWire released its VC numbers the day after this post went up. DJVW tallied $1.1 billion raised by biotech, up 36% from the first quarter. The different numbers are nothing new for the dueling data houses. FOTF tried to find an explanation last summer.]

Further clouding the picture (a.k.a. the bad news) is a second set of venture data released by the National Venture Capital Association: the previous quarter saw the lowest number of venture funds raising cash since 1995. Welcome to the shakeout. The number of venture dollars raised has decreased every year since 2007, down to last year's $13.3 billion, but larger inflows per firm this year have so far added up to $10.2 billion raised. The take-home lesson: VCs might be folding up shop, but those who remain are attracting more cash.

That's across all industries. NVCA and its survey partner Thomson Reuters don't break out fundraising by sector. For a little more color, though, we've got a treat for you. You can put it between oatmeal cookies and dip it in chocolate if you wish.

Our colleagues have recently updated what we call the "gas-tank" chart: Which life-science VCs are revving for a refill, and which are running on empty. It's coming soon to a START-UP magazine near you, but FOTF got a sneak peek. Since our last gas-tank update in July 2010, several firms have raised new funds (Advent Venture Partners, Avalon Ventures, Third Rock Ventures), while others listed as running low last summer are again pounding the hot pavement, stumping for cash. For example, Sofinnova Ventures is trying to match its vintage-2006 $375 million fund. Our European colleagues have noticed the stirrings, too.

But no matter how much we equate shoe leather with optimism, there's no getting around the shakeout. Everyone thinks the life-science VC sector will shrink in the next three years. Trust us, we've asked. (And you'll see the results in an upcoming issue of START-UP.)

As we love to remind you, not all venture capital is distributed equally. Call us bleeding-heart wasteful-spending underdogs, but we love to see the new ideas and emerging science get funded, so when we see a slight recovery in Series A rounds in the first half of 2011, as noted in our previous column, we think hey, maybe this time the good news outweighs the bad news. It might not be a massive hot fudge sundae, but it could be a little cherry on top. Or if you prefer, life is far from parfait, but once in a while you get your just desserts. Loosen your waistbands, everyone, it's time for a heaping helping of...

Essence Group: Healthcare services holding company Essence Group Holdings completed a $61 million round of funding that included contributions from private equity firm Camden Partners Holdings of Baltimore and blue-chip Silicon Valley VC Kleiner Perkins Caufield & Byers. It’s the latest large funding in the healthcare IT sector, an area that has attracted increased attention and investment since the passage of the Affordable Care Act last year. It also follows KPCB’s 2009 investment in employee health incentives start-up Red Brick Health. For Essence, it’s nominally a “Series 2” round, following a recapitalization of several previous rounds as a “Series 1." According to a company spokesman, the funding brings Essence’s private investment to more than $120 million. Previous rounds had included numerous individual investors, including KPCB partner John Doerr. Essence will use the funds largely to support marketing of its Lumeris subsidiary’s TackleBox software, a cloud-based collaborative communications system for accountable care organizations that includes clinical and financial outcomes management and decision support capabilities. St. Louis-based Essence also operates its own health plan, while a third subsidiary, ClearPractice, is a vendor of electronic medical records and revenue management software package for small physician groups. -- Paul Bonanos

Coronado Biosciences: Forgive us the easy pun, but Coronado, based in New York City, hopes to worm its way onto the public markets via a Form 10 filed on July 15, which effectively registers its private shares as common stock. The firm's lead therapy, not yet in the clinic, is made of the microscopic eggs of the parasitic pig whipworm and meant to treat autoimmune disorders. If the FDA allows the IND, the first test will be in Crohn's disease patients. The treatment is based on the "hygiene hypothesis" that modern humans, especially in developed countries, have cleansed their environments too well. Parasites like Trichuris suis -- which only briefly colonize humans before being flushed out-- are in fact necessary immune-system triggers. Without them, Coronado believes, we don't have the proper T-cell regulation, leading to autoimmune diseases, in the gut and elsewhere. Coronado says it plans to file an IND in the third quarter and complete a Phase I dose-escalation study by end of year. Its second candidate, slated for the clinic next year to test against acute myeloid leukemia, is a lysate that activates natural killer (NK) cells. Founded in 2006, the firm has racked up $43 million in losses. The Form 10 is the first step to making its shares tradeable, but there's no guarantee Coronado will win a listing on a major exchange. It does not intend to hold an underwritten IPO, according to its Form 10 filing. Coronado acquired regional rights to the worm treatment earlier this year as part of its acquisition of Asphelia Pharmaceuticals. That came on the heels of a management overhaul, in which its CEO and CFO were let go, but not before collecting $860,000 and $700,000 in compensation for 2010. -- Alex Lash

Merrimack Pharmaceuticals: Oncology drug developer Merrimack hopes to become the latest pharma to reach the public markets. The Cambridge, Mass.-based company filed paperwork with the SEC for an IPO potentially worth $172.5 million in the coming months, which would bring liquidity to a large and diverse investor group that has supported the start-up since its inception in the 1990s. The offering’s proceeds would support ongoing development of a pipeline whose most advanced drug is just reaching Phase III, a reformulation of the chemotherapy agent irinotecan dubbed MM-398, intended for use in metastatic pancreatic and gastric cancer patients who did not respond to Eli Lilly’s Gemzar (gemcitabine), the standard of care. MM-398 is slated to enter Phase III trials in the fourth quarter and will be compared to fluoruoracil and leucovorin. Merrimack already reaps licensing revenue from a partnership with Sanofi around its antibody MM-121, for which the pharma paid $60 million upfront for worldwide rights in 2009. Merrimack has raised more than $250 million to date, much of it in recent years. It now counts large funds affiliated with Fidelity Investments, Credit Suisse First Boston, and TPG-Axon among its top investors. The firm has four compounds total either in the clinic or soon to enter, and says it's also developing companion diagnostics for each compound. Despite near-record activity in IPOs in the month of July, the only biopharma firm slated to go public soon is Horizon Pharma, which has one pain-killing drug recently approved and another nearly ready for marketing application.-- P.B.

SARcode Biosciences: The San Francisco Bay Area ophthalmology company hopes there's not a dry eye in the house after its latest cash infusion, a $44 million B round led by Sofinnova Ventures. The firm plans to use the money to push forward development of its lead compound, a nonsteroidal anti-inflammatory small-molecule antagonist of the integrin lymphocyte function-associated antigen-1 (LFA-1) to treat dry eye. Dry eye is caused by a number of factors, including age, menopause, environmental factors, medications, certain diseases like diabetes, and even prolonged staring at a computer screen. (Uh-oh.) SARcode plans to begin the first of two Phase III trials later this year and to report data in June 2012, and CEO Quinton Oswald told "The Pink Sheet" this week that his troops might bring it to market and sell it without a partner. He said 100 to 120 sales reps could market it to ophthalmologists. Oswald was previously an executive at Roche Holding's Genentech, where he helped launch Lucentis (ranibizumab), a commercially successful macular degeneration drug with sales of $2.9 billion in 2010. The new round included new investor Rho Ventures, as well as returning investors Alta Partners and Clarus Ventures. The round closed July 14 and should fund the company through 2012.-- Lisa LaMotta

Image courtesy of flickrer infowidget via a Creative Commons license. Mmm.

Thursday, July 21, 2011

We Bet No Champagne Corks Popped at AZ

Brilinta's long-delayed FDA approval yesterday should have meant party-time at AstraZeneca. After all, this blood-thinner showed itself, in head-to-head trials, to be better at preventing heart-attacks than the $8.8 billion Plavix, the number-two drug in the world. And unlike in the case of beleaguered dapagliflozin, AZ doesn't have to share Brilinta profits with anyone.

We suspect there weren't many champagne corks popping, though. FDA's nod was reluctant, to say the least, and came with a sting in the form of a boxed warning about bleeding risk and the aspirin-problem: if patients are on too much aspirin (more than 100mg per day), Brilinta ain't so brilliant. Most if not all heart patients take aspirin. And most also take host of other pills, too -- meaning that Brilinta's twice-daily dosing could be a significant turn-off.

No wonder that, despite a small share rise for AZ yesterday, the analyst reaction was muted. Jefferies' Jeffrey Holford halved his peak sales estimates for the drug to $1 billion, calling the FDA victory 'pyrrhic' and advising investors to sell. Indeed, even the $1 billion, if it's reached, won't come fast: AZ is talking about a 12-month roll-out period, given reimbursement hurdles (raised, probably, by today's planned merger of Express Scripts and Medco, giving buyers even more clout to squeeze prices) and a REMS that calls for the company to educate physicians as to the aspirin problem.

By then, generic Plavix will have flooded the U.S. market (multisource generics are expected in May 2012), providing yet more compelling reason -- cost -- for payers to dismiss, or at least disadvantage, Brilinta.

They certainly aren't embracing Effient, Lilly's blood-thinning offering, launched in 2009. Granted, that drug came with a narrower label than Plavix, and additional bleeding risk (and not only among high-dose aspirin patients). Despite some advantages over Plavix -- it doesn't share the blockbuster's efficacy problems among slow metabolizers, and can be used in conjuction with PPI drug omeprazole -- Jefferies expect Effient sales to reach only $244 million this year.

The bottom line is that Brilinta won't do much to plug the gaping, multi-billion dollar revenue hole left at AZ after the likes of Seroquel, Nexium, Symbicort, Atacand and Zomig (worth about $14 billion in 2010) lose exclusivity in 2014 or sooner. Not to mention the $5.7 billion Crestor, which goes off in 2016 but whose growth is already slowing ahead of generic competition to class-competitor Lipitor this year.

So AZ's in the same boat as Lilly: sitting there (albeit while re-organizing its R&D), faced with the harsh reality of today's pharma scene: if there's a big drug out there that works good enough, and is about to become a lot cheaper, don't bother trying to better it. Better has to be so much better these days; and safer has to be safer in all patients, not just those going easy on the aspirin.

Meanwhile in Europe (where, in those patients included in the 18,000-strong Phase III PLATO trial, the aspirin problem didn't show up), Brilique (as it's known there) is already reimbursed in seven countries (including Iceland) and the company expects decisions this year in France (following an earlier withdrawal), Germany (where it's the first to test a new reimbursement system) and the U.K, where the drug received a preliminary approval in June.

image by flickrer creative tools used under creative commons

Monday, July 18, 2011

Guest Post: Moving From The CER Wilderness To The Promised Land

By Richard Gliklich, MD, President and CEO, Outcome

We all know, broadly speaking, the mission of comparative effectiveness research (CER), now sometimes called patient-centered outcomes research. Such studies should inform clinical and health policy decisions made by physicians, payers, and regulators to help determine treatment guidelines, coverage policies, and the therapeutic value of new therapies relative to standard-of-care in real-world settings.

But dive deeper, and it’s clear there remains an uncomfortable level of confusion as to what CER will actually be used to do. So complicated is CER that even US federal agencies can’t agree on a unifying definition. Indeed, look across the various Health and Human Services websites and related entities such as the Patient-Centered Outcomes Research Institute (PCORI) and you’ll discover slight differences in emphasis that have big potential impact on CER’s implementation.

For example, the U.S. Federal Coordinating Council defines CER as the conduct and synthesis of research comparing the benefits and harms of different interventions and strategies to prevent, diagnose, treat and monitor health conditions in “real world” settings. But the U.S. Agency for Healthcare Research and Quality defines CER as a type of health care research that compares the results of one approach for managing a disease to the results of other approaches – for instance the utility of drug A relative to drug B or procedure X to procedure Y or drug A to procedure X.

And according to the new Patient Centered Outcomes Research Institute Methodology Committee, CER seeks

“to understand and improve the effects of healthcare and prevention services on outcomes important to all persons with disease or at risk for disease considering individual perspectives, needs, preferences, biological, environmental, behavioral, and cultural determinants of health.”
Well, that seems to include just about everything.

Certainly it's a lot of high falutin’ language to digest – and for manufacturers hoping to bring new products to market, it’s critical they get fluent in CER as soon as possible. No matter how its defined, CER IS NOT going away.

Investment by the U.S. government in the concept is soaring.The Patient Protection and Affordable Care Act (PPAC) created the Patient Centered Outcomes Research Institute (PCORI) with hundreds of millions of dollars in funding. It is inevitable that the importance of PCORI will grow and its impact on drug and device discovery as well as post-approval monitoring will become more and more apparent.

So if the different definitions spark confusion, we offer this piece of advice. The best way to think about CER is the audience it serves.While classic research questions arise from intellectual curiosity of scientists, CER informs decisions made by a diverse group of stakeholders across the industry – especially regulators, payers, patients and providers.

Thus, this real-world pragmatism changes the way CER questions are defined and answers are pursued. It also means decision makers will accept complementary forms of evidence to bolster their arguments, not just traditional ‘experimental’ studies. These data span the gamut from prospective observational studies to retrospective analyses of existing clinical or administrative data -- and even include sophisticated models based on such data sets.

Still, it’s one thing to have evidence; it’s another to know which evidence is sufficient to answer key questions. As Sir Michael Rawlins, Chairman of the National Institute of Health and Clinical Excellence (NICE) in the United Kingdom has stated, it is clear the traditional evidence hierarchies are limited when it comes to understanding how effectively drugs and devices work in the real-world. Those limitations have sparked working groups, like the longstanding GRADE (formed in 2000) and the relative newcomer GRACE (started in 2007), which aim to redefine what constitutes “good” research based on the quality of the methods and results and contextual matters.

With no ready answers to what constitutes appropriate CER, drug makers need to spend more time earlier in the drug development cycle considering the kinds of evidence they need to gather. That’s especially important given that going forward non-traditional trials will likely be equally important – if not more important – than the randomized double blind placebo controlled studies preferred by regulators for approval.

What it all boils down to is this: CER involves much more than just the research. As important, it is a process that includes setting priorities, generating evidence, synthesizing said evidence, and disseminating it to the right audiences.We’re starting to move down the path, but it’s still going to be a few years before we really get "there."

In January 2011, PCORI formed a methods committee to help industry ch
art a map through the CER wilderness. The goal? A translation table to help both decision makers and researchers know what types of studies are appropriate for different types of questions. What is the best way to compare a drug to a procedure in urology in the real-world? Or, given the existing evidence, what more information is needed to make a decision about a health intervention?

Undoubtedly, the guidelines won’t be so succinct they can be etched on two tab
lets; nor will PCORI have Charlton Heston able to lead us out of this information desert into the promised land.

Let’s just hope it doesn’t take the same 40 years it took for the Israelites to find their way out of the desert. With healthcare costs rising and CER the most frequently cited cure to the impending insolvency of Medicare, we’ll need some more timely answers than that.

Founded in 1998, Outcome, a spin-out of a Harvard affiliated research laboratory, is a leading provider for patient registries, studies and technologies for evaluating real-world outcomes
. For more information about Outcome, please contact Renee Hurley:

Friday, July 15, 2011

Deals of the Week: Liberté, égalité, fraternité

Sacre bleu! For oncology drug developer Exelixis, le quatorze juillet brought the wrong kind of liberation. In a regulatory filing, Exelixis revealed that longtime partner Bristol-Myers Squibb has terminated the companies’ licensing agreement around XL281, freeing up rights to the Phase I RAF kinase inhibitor studied in patients with solid tumors. BMS’s decision spells the end of the companies’ December 2008 alliance that covered two drugs, for which BMS paid $240 million in up-front and near-term fees. Left unpaid will be a lot of biobucks: $315 million in development and regulatory milestones, $150 million in sales milestones, and double-digit royalties. The partnership officially ends in October.

Hewing to its chosen strategy, Exelixis won’t enjoy XL281’s newfound liberty. But if there's a silver lining for Exelixis, it's that the company will receive the remaining unpaid $120 million of the up-front component by October, rather than on a deferred schedule that would have drawn out payments until April 2014. That gives the company a little more cash to put behind primary program cabozantinib, the compound formerly known as XL184, which interestingly was also part of the bitoech's mammoth 2008 alliance with BMS.

Exelixis also recovers full control of XL281, which its well-heeled business development team could partner away again. After all, BRAF remains a hot target, and nearly every pharma has identified oncology as a core pursuit.

Cabozantinib still has its risks, of course. BMS walked away from the drug last June, becoming the second Big Pharma to do so: GlaxoSmithKline lost interest in it in 2008 as well, effectively ending its six-year partnership with Exelixis. Cabozantinib has shown strong promise in prostate cancer, where it’s thought to be a potential blockbuster. The candidate is farthest along in medullary thyroid cancer, although Exelixis said last week that results of a Phase III study in MTC would be delayed for three months.

BMS and Exelixis have been moving apart in oncology for some time. Last fall, BMS waived its option on the last compound of a three-drug oncology agreement, after one of the others failed. Exelixis also opted out of a collaborative agreement on BMS-833923, formerly XL139, leaving further development to BMS. The two companies still have tie-ups covering diabetes and inflammatory diseases, based on new agreements forged in October that brought Exelixis $60 million in up-front payments.

From those of us in the Fourth Estate to the rest of you, we hope you’ve got a free moment for this week’s installment of…Valeant/Dermik and Valeant/Ortho Dermatologics: Canadian specialty pharma Valeant Pharmaceuticals may not have been able to take out Cephalon in a hostile bid this spring, but the company hasn’t lost its appetite for acquisitions. The company made two major moves in dermatology this week, snapping up both Sanofi-Aventis’ Dermik unit for $425 million and Janssen Pharmaceuticals’ Ortho Dermatologics subsidiary for $345 million. Dermik markets a small portfolio of creams and lotions as well as the injectable Sculptra Aesthetic, for correcting facial wrinkles and folds, and comes with its own manufacturing and packaging facility in Laval, Quebec. The facility produces 70 formulations and more than 200 presentations of tablets, capsules, non-sterile liquids, ointments and creams, for itself and for other companies. Sanofi was magnanimous about selling the unit, waving it off with glad tidings: "Dermik will benefit from being part of a larger dermatology business," it commented. Ortho manufactures Retin-A-Micro and Renova, two formulations of tretinoin for acne, as well as Ertaczo (sertaconazole) for athlete’s foot. Dermik brought in $240 million in sales in 2010, while the J&J unit took in $150 million. Valeant also acquired North American rights to dermatitis cream Elidel (pimecrolimus) from Sweden's Meda AB in late June. - John Davis and Paul Bonanos

Micromet/Amgen: Rockville, Md., and Munich-based oncology drug developer Micromet has teamed up with Amgen on the development of three solid tumor targets using Micromet’s BiTE (Bispecific T-Cell Engager) antibody technology platform that mobilizes T-cells to cause apoptosis. Amgen will pay €10 million ($14 million) upfront, plus Micromet is eligible to receive €342 million ($479 million) in clinical and commercial milestones for the first product that is developed under the collaboration. The terms are similar to other deals that Micromet has struck with other Big Pharma. Amgen has the right to pursue development of two of the three targets. Micromet will receive another €25 million ($35.1 million) payment should the antibodies be advanced to IND. Amgen will pay a comparable amount in milestones for the second product. Amgen will also cover all research and development costs. Micromet has four other deals in place with large pharmaceutical companies for its BiTE antibodies, including Sanofi and AstraZeneca. - Lisa LaMotta

: When it raised a $12 million Series A round of funding in April, Singapore-based ASLAN Pharmaceuticals said its business model would involve in-licensing early-stage drug candidates, developing them to the proof-of-concept stage, and out-licensing them to larger pharma partners. Now the young start-up has found its first candidate in Array BioPharma’s ARRY-543, a molecule being studied for gastric cancer with potential elsewhere in oncology. ASLAN will conduct Phase II trials in Asia, then seek a partner for the drug, an HER2/EGFR inhibitor with potential to augment or supersede Roche’s Herceptin (trastuzumab) in HER-2 positive gastric cancer patients. The somewhat unusual licensing deal did not include an up-front component; rather, the two companies will “split the back end economics,” Array CEO Robert Conway said in an interview with PharmAsia News, adding that Array will still receive “a significant portion” of the proceeds if Aslan completes an out-licensing deal after Phase II trials are complete. The arrangement between the two companies also includes an option for ASLAN to negotiate a license for a second Array compound. Singapore’s BV Healthcare II, a fund managed by BioVeda Capital, led ASLAN’s Series A round, investing alongside Sagamore Ventures and other backers. – Tamra Sami and P.B.

/Zogenix: Durect is the latest company to partner its extended release technology to turn an old staple into a new product. Zogenix will use Durect’s Saber technology to create a once-monthly formulation of risperidone, an antipsychotic that went off patent in 2003. The drug is expected to start clinical trials in 2012, but will face plenty of competition once it hits the market. Johnson & Johnson already makes a twice monthly injectible risperidone called Risperdal Consta that had sales of more than $1.5 billion in 2010. Zogenix will pay Durect $2.25 million upfront, as well as $103 million in future clinical, regulatory and commercial milestones. Durect will also be eligible for royalty payments should the product reach the market. The deal was a relatively small one, but will help the company move forward the rest of its pipeline, which is largely pain medications.- L.L.

Public domain image from Wikimedia Commons.