How Important Is Prasugrel? Ask The Street

We knew the story on the prasugrel delay was big, but maybe not quite this big.

If you hadn’t already heard, it appears a decision by FDA on Eli Lilly/Daiichi Sankyo’s anti-clotting drug won’t come until March 2009 at the earliest. That projection is based on the convening of an FDA advisory committee tentatively being scheduled for February 2009. To read the rest, click here.

How important is prasugrel? Let’s put it this way: the stock of Sanofi-Aventis, partner with Bristol-Myers Squibb on the blockbuster blood thinner Plavix which prasugrel is expected to essentially replace, was up 9.3% at midday. Bristol’s stock? Up 2.4%. How about Eli Lilly? Down 4%. Remember, it takes a lot to move the needle for all three companies given their overall size.

Lilly and Daiichi put out a joint statement responding to our story. The long and short of what they had to say?

1) The companies are still in discussions with FDA.

2) If FDA chooses to schedule an advisory committee, the companies will be ready for it.

3) The companies believe prasugrel should be approved.

“The FDA can schedule an advisory committee at any time during the review of an application. If one is called, then we will be prepared to participate,” Daiichi’s global head of R&D John Alexander said in a statement.

“Daiichi Sankyo and Lilly are engaged in an ongoing dialogue with the FDA,” Lilly VP-global regulatory affairs Jennifer Stotka said. “We remain confident in the overall benefit-risk profile of prasugrel, and we believe this drug should be approved.”

Wall Street analysts appear to be most concerned with the cancers discovered in the prasugrel arm. Our very basic understanding is that the presence of tumors can be explained by the fact that they were discovered through enrollment and treatment in the TRITON study, not caused by the drug itself. The reasoning? The onset was too rapid to have been caused by prasugrel. That’s only one perspective, though, so do with that what you will. But there is some resentment out there that Lilly did not visibly disclose—if disclose at all—the cancer issue.

Now, the focus shifts to Lilly’s third quarter earnings call slated for Thursday, October 23, where it’s expected the firm will have to address the prasugrel issues in slightly more detail. Or not.

Big Tent for Stent Trial Is All About Predictability of Results

Eight large product companies--including the top four drug-eluting stent (DES) companies, Abbott, Cordis, Boston Scientific, and Medtronic, as well as drug companies Bristol-Myers Squibb and Sanofi Aventis, makers and co-marketers of current anti-platelet blockbuster Plavix, as well as Eli Lilly and Daiichi Sankyo, co-developers of the much anticipated prasugrel—are collaborating on a large-scale, $100 million clinical trial assessing late-stent thrombosis.

That's interesting, we suppose, but hardly surprising and not likely to lead to any remarkable findings. Rather, it is the very predictability of the study’s likely results that is, we’d bet, what’s brought everyone to the table.

For one thing, the role of anti-platelet therapy following DES implantation has been aggressively studied for years and got a boost when the whole late stent thrombosis (LST) debate took off a couple of years ago. And every study, including several presented at this year’s TCT meeting in Washington DC where the news of the launch of the new study was announced, has shown the same thing: yes, patients face a much lower risk of LST when they stay on their meds for some period of time.

The new study may determine what the optimal Rx regimen is, but the notion that patients need to follow that regimen is what everyone’s betting will come out of the new study—and it’s hardly news. Only the direct opposite—that staying on an anti-platelet therapy has no impact on LST—would register as anything like a surprising result.

Moreover, what the WSJ called “an unusual display of collaboration,” among the companies—unusual, presumably, because they’re all fierce rivals in this space--is also hardly that. There’s no competitive issue at all here. All eight of the product companies are hoping and betting that the study results prove the clinical value of aggressive anti-platelet therapy—the drug companies, because they want to sell more drugs, the stent companies because they would like to show, once and for all, that the LST problem is more about the use of drugs than the use of stents and, more importantly, that the problem of LST is treatable with drugs.

Indeed, this could be an important study for both the Pharma and Device companies, but more so for the latter, if it conclusively demonstrates that physicians need not be concerned about putting their patients at risk by implanting a DES—if it proves to be the kind of large, definitive study that everyone called for when the LST crisis first broke.

But unless the study shows that one or two of the four stents being studied have substantially lower LST rates when the patient follows the appropriate drug regimen, there won’t be much of a competitive impact—this will be the rising tide that lifts all boats. And again, just based on earlier studies—LST has also been much studied in DES trials, particularly in the last two years—while head-to-head comparisons of various DES have shown different rates of stent thrombosis, they haven’t been meaningful.

In fact, if anything, the study’s risk, especially to DES companies, may lie not in findings that would show one stent superior to another, but just the opposite: findings that basically confirm everything we already know. The LST scare that burst onto the scene two years ago following data reported by Swedish researchers based on a Swedish patient registry was the device industry’s equivalent of Vioxx: a safety concern that caused havoc with what was once believed to be a blockbuster product category.

Drug-eluting stents are still the device industry’s one true blockbuster product. But the market has contracted—from $6 billion and growing a couple of years ago to $5 billion and stagnant—and reports from this year’s TCT suggest that while DES use has rebounded, that rebound has been mighty small.

The LST debate has been the leading cause of the contracted market. (Improvements in bare metal stents have also cut into DES sales, but only because of their implications in the LST debate.)

$100 million isn’t much spread among 8 companies, but only if, as stent companies hope, this kind of large, high-profile study conducted by a prestigious research organization, finally puts to rest the LST debate. If it doesn’t, if it simply raises calls for more studies looking at similar data—which is what’s happening a lot lately in cardiovascular circles—it could be a problem. --David Cassak

image of Taxus stent courtesy FDA via wikimedia commons.

Phase III Ain't What It Used to Be

sometimes the bear gets you

Baseball seasons sure are long.

In fact, back when Bush 43 braved the boos at the new Nationals stadium to throw out the year's first pitch, back when the NL pennant wasn't yet even a twinkle in Cole Hamels' eye, the ink was just drying on Cell Genesys' impressive $50 million upfront alliance with Takeda for the biotech's Phase III GVAX cancer vaccine.

The 2008 season isn't over yet. But what a difference six months makes.

Yesterday Cell Genesys essentially pulled the plug on GVAX after it failed a second Phase III clinical trial in prostate cancer patients. An independent data monitoring committee's futility analysis suggested the trial had only a slim chance of meeting its improved survival endpoint.

Check out The Pink Sheet Daily's coverage of the news, here. The decision to conduct the futility analysis came after another Phase III study of GVAX failed back in August. So GVAX is now on 'hold', according to Cell Genesys, while the partners review their options. Meanwhile, 75% of the biotech's staff are out of jobs, and further restructuring is expected early next year.

With $128 million in the bank projected for the end of the year, Cell Genesys will have plenty of options: it could play the role of shell or consolidator; it could give the cash back to shareholders and close the company's doors; it could even press ahead with GVAX, which is in Phase II trials for leukemia and pancreatic cancer as well.

It certainly hasn't been the best of years for Phase III drugs at the center of top-dollar alliances. Most conspicuously Myriad Genetics' Flurizan Alzheimer's candidate was spectacularly licensed in Europe by H. Lundbeck for $100 million upfront, only to spectacularly crash and burn only a few weeks later. (Forget an entire baseball season, the playoffs last longer than that.)

And let's not forget Trovax, another cancer vaccine and the subject of Sanofi-Aventis' $39mm up-front deal with Oxford BioMedica. That deal, signed in March 2007, hasn't officially ended--but Trovax's hopes were dealt a significant blow this summer when a DSMB said a Phase III trial in renal cancer would not meet its endpoints. OXB shares have lost about 90% of their value since that deal was signed--though data from the renal cancer trial will get analyzed and the companies are pushing forward with a Phase III program in colorectal cancer.

Of course then there's Asentar--the small molecule cancer treatment Schering-Plough licensed from Novacea in May 2007 for $72 million up-front. The trial failed late last year and in April 2008 Schering terminated the deal.

Look, drugs fail. That happens because drug development is very difficult. Even Phase III drugs fail, probably more than they used to, thanks to stiffer endpoints and attempts to tackle trickier diseases. Lilly Research Laboratory president Steve Paul lamented at our recent PSA meeting that Phase III is "still pretty lousy," in terms of attrition rates -- around 50%. And not always for the reasons you'd expect. "You shouldn't be losing Phase III molecules for lack of efficacy," he said, but it's happening throughout the industry. (If you missed it, a recap of the PSA goings-on will be in the next IN VIVO.)

But we would expect these failures to come mostly from pharma's home-grown crop of drug candidates, not so much from the drugs accessed via high-priced biotech collaborations.

Of the 16 deals involving single-Phase III products licensed for $20 million or more up-front since the beginning of 2007, four have either failed completely or are on death's door. A further two have endured signifcant hiccups, though may pull through with flying colors--Merck/Dynavax's Hep B hopeful Heplisav, which remains on clinical hold by FDA, and the much-discussed mipomersen from Isis/Genzyme (our recap of that situation is here).

So what's happening? Are pipeline-poor pharmas lowering their standards?

Lilly Prasugrel Delay Could Extend Well Into 2009

It looks like FDA’s decision on Eli Lilly’s anti-clotting drug prasugrel won’t come before March 2009 at the earliest.

Members of FDA’s Cardiovascular and Renal Drugs Advisory Committee have been contacted about their availability for a February panel meeting specifically on prasugrel, sources say. The agency’s Drug Safety and Risk Management Advisory Committee may also be convened.

FDA has scheduled a December 10 meeting of the Cardio-Renal advisory committee. The agenda, however, is already set: Acusphere’s IMAGIFY (perflubutane polymer microspheres) injectable suspension imaging agent. The odds of a change are practically zero.

The potential February advisory committee date means it is almost impossible for FDA to deliver a decision before March. In fact, a March decision is probably the best-case scenario for Lilly and partner Daiichi Sankyo at this point.

Prasugrel, which will be marketed as Effient if approved, has been closely watched by FDA observers, drug sponsors and the investment community alike because of the drug’s blockbuster potential in a primary care market and as a marker of the current state of FDA drug reviews as the agency continues to miss multiple user fee deadlines (See “Running Late: What It Means When FDA Misses a Deadline,” The RPM Report, September 2008).

Developments thus far in the review support those who argue that FDA is exhibiting overly cautious decision-making in an era of drug safety.

Lilly submitted the prasugrel NDA on December 26, 2007; FDA designated a six month priority review for the application in February. At the end of June, FDA extended the review by another three months due to supplemental information submitted to the agency (“The Pink Sheet” DAILY, June 24, 2008). Then, FDA missed the September 26 deadline (“The Pink Sheet” DAILY Sept. 29, 2008).

“This is a very large and complex submission, and it should not be surprising that delays occur,” a Lilly spokesperson says. “We are working diligently with the FDA as they continue their review of the prasugrel NDA.”

But the size of the NDA does not appear to be the cause for the delay with the review now in its 10^th month.

A serious internal disagreement has developed over whether to approve the drug as it stands, sources say.

The decision to grant priority review in the first place suggests that the top review managers—namely, Office of Drug Evaluation I director Bob Temple and director of the division of cardio-renal drug products Norman Stockbridge—are excited about the potential for the drug. However, it appears that another party has made a compelling argument against approval of the application in its current state.

Three issues appear to have impeded an FDA decision: (1) the increase in minor and major bleeding and concerns of related deaths in the prasugrel arm; (2) more cancers discovered in the prasugrel group compared to clopidogrel in TRITON; and (3) a recent formulation issue either related to the active ingredient or excipient substance.

In Lilly’s 13,000-patient TRITON clinical study, prasugrel produced a 19% reduction in the composite primary endpoint of cardiovascular death, non-fatal heart attacks or non-fatal strokes when compared with Bristol-Myers Squibb/Sanofi-Aventis’s Plavix (clopidogrel).

TRITON also demonstrated a statistically significant 32% increase in minor and major bleeding. However, when you consider the primary endpoint, those bleeds didn’t lead to deaths, heart attacks or strokes.

Time is of the essence when it comes to Lilly’s marketing plans for the anti-platelet therapy, which the company hopes will replace Plavix as the standard of care. (Annualized US revenue of Plavix would be approximately $4.8 billion based on second quarter sales of $1.2 billion). Plavix is scheduled to go generic in 2011 meaning prasugrel will have to compete against generic clopidogrel in clinical practice and on drug coverage formularies. In other words, timing of the approval is of critical commercial importance to Lilly.

Heroes and False Prophets of Vaccine Safety

Congressman Henry Waxman “is a hero on this debate.”

That sentiment has frequently been expressed by liberal-leaning organizations on a wide range of issues during Waxman’s long 34-year career in Congress.

The current praise comes, however, from a more unlikely source: the top pharmaceutical policy expert at the American Enterprise Institute. The issue: upholding the public’s confidence in childhood vaccinations in light of a purported (and still unproven) link to autism.

The California Democrat got that ringing endorsement on Oct. 10 from Jack Calfee, who typically addresses health care issues from a position almost diametrically opposed to Waxman. From the AEI perspective, Waxman is often the epitome of too much government regulation and too much the friend of liability lawyers.

But on vaccine safety, the representatives of two ideologies find themselves aligned. The confluence of views on vaccine safety between AEI and Waxman should bode well for a continued climate of support for vaccines from the federal government, but challenges still persist.

The chief challenge is the continuing political appeal of the groups seeking to link autism to vaccinations.

Calfee’s praise for Waxman came during a question and answer session at an October 10 AEI session on a new book on the science and politics of autism by Paul Offit, the chief of the vaccine education division at Children’s Hospital of Philadelphia.

Offit’s book, “Autism’s False Prophets,” recounts how the proponents of a link between childhood vaccines and autism have pressed the issue into common parlance. The book traces the origins and issues raised from the decade-old effort to describe a link.

Offit, who bravely accepts the challenge to counter the attempt to tie autism to vaccines, notes that there has been a long history stretching back over 200 years of people looking at vaccines as the source of diseases arising from unknown causes. “Vaccines have been blamed for many diseases for which there are no clear causes,” he told AEI, citing multiple sclerosis, epilepsy, diabetes and mental retardation.

“Autism, like those disorders, has no clear cause or cure.” In that context, Offit observes, “it was just a matter of time” until a link to autism was suggested.

During the AEI event, Stephen Cha, an aide to Waxman, noted that the congressman has also taken a public stand to keep attention focused on the weight of scientific studies refuting the link between autism and vaccines.

Waxman recently sent a summary of the major studies to other members of Congress recently to counter arguments at a briefing on autism sponsored by Rep. Carolyn Maloney (D-NY).

Maloney, a liberal Democrat from Manhattan, is the sponsor of a bill (HR 2832) to require the National Institutes of Health to conduct a comparative study of vaccinated and non-vaccinated populations as a way to examine the allegations of a link between thimerosol and autism.

According to blog reports, the Maloney hearing drew representatives from 59 House offices and 30 Senate offices, including Barack Obama’s office.

The high attendance at the Maloney event demonstrates the persistent political attention to the issue. It even raised its head during the presidential campaign earlier in the spring, pushing Obama, John McCain, and even traditional supporters of vaccines like Hillary Clinton to speak out for caution.

Offit suggests that some of the skepticism about vaccine safety arises ironically from well-intentioned but maladroit efforts to reassure the public.

Offit’s account of the problems generated for vaccines by responding to safety questions too rapidly holds a lesson and warning for other segments of the drug industry and for drug regulators as they head further into the age of post-marketing surveillance reports from a wide variety of sources.

“The precipitous and frightening removal” of thimerosol from vaccines for young children rapidly within three years of the first charges of danger from the preservative actually fed concerns about vaccine safety, Offit told AEI. The effort to get the ingredient out rapidly was led by the American Academy of Pediatrics and “to a lesser extent” by the Centers for Disease Control & Prevention.

By handling the removal “in the manner that it was done,” it scared parents, Offit maintains. Because of the rush parents reasonably “would ask why would one take this ethyl-mercury containing preservative out of vaccines in such a precipitous manner if it wasn’t harmful.”

Offit notes that the “American Academy of Pediatrics put themselves in a position to try to communicate something that was virtually impossible to communicate: ‘yes we are taking it out, but there is not a problem.’”

The academy was put in the awkward position of trying to explain why it had urged action if it felt that vaccines were safe. “If you look at the way that they describe” the push to get thimerosol removed, Offit said, “they say that there is no evidence that thimerosol-containing vaccines are harmful, but to make safe vaccines even safer we’re going to take it out.”

“If it had not been shown to be harmful, how does taking it out make it any safer?,” Offit asks. “It doesn’t; it only makes it perceived to be safer.”

If there is a lesson from the autism debate, the right responses to safety concerns for vaccines (and drugs) in the future are going to take fortitude, careful judgment—and more heroes.

Nearing an End to the Longest Review?

Ovation reached a milestone this month in its quest to get its GABA-transaminase inhibitor vigabatrin (Sabril) on the market: It received confirmation from the Food & Drug Administration of a tentative date for an advisory committee meeting.

Given that FDA has held 30 advisory committee meetings so far this year, that doesn’t sound like groundbreaking news. But in the case of Sabril, it’s a major development given the difficulty FDA has had in finding enough qualified advisory committee members under the new conflict of interest guidelines.

We wrote about Sabril as a worst-case example of the approval delays in the new user fee era in last month's issue of The RPM Report. But is also a poster child for what can go wrong under FDA's new conflict of interest guidelines. (We'll have more on that on this blog and in the next issue of The RPM Report.)

But for now, here's the short story: An advisory committee meeting for Sabril was originally scheduled for August, but there was one (tiny) hiccup. It turns out that the only pediatric neurologist on the committee, Dartmouth Medical Centers Greg Holmes, did work on the original NDA when it was owned by Sanofi-Aventis predecessor company Marion Merrell Dow.

That’s a definite no-no under FDA’s new guidelines. Holmes was recused, and it has taken until now for the agency to reschedule the meeting for January 7-8, as reported in this week's issue of "The Pink Sheet." Of course, that’s assuming FDA can find a qualified pediatric neurologist who hasn’t run a clinical trial for vigabatrin (or a competitor), or invested more than $50,000 in Ovation (or a competitor), or is conflicted in some other way.

But perhaps the Greg Holmes snafu is only fitting for a drug like vigabatrin, which has already had an excruciatingly long pathway toward approval.

Vigabatrin was developed in the 1980s by Merrell Dow as an anticonvulsant. Three advisory committee were convened (in 1984, 1985 and 1989) in light of toxicity signals seen in animal models. An NDA finally was submitted in 1994 by Marion Merrell Dow; FDA turned it down twice before it was outlicensed to Ovation in 2004 by Aventis (now Sanofi-Aventis).

Ovation has had much more success with vigabatrin, having moved from the licensing deal to a priority review for a more targeted indication of infantile seizures in three years. (Ovation also is pursuing the original indication for use in complex partial seizures; the company submitted a response to FDA's questions about that application late last year.)

FDA's deadline for a decision on both indications was June 27--more than three months ago. Between the missed user fee deadline and the immense difficulty in finding enough experts to staff an advisory committee, Sabril is the worst-case example of drug regulation today.

Will there be more? Probably. Will it be yours? Stay tuned.

Lilly/Imclone: Hedging Payor Risk

Imclone’s Erbitux is a quintessential example of a high priced cancer medication of the type routinely cited by advocates for some form of national comparative effectiveness project in the US.

So it may seem odd to argue that Lilly’s decision to step in and buy Imclone away from Bristol reduces the company’s exposure to a potentially tougher pricing climate in the US.

But in one important sense it does: It gives Lilly about $400 million in annual revenues that are sheltered from any impact of the upcoming debate over price negotiation under the Medicare Part D program in the US.

Like most Big Pharma companies, Lilly’s product line is heavily tilted towards the types of products paid for under the new Part D program: chronic, oral medications like Zyprexa and Cymbalta. And, like most Big Pharma’s with mature product lines, that means Lilly has benefited from a de facto price increase, thanks to the transfer of a lot of use of those medicines out of the price-controlled Medicaid market and into the managed care plan-administered Part D program.

And, like most Big Pharma companies, Lilly is concerned that the US government is about to do something about that.

Here is what Lilly SVP-corporate policy and strategy had to say during FDC-Windhover’s Pharmaceutical Strategic Alliances Conference about the potential impact of a price negotiation model in the US.:

“Eliminating the non-interference clause in the Medicare program could have a significant impact….When the government starts to enter into direct negotiation and they pay for the majority of the drug in the county, inevitably the political pressure and budget pressure will end up damaging the ability of the industry to continue to innovate. So I do have a concern, and I’m not sure that the whole of the biotech industry is perceiving that danger. But we, the big large companies that have experience in working in those countries where indeed there are price controls, I think we have a better perception of what that will mean. And in my opinion it might hurt the willingness of investors to continue to put money into research.”

Erbitux, like most infused biologics, is paid for under the Medicare Part B program. Now there are plenty of opportunities for the government to meddle then—but it isn’t on top of the agenda at the moment.

Interestingly, a lot of Big Pharma companies are modeling the impact of government price negotiation under Part D as about a 3%-4% hit in the US. Lilly’s US business is about $10 billion. How nice to have about $400 million in new revenue coming from a product that isn’t touched by price negotiation…

For some background reading on how price negotiation may translate into real price pressure, start here. For more on how companies approach the two different payor models in the US, start here.

Watson’s Rapaflo Sails Through FDA: The Exception That Proves The Rule?

Analysts don’t expect much from Watson’s Rapaflo, a new entrant in the already crowded alpha-blocker benign prostatic hyperplasia category.

But if the drug is any where as good as relieving obstructed bladders as it was at breaking through the bottleneck at FDA, don’t bet against it.

Let’s recap what we know about today’s FDA. The agency doesn’t have the resources to review applications on time. (See “Talent Squeeze at FDA,” The RPM Report, December 2007.) It also has the strategic good sense to realize that now is not the time to make on-time approvals the top priority. (See “The New User Fee Rules,” The RPM Report, March 2008.)

There’s more. “Standard” review applications will receive at least one “complete response” letter before approval—if they are approved at all. (See “The Data Everyone’s Talking About,” The RPM Report, November 2007.) Inexperienced NDA filers shouldn’t kid themselves into believing they will even get a review by FDA. (See “Rejected Out of Hand,” The RPM Report, February 2008.) And products for crowded primary care indications can only come to market in the US if they have been sold forever overseas (See “When Approvable is Good News,” The RPM Report, December 2007) or if they have clear evidence of comparative advantages over existing therapy. (See “Straight Talk From FDA,” The RPM Report, November 2007.)

So, if you had asked us about Watson’s chances on Rapaflo, filed in December under a licensing agreement with Kissei, we’d have bet all our US Treasury bonds that they’d have at least another year to wait before getting the all clear from FDA.

Good thing you didn’t ask. As “The Pink Sheet” reports, Rapaflo received approval from FDA on Oct. 9—three days before the 10-month standard review deadline.

So here’s a drug entering a huge primary care market (we found one estimate that there are 115 million men worldwide with BPH) approved based on clinical trials in less than 1,000 patients. It has only minimal global market experience (two years in Japan). The sponsor—Watson—is still far better known for its generic drug applications than its new drug savvy, and there are already four brands available in the same class for the same indication.

Can this be the same FDA that just imposed a formal risk evaluation and mitigation strategy on a drug that isn’t even marketed anymore? (It is—FDA is requiring a REMS for Exubera.)

Maybe FDA read the analyst reports, which suggest Watson will have at best modest success (say $50 million a year) selling Rapaflo in a generic-first class. But we doubt it. This is definitely a clear sign that the old model FDA is completely dead yet. Product by product, division by division, there are still openings for these kind of approvals.

Though we still wouldn’t build our business on expecting too many more Rapaflo’s in the years to come…

DotW: Barely Hanging On

Ruh Roh, Reorge! The news on Wall Street is grim--just one year after closing at an all-time high of 14,164.53, the Dow dropped another 679 points yesterday to close at its lowest level in 5 years. (In case you're keeping track it's down nearly 40%.) The losses have driven the now not-quite-so-fabulously wealthy to therapy as they seek help for "sudden loss syndrome," a condition we're pretty sure isn't in the latest DSM manual but may well be by the time the fifth edition is released in 2012.

While the biopharma world has been relatively insulated from the turmoil on Wall Street--compared to other industries, most Big Pharma and Big Biotech aren't highly leveraged and have low debt to capital ratios--it certainly isn't immune. (We'll have more to say about this in the upcoming IN VIVO.)

Word is that a certain Big Pharma that went shopping this week had a difficult time lining up its debt financing. It got it--but at a higher rate than it would have a few months back.

It will be interesting to see how Genentech fares given the protracted crisis. Roche still hasn't officially responded to the company's last "no", and some analysts speculate that the Swiss pharma won't be able to finance the deal on favorable terms. Even so, the $89-a-share offer price looks a whole lot better this week than it did just seven days ago. As of Thursday evening, Genentech's shares slid below $80 thanks to general weakness in the market and news that Avastin in combination with partner OSI's Tarceva didn't improve outcomes in lung cancer patients.

Certainly smaller biotechs and specialty pharmas are having troubles. The Danish biotech Genmab announced Wednesday that it's stopping research on zanolimumab and cutting 101 jobs. AtheroGenics, meanwhile, revealed it was filing for Chapter 11, while Mylan's CEO spent much of the week trying to soothe its nervous nellies (also known as investors) after the company's stock price plunged on concerns that the company was too highly leveraged.

Are you inured to the negative news or barely hanging on? Either way, it's time for your weekly ray of sunshine...


Eli Lilly/ImClone: Oh Carl, behave. We admit it--sometimes activist shareholders do add value. ImClone certainly came out smelling like a rose this week. Lilly was, indeed, the mysterious (though not dark and handsome) suitor courting the oncology-focused biotech. In a bid that defies logic, the pharma agreed to cough up $70-a-share or $6.5 billion for the bragging rights to ImClone's interesting but risky early stage pipeline. As we reported in the Pink Sheet Daily, the deal calculus likely wasn't based on the value of ImClone's lead product, the EGFR antagonist Erbitux. After all BMS owns 73% of the rights to the product in the US, while Merck KGaA owns 90% of Erbitux in Europe. But as we all know, it's now de rigeur to be an oncology player if you're a Big Pharma--witness the recent moves of GlaxoSmithKline and Pfizer to that effect. Certainly, Lilly was woefully lacking in this arena, especially in the area of targeted biologics. But Lilly is also paying a premium for a pipeline of drugs that could face stiff competition from rivals that are further along in development. Catherine Arnold, of Credit Suisse, noted in an October 9 report: "We question the magnitude of the pipeline's potential, especially when one considers how crowded the oncology space is becoming (particularly for the mechanisms in question) and the increasingly conservative US regulatory market." Ouch.

Eli Lilly/Dicephera: Lilly had smaller fish to fry this past week as well. Late on Oct. 3, it announced a deal with privately-held Deciphera Pharmaceuticals to gain access to the start-up's preclinical B-Raf kinase inhibitor program. Under the terms of the agreement, Lilly and Deciphera will collaborate in four different project areas with Lilly getting exclusive worldwide rights to any products developed as part of this collaboration. In return, Deciphera will receive an undisclosed upfront payment and two year's research funding and may also receive up to $130 million in potential development, regulatory and sales milestones for each of the four project areas. (Deciphera is also entitled to royalties on sales if any products actually make it to market.) "This collaboration is further evidence of Lilly's ongoing commitment to oncology research," said Dr. William W. Chin, M.D., vice president of discovery research and clinical investigation for Lilly. (Funny, we thought it was evidence of desperation based on a missed user fee deadline for prasugrel and negative news associated with Byetta. Oops, sorry--that was ImClone. Undoubtedly Lilly would say Deciphera is about accessing innovation.)

Summit/The Lilly TB Drug Discovery Initiative: We hope you haven't overdosed on Lilly. This week's feel-good tie-up is a co-development agreement between the UK biotech Summit and the Lilly Tb Drug Discovery Initiative, a public-private partnership created by guess who. Under the deal's terms, the Lilly initiative gains an exclusive license to Summit's early stage, novel compounds in the developing world and will shoulder future research and development costs. In exchange, Summit retains all rights to these compounds for the treatment of TB in the developed world, as well as all other potential indications. In addition, the biotech will have access to the data generated by the initiative and can use it in future sub-licensing agreements. As we noted in the Pink Sheet Daily, that's great news for Summit--someone else pays for development of its drugs, but it still has commercial rights in parts of the globe where patients can actually pay for the meds. In all seriousness, scourges such as TB and malaria exact an enormous toll on the inhabitants--especially children--of developing nations. But market incentives are lacking and that's made it tought to get biotechs interested in taking on drugs for these global health targets. As Chris Earl, CEO of Bio Ventures for Global Health (BVGH) told START-UP, "Even if you made the drugs [for global health] as cheap as possible, the patients still don't have any money." Partnerships like the Lilly TB initiative and the Bill and Melinda Gates Foundation (which we profile in the October issue of START-UP)--as well as novel mechanisms like priority review vouchers--are starting to provide those necessary incentives. Hopefully other companies will follow Summit's (and Lilly's) lead and do well by doing good.

Biolex/OctoPlus: In case you thought we were gilding the Lilly, fear not. (We can't afford the precious metal on our salaries here at IN VIVO Blog.) In the non-Lilly universe, Biolex and OctoPlus also made some noise, expanding the scope of their existing partnership concerning the Dutch company's Locteron. OctoPlus and Biolex have been involved in co-development of the Hep C drug, currently in Phase IIa trials, since 2005. With this latest agreement, Biolex now takes full responsibility for development and commercialization of the drug, funding the work out of the $60 million Series D financing round it recently closed. Octoplus will receive an upfront fee of $11 million, potential milestone payments totaling $138 million, royalties on future Locteron sales, and an equity stake in Biolex of up to 3%. (OctoPlus also retains commercial manufacturing rights to Locteron--just in case you were wondering.) The deal could be Biolex's ticket to a positive change of luck: the firm tried and failed in an attempt to go public in 2007, and Locteron could be the late-stage product it needs to validate its lemna-based LEX technology and attract other big pharma partners.

Mediceo/Alfresa: The merger mania that infected Japanese pharmas such as Takeda and Daiichi now looks to be hitting the wholesale sector in that country. This week, Mediceo Paltac Holdings and Alfresa Holdings, the ichi-dai and ni-dai Japanese wholesalers, struck a $2 billion stock deal to better cope with falling prices and tough competition. Hit by government-mandated cuts for medicines, increased use of generics and loss of negotiating power as hospitals and pharmacies form new ties, the distributors hope to gain bargaining power by creating a dominant industry leader. As part of the deal Alfresa will swap one of its shares for 4.15 shares in Mediceo, according to a release.

Image courtesy of Flickr user azrainman via a creative commons license.

Pfizer's Newfound Flexibility

The restructuring at Pfizer that will see the group split into business units may or may not improve productivity, boost the bottom line, or resonate positively with investors. But one thing's for sure: Pfizer's move should lead to a more flexible, nimble company. If they're not quite Gumby, they're no longer Pokey either.

Our take on the new structure--and on Pfizer's slimmed-down R&D focus--will be in the next issue of IN VIVO.

In the new Pfizer, the company's business units--comprising mature products, emerging markets, oncology, specialty products, and primary care--will be managed independently.

Essentially the groups will vie for resources with one another, manage their own P&Ls, and as Pfizer R&D chief Martin Mackay tells us, essentially run the show. "It really empowers those business unit heads to run P&Ls so they will have tremendous responsibility to maximize revenues of the projects we have in those groups but also to make sure the business is thriving at the earlier stages," he says.

Mackay and the rest of the executive leadership will then decide how to dole out Pfizer's dollars between these different businesses. "Of course a lot of strategy is simply down to where do you allocate your resources," he says.

Running smaller units under the umbrella of a large pharma isn't a new concept; GSK's centers of excellence in drug discovery (CEDDs) similarly compete with one another for corporate resources, albeit earlier on in the value chain. In some ways Pfizer's move is less ambitious than GSK's experiment, started way back in 2001 and aimed in part at mimicking the entrepreneurial essence of a biotech firm.

The CEDDs though still have to prove their worth 8 years on--GSK may talk about a broader pipeline but the proof of the pipeline is in the marketing, to stretch a phrase. And if the CEDDs were really thriving, new initiatives like GSK's drug performance units, announced over the sumer, mightn't be necessary. (It's worth noting too that GSK has also recently created an oncology unit--GSK Oncology--which takes different DPUs out of various CEDDs.)

But Pfizer's new structure ought to by its very nature (in that the units are later-stage development and commercialization focused) thrive or fail more quickly.

And when Pfizer decides its time to pull the plug on a unit--presto!--it's already wrapped up in an easy to spin-off or sell package. And it should, by then, have plenty of practice in offloading unwanted assets. As part of the research reshuffle, Pfizer is pushing forward with its efforts to monetize shelved programs. Earlier this year, it spun-off both RaQualia and Esperion 2.0.

“We’ll be much more active in out-licensing assets,” Mackay promises. “It will vary between single assets and small groups of assets, depending on what is the best deal for both parties.” Pfizer, he says, is in active discussions with potential collaborators. “We’ll be much more creative than we’ve been in the past in this particular arena.” For more on Pfizer's externalization program, see this piece in today's Pink Sheet Daily.

image from flickr user jessedybka used under a creative commons license.