Friday, March 23, 2007

So Cimzia Will be Late, After All

It's official: UCB's Cimzia will be late. (Or rather, even later.) No one really doubted that UCB's anti-TNF antibody fragment would fail to meet its planned 2Q 2007 launch for Crohn's disease, ever since the FDA Complete Response Letter in December 2006. (UCB shares have tumbled 20% since then.)

The only surprising part was CEO Roch Doliveux's apparent refusal to contemplate any slippage. "We're preparing everything for the launch," he declared at UCB's preliminary results meeting barely a month ago.

The preparations will be long (let's hope they haven't hired any reps yet). Turns out that FDA wasn't happy with the design of one of Cimzia's trials, so UCB announced today it needs to do another one, to "confirm the induction of clinical response" in Crohn's patients. That's worrying; so is the fact that it'll take until late next year to do the study.

Cimzia matters to UCB. Not just financially, although the drug is--or was--expected to contribute significantly to UCB's EBIT, but also strategically, in terms of defining and confirming UCB's transition from a chemicals conglomerate into a biopharmaceuticals firm. Doliveux has made much of this transformation, triggered by the $2.7 billion acquisition of Celltech Group in 2004. Thus setbacks to Cimzia casts doubt not just on one legacy project from Celltech (already delayed for a variety of reasons), but on UCB's skills in integrating large-molecule science with its chemistry heritage.

It doesn't do management's credibility much good, either. By and large, Doliveux and his team have done a bloody good job--don't forget he also bought Schwarz Pharma last fall, a move which looks more perceptive as Cimzia's troubles deepen. But management's apparent confusion as to the nature of the FDA response and subsequent meetings--whether reflecting real uncertainty or just caginess--concerns some analysts.

When and if Cimzia does get to market, it will face plenty of competition, not least from Abbott's Humira, which filed for approval in the US and EU last September and is easier to administer. UCB's plan was to get to market in Crohn's before Humira (which is already on the market for RA). Now it's not a question of whether it will be behind, but how far behind. The additional trial won't be done until late 2008, and although UCB says it's unclear whether will be a pre- or post-approval requirement, I know where my money is.

Reporting on Exubera: an A-Buse

Many analysts have questioned the potential of Pfizer’s inhaled insulin, Exubera. Nonetheless, it was more than surprising to see the comments about the drug attributed to American Diabetes Association president-elect John Buse, MD, this week.

In a widely circulated AP story on March 21 about Exubera, Buse was quoted saying "I think Pfizer will wish they had never gotten into this. I doubt they'll regain their investment…There is no advantage to Exubera and there may be a safety risk. I see it as my job to talk people out of (using) it."

Buse has spoken to IN VIVO in the past, and we know him to be a highly credible and extremely careful commenter who focuses on medicine and avoids discussion of company issues. His statements on Exubera and Pfizer therefore seemed unusually pointed, all the more so given that he had said “There’s cause for tremendous optimism” following the product’s approval in 2006 for the treatment of type 1 and type 2 diabetes in adults.

When asked in an email last night about the accuracy of the AP story, Buse replied: “Not fair. The comments were specifically about treating type 1 diabetes. Not about treating type 2 diabetes.”

That makes sense. Indeed, last year he pointed out the possibility of a safety risk for type 1 diabetics, who must use Exubera in combination with longer-acting insulin. The inhalation device “is a little too cumbersome to be used in multiple daily therapies like we use in type 1 diabetes, but certainly that would be an option,” he said then, adding that the drug is “mostly going to be used in the type 2 population that's just getting started in the insulin business,” as an alternative to or in combination with rapid-acting insulin injections or oral drugs. Safety issues are also amplified in type 1 patients because “they are likely to be exposed for 50-plus years,” Buse added in his recent email to us.

As for the reported comments about Pfizer’s ability to recoup its investment, he would only say that “I may have said it” in the course of reflecting on the competition Exubera faces in both the type 1 and type 2 markets from Lilly-Amylin’s Byetta, “even better [incretin mimetics] on the horizon, better pens, much greater acceptance of long-acting insulin, increasing price pressure from managed care and the interest in long-term safety demonstration.” --Mark Ratner

Did the AP inhale?

Thursday, March 22, 2007

Has Sanofi-Aventis Lost its Friends in Government?

Sanofi-Aventis may have fallen out of bed with the French government.

When Sanofi-Synthelabo gobbled up its larger peer Aventis in 2004 after a prolonged struggle, it was widely believed that Sanofi's president Jean-Francois Dehecq had received a little help from his friends in high places (read: the French president Jacques Chirac). The government wanted a large, national pharmaceutical flagship just as much as Dehecq wanted to crown his M&A record with his biggest acquisition to date.

They don't seem that friendly any more, though.

Far from embracing its national champion's new fat-buster drug with open arms, the French reimbursement authorities today gave it a distinctly lukewarm approval.

Acomplia (rimonabant, approved in the EU in June 2006 but reimbursed so far only in a handful of countries, including Sweden and Denmark) is relegated to the lowest tier reimbursement--35%--which corresponds to treatments of 'minor therapeutic value'. What's more, only obese patients with diabetes will be eligible for the 35% reimbursement (and even then, docs have to fill out the prescription on a special form--an "ordonnance d'exception"). The overweight lot with risk factors, though included on the label, will have to stump up the full €70 per month if they want the drug.

Yet it's not as if France can any longer claim to be a nation of slimmies, even though in the past their red-wine and foie-gras lifestyle was known as the "French paradox" because it didn't make them fat. These days, 1.2 million French people eat in McDonalds each day, and childhood obesity is growing at 17% annually. At this rate, reports the Roubaix journal in Northern France, the French could be as fat as Americans by 2020.

Still, despite initiatives such as National Weighing Day for French children on January 7, and significant political involvement (the Socialists in particular are jumping on the healthy eating bandwagon to try to muster support ahead of May's elections), the French government doesn't see Acomplia as a big part of the answer to bulging waistlines. Nor, incidentally, do the Germans: they refused point blank to reimburse Acomplia at all, dismissing it as a life-style drug.

Is there a trend here?

Either way, the pressure's on the Acomplia reps to get friendly with docs and persuade them to prescribe the drug anyway--but only for, er, patients with that particular combination of cardio-metabolic risk factors (that docs all know about and have time to measure).

Sanofi executives have always claimed that "this isn't an obesity drug". The authorities appear to agree.

Wednesday, March 21, 2007

Touched By An Angel

A few years ago, a polls suggested 79 percent of Americans believed in angels. I guess you can toss me in along with the rest.

What else can we conclude after reading a report put out by the Center for Venture Research at the University of New Hampshire? The center--which says it's been tracking angel investing since 1980--says Angels invested $25.6 billion in companies last year, a 10.8% increase from 2005.

This is a lot of money you're talking about. Any of the major data sources out there suggested venture capitalists--you know the ones with institutional capital?--put roughly $25 billion into companies last year, roughly the same amount.
These angels have some serious clout.

Who got the money? Well, most likely, someone you know. Health care companies--biotechnology, medical device and health care services companies--got a bulk of it or at least accounted for 39% of the 51,000 angel deals completed last year. The report doesn't give a breakdown of the capital committed.

That's nearly 20,000 investments (and $10 billion if the percentage could be applied to dollars, but that's probably not completely accurate. Could be more. Could be less. My guess is biotech, medical device deals get more than your average investment.)

So what's this all mean? For entrepreneurs, this is great news. There's a whole bunch of billions being invested in health care companies year after year, and start-ups appear to be getting a fair share.

But what's this mean for VCs? Well, take some solace in knowing there's someone out there funding the start-ups you no longer have the time nor patience to do yourselves. However, these folks are becoming a force, and they're going to be looking to get paid big time when their companies come to you looking for capital.

Thursday, March 15, 2007

Eternal Sunshine of the Spotless ... ooh cheese!

Great news for rats everywhere--with some upside for humans as well.

NYU scientists have demonstrated the ability to erase a single memory from rat brains, while leaving other memories intact. The study, published this week in Nature Neuroscience, suggested that certain drugs can inhibit the process of transforming short-term memory to long-term memory, dubbed reconsolidation.

The upshot for psychiatry may be the greater understanding of memory processes and potential inroads to treating conditions like post-traumatic stress disorder.

may cause memory impairment!

Monday, March 12, 2007

Schering-Plough Spends Big on Organon

$14.5 billion sure doesn't go as far as it used to.

Schering-Plough announced in the wee hours of Monday morning that it would spend that amount to acquire Organon BioSciences, the biopharmaceuticals unit of the Dutch conglomerate Akzo Nobel NV. The price tag, at more than 4x Organon's 2006 sales, was a couple billion dollars higher than analysts expected for any trade sale or listing of the company. Akzo is now free to focus on its chemicals and paints businesses, and the sale has already sparked rumors that it would seek to spend its Organon proceeds on buying companies in those spaces.

Organon, which specializes in women's health and CNS disorders, was slated to IPO on Euronext later this month, and was rumored to be entertaining private equity offers for the business. Those rumors prompted a few 'reconfirmations' that an IPO was still in the offing--basically indicating the offers to buy Organon weren't sweet enough.

So what is Schering-Plough getting for its hard-earned cash? It's hard to believe that the acquisition will vault the company back into the top tier of Big Pharma companies, though it may dissuade others from attempting their own takeover bids of the NJ firm. Organon's forte is contraceptives, though that business isn't exactly booming.

Analysts have suggested that perhaps Schering-Plough attaches more value to Organon's CNS projects than the market does (or for that matter than Pfizer does--Pfizer returned to Organon rights to the Phase III antipsychotic asenapine late in 2006, when the drug disappointed in a pivotal trial). Perhaps, though Organon's track record in pivotal trials has not been sterling over the past few years. Organon has recently rebooted itself as a biologics focused firm--adding an R&D facility the Boston area and signing a few early-stage deals--though those efforts will take years to come to fruition.

Friday, March 09, 2007

When DDMAC Attacks

Insomnia drug Rozerem's Your Dreams Miss You advertising campaign may have crossed the line into Nightmare for its marketer, Takeda. (if we can find a copy of the problematic spot, we'll post it here. meanwhile, enjoy Rozerem's pitch in happier times.)

Abe & the beaver, in better days

Admired for their off-beat and clever take on the results of insomnia (and questioned for being too convoluted for the average consumer), the ads, say the FDA, may have gone too far this time.

The agency's division of drug marketing, advertising, and communications (DDMAC) slapped the drugmaker with a warning letter for one of its ten-second reminder ads. For such a short spot, the ad broke a ton of rules. Some of DDMAC's more serious allegations point out that while Rozerem is not indicated for use in children, some of the language in the ad is misleading:
The combination of these statements ("Back to School") and images of school-aged children and school-related objects suggest that Rozerem is indicated for and can be safely used in the pediatric population. The presentation in the TV ad is especially concerning given that the PI for Rozerem includes the following Precaution regarding pediatric use: "Safety and effectiveness of ROZEREM in pediatric pateints have not been established. Further study is needed prior to determining that this product may be used safely in pre-pubescent and pubescent patients." (FDA's emphasis)

That study is warranted because of Rozerem's known affect on reproductive hormones in adults--decreased testosterone levels and increased prolactin levels. Making matters worse, Takeda failed to submit the ad to FDA "at the time of initial dissemination" as required by current regulations.

Yikes, Honest Abe would not be happy. Takeda, go sit in the corner. You're in a time-out.

Incidentally, it makes one wonder who's next ... perhaps the FDA will crack down on Osama bin Laden's endorsement of the erectile dysfunction drug Levitra?

Thursday, March 08, 2007

Amgen Sucks Up to Tony

"So you see, if we create jobs, you keep reimbursing our drugs, ok?"

UK Prime Minister Tony Blair at last had something to smile about at the opening of Amgen Inc.'s new R&D center in Uxbridge, west of London. The US biotech brings with it 300 new jobs, its biggest R&D investment outside of the US, and a nice boost for the UK's image as a country that fosters innovation and has, in Tony's words, a "first in class research base". (You can bet the Germans are looking on with envy, given Bayer's 3000-odd job cuts in Berlin, an unfortunate but not unexpected burp as it swallows up compatriot Schering.)

But Amgen will get plenty out of it, too. Cosying up to the government isn't a bad idea when your company's largest franchise by far (anemia, 50% of sales) is under threat from all sides, and when EU authorities are doing such an unusually fast job of ushering in cheaper biosimilars.

Having the PM's ear will help as European countries gradually implement the new regulatory pathway for follow-on biologics. It will also help as the UK government considers changes to the country's drug pricing scheme, up to now considered one of the most pharma-friendly in Europe.

Tuesday, March 06, 2007

Tekturna: looking for growth in antihypertensives

One company's generic-infested, avoid-at-all-costs, too-little-too-late, carcass of a primary care market is another company's big relief, big news, and big hope for a rebound.

Novartis AG's aliskiren (Tekturna), the first ever renin inhibitor approved to treat hypertension, got the FDA nod yesterday in what can only be described as Novartis' best piece of news in a long while. The Swiss pharma can take a minute to enjoy its success before getting back to defending its right to fight against cheaper versions of its drugs in India, sweating about delays to its great diabetes hope Galvus, and arguing with shareholders over the mountain of money it pays its chairman and CEO Dan Vassella.

OK, minute's up.

Other pharmaceutical companies, even those with established cardiovascular franchises that have clung to their primary care aspirations during the current decidedly specialist shift, like AstraZeneca, now consider the blood pressure market to be tapped out. Genericly available drugs do a pretty damn good job of controlling blood pressure for the vast majority of patients, so why spend a fortune developing a Tekturna to compete against these cheap alternatives in an environment where payors are increasingly asking for innovation in exchange for top dollar pricing.

That's not to say Tekturna isn't innovative--the drug was successfully developed by Novartis and Speedel Group (who for now looks to be the big winner, at least stock-wise) in an area where every one else who gave it a try had failed, and data suggests it can control blood pressure a bit better and longer than ARBs, ACE inhibitors and beta blockers. Novartis will aim to transfer patients off Diovan, it's ARB, and onto Tekturna, as Diovan goes off patent in 2012.

But is it innovative enough, for enough patients, enough of the time? In an upcoming interview to be published in IN VIVO in March, AstraZeneca CEO David Brennan notes that AZ has moved away from hypertension, suggesting the company doesn't "see the science breaking in such a way to compel us to invest in that," unlike other primary care areas like diabetes.
There are believers out there. Analysts estimate billions of dollars in peak sales and profits. Novartis may yet enjoy that rebound.

A Sleeper of a Deal

Insomnia: more than just another solid film by British writer/director Christopher Nolan. The $4 billion market is one of Big Pharma's thriving primary care playgrounds, home to some of the industry's wackiest DTC ads and a handful of lucrative deals.

Days never end. Nightmares are real. No one is innocent.

Eli Lilly said yesterday it was acquiring the private insomnia-focused biotech Hypnion to help boost its CNS pipeline. Terms of the deal weren't disclosed but IN VIVO has learned the transaction was all-cash and included no earn-outs. While Nolan's 2002 film grossed nearly $114 million we reckon Hypnion probably sold for more than twice that figure, even without having the benefit of Al Pacino or quasi-exotic Alaska locations.

It's not surprising that Hypnion's backers sold out--insomnia is an increasingly competitive space to play in, with large, expensive Phase III development programs (like Somaxon's multiple pivotal trials for Silenor).

Hypnion opted to sell rather than license in the wake of decent Phase II data for its lead candidate, HY10275, which were announced in January. HY10275 is a dual histamine/serotonin (H1/5HT2a) receptor modulator, a mechanism that may allow the drug to avoid scheduling by the FDA/DEA as a controlled substance. Currently marketed drugs, with the notable exception of Takeda's Rozerem (a melatonin receptor modulator) block the GABA-A receptor and according to regulators are potentially abusable.

The vast majority of the company's value was tied up in that compound and its backups & while the company's private investors have supported the company well thus far--it has raised nearly $90 million since inception in 2000--Hypnion was largely a binary bet. Licensing HY10275 would have left little for future public investors to chew on.

Lilly's been active in insomnia R&D at least since it licensed in pruvanserin from Merck KGAA in 2004. Pruvanserin, a serotonin receptor antagonist, is also in Phase II.

Monday, March 05, 2007

Sometimes the Bayer Gets You

It has been on the cards for some time--and some cuts have already been implemented, for sure--but Bayer has made its restructuring official: 6100 jobs have been eliminated at the German specialty pharma company, which ought to go a long way towards its goal of €700 million in savings by 2009.

Most of the jobs lost come from Europe (3150) and the majority of which will be administrative redundancies in Germany, the direct result of Bayer's €17 billion takeover of Schering AG last year.

And surely it all makes sense. But what's more important in the long run is where is Bayer going from here. The company has more boldly than most larger pharmaceutical companies embraced specialist medicines as the way forward--it didn't have much of a choice, really. The move seems to be paying off; progress may or may not be confirmed when Bayer talks up its R&D strategy at the end of the second quarter.

AZ: Radical Re-think?

David Brennan's certainly made his mark just over a year into his tenure as CEO of AstraZeneca. The company has embraced externalization with fervour, completing a dozen or so significant alliances or acquisitions in the last 12 months, bolting on biologics capabilities by snapping up compatriot CAT, and joined in the cost-cutting, efficiency drives and re-focusing that are fast becoming Big Pharma's hallmark.

But is that enough? Brennan doesn't seem to think so. When asked in an IN VIVO interview last month whether he's contemplating more revolutionary change to set AZ apart, the answer's an assertive "Yes". But he's not going to talk about how. So what might be afoot within the Mayfair HQ?

It's not going to be a merger--that's an old trick, after all, and one that hasn't been shown to work very well. Nor did he sound that excited by the notion of acquiring a new, ready-built franchise by buying a specialty pharma firm such as Shire (not that he'd want to now, anyway, after that firm's large lunch of Vyvanse promotion partner New River Pharmaceuticals.

Doing a Novartis doesn't seem to be on the agenda either--"we think about [buying] generics, vaccines or diagnostics, etc. during each annual review," admits Brennan. "But the whole point of the Astra-Zeneca merger was to focus us solely on innovative pharmaceuticals. Anything else would detract from that."

So what's left? Splitting up? As Brennan points out, AZ is already organized into small-ish units, research units, since recently including CAT and Arrow--and plans to remain that way, GSK-style--"better than putting everyone in one unit and saying, now we're all going to do things this way."

Perhaps that means more, smallish, bolt-on acquisitions--what most of the punters are predicting. But as these entrepreneurial cells are increasingly left to their own devices (unless you're Pfizer), it raises the prospect of Big Pharma as portfolio managers, assessing and managing a series of external partners rather than, not as well as, their in-house R&D.

"The hurdles for in-licensing are lower," Brennan says. "The way we look at it now is, we’ve got risk in our portfolio, there will be risk in what we’re licensing in, so let’s make sure we’re looking at the best technology, project, or product that we think we can get at the time, and we’ll deal with it accordingly." Sound a bit like a portfolio manager to you?

Big Pharma used to bask in relatively easy-won double digit growth--the safe havens of the stock market. That has changed. Today, "being successful is not a certainty—you have to make it happen," notes Brennan.

Watch this space.

Sunday, March 04, 2007

Can't Get VC? Try Charities

Warren Buffet and Bill Gates have given their business fortunes to charity; now charities, increasingly, are pouring their philanthropic funds into business--including the biotech sector. In fact, some VCs are joining or even founding charities as the most promising means of accelerating the development of new treatments.

Like Wolf Busse, for instance, general partner at NGN Capital, who has just become executive director of the newly-founded Melanoma Development Foundation. In collaboration with the UCSF and with support from Bain & Co, the charity will progress promising IP from UCSF into the clinic, virtual-style, but also seek out shelved compounds from pharma--it's already in negotiations for two.

Plans for a for-profit biotech are in the pipeline, too: with seed funding from MDF. Accelerate Cancer Therapeutics (ACT Biotech) will be launched in June--with Busse as CEO. And since MDF will fund some of the work, it'll get equity in ACT.

Isn't all this stretching the charitable cause a bit far? No, says Busse: "It's allowable according to the IRC rules," and MDF got approval as a public charity with these plans in mind.

Indeed, plenty of other non-profits have turned into so-called venture philanthropists--not just giving grants to industry, but taking equity stakes, providing milestone-linked grants "so that companies are incentivized to perform" and securing modest royalties.

Why? Coz they've gotten impatient simply handing money to research scientists--since rarely, or unbearably slowly, does that research ever turn into drugs (especially when it's research into rare diseases with poor commercial prospects). The problem isn't helped by VCs' mass exodus from early-stage opportunities.
"If we don't address the innovation gap, who will? It's a role for foundations," declares Richard Insel, EVP research at the Juvenile Diabetes Research Foundation.

Not that charities are trying to displace VCs; they're in fact trying to draw them in. But as non-profits become more business-savvy--the Cystic Fibrosis Foundation has been doing this for years--they're also tougher negotiators. Sure, they don't need a profit, but they do need to share in success. So while VCs in theory support foundations--it's usually non-dilutive funding, after all--there are times when sparks fly. "They're unrealistic in their demands," fumes one VC. "They're trying to be tough, but they don't have the knowledge to carry it off."
Not for much longer, probably.