FDA’s “non-approvable” decision on Eli Lilly’s long-acting olanzapine (Zyprexa) depot reiterates the reality of the new "Safety First" climate: product labeling and educational programs simply aren’t going to cut it as a comprehensive risk minimization program--especially if there are acceptable and well-understood alternatives on the market.
Going against the recommendations of its advisory committee, FDA declined to approve the long-acting olanzapine injection yesterday, stating that it needed “more information to better understand the risk and underlying cause of excessive sedation events.” In clinical trials, 1.2% of schizophrenia patients became profoundly sedated one to three hours after administration—to the point where some slipped into a coma.
Lilly presented FDA with a risk management plan to address the excessive sedation risk, including a bolded warning in Zyprexa labeling, a recommended post-injection observational period and a patient and physician education program. The company also said it would continue to monitor sedation events via a 5,000-patient observational study.
FDA’s Psychopharmacologic Drugs Advisory Committee bought into the program, agreeing with Lilly that with the appropriate labeling around the excessive sedation events, Zyprexa depot was effective and "acceptably safe" as a schizophrenia treatment in adults.
But FDA ultimately disagreed, pointing to a case in which a patient became excessively sedated three to five hours after the injection—a significantly later onset than what had been seen earlier in clinical trials. For FDA reviewers, that event no doubt called into question whether Lilly’s proposed risk management plan could adequately protect patients.
The Zyprexa non-approvable decision provides an early look into how FDA will view risk management in light of its new drug safety authorities under the 2007 FDA Amendments Act. Under the new law, sponsors are required to submit Risk Evaluation & Mitigation Strategies for all new drugs, or provide a justification to FDA for why one is not needed.
Risk management isn’t new: drug sponsors certainly have experience with designing programs to minimize the risk associated with new products. But Zyprexa demonstrates that the old rules no longer apply—especially for a line extension of an already-approved product. FDA is raising the bar, and industry would be wise to act accordingly.
Friday, February 29, 2008
Zyprexa Depot: The Real Meaning of Delayed Release
Deals of the Week: the Good, the Bad and the Ugly
We're usually bad-news-first kind of bloggers, but that's not how the old spaghetti western poster reads, so you'll just have to wait. It was a bit of a mixed bag this week for the industry, with a couple of solid slugs of clinical data from Novartis (its mTOR inhibitor everolimus impressed in a Phase III study) and Alnylam (Phase II data for ALN-RSV01 were positive). AZ even got approval for Nexium in kids aged 1-11 (at $164 for 30 capsules those kids are gonna have to sell a lot of lemonade). Bad news, typically, seemed easier to come by: Lilly's long-acting Zyprexa injection was deemed not approvable, Elan and Biogen's warned docs of Tysabri liver damage potential, FDA decided to scrap its anti-infectives panel meeting to the chagrin of Basilea and Theravance, and AZ's lung cancer drug Recentin failed its pivotal study. On top of all that, a few entire classes of drugs (antidepressants, EPOs) had pesky and problematic meta-analyses to contend with. Pfizer's pitchman Dr. Jarvik row, row, rowed gently down the stream (but not before Pharmagossip unearthed this hilarious 1986 Playboy article about the artificial heart pioneer). And then there's the ugly:
Galderma/CollaGenex: Galderma’s $420 million tender offer on Tuesday for CollaGenex marks the third recent major acquisition of a specialty dermatology company, joining Nycomed/Bradley ($330 million, in October 2007) and Almirall/Hermal (July 2007, for $518 million) as part of a trend initiated in October 2006, when Steifel Laboratories bought Connetics for $640 million. The CollaGenex deal, at a 30% premium to its recent price and a 100% increase over the company’s stock price less than four months ago, was the result of a competitive bidding process, according to the company. “The price tag reflects how hungry the dermatology companies are for assets,” notes Leerink Swann analyst Gary Nachman. The merger will place two products often used in combination under the same roof: Galderma’s topical rosacea drug MetroGel, one of the privately held company’s key branded products, and Collagenex’s Oracea, the first systemic drug for treating rosacea. Approved in the US in July 2006, Oracea, a low-dose, delayed release formulation of doxycycline that works as an anti-inflammatory but not an anti-bacterial drug, will comprise $50-51 million of CollaGenex’s projected $61-62 million revenues for 2007. Galderma also gets an 80-person sales force, and with an existing US commercial presence, it should be able to experience some cost savings through the combination. (Medigene holds the EU rights to Oracea.) Galderma could further bolster its rosacea franchise down the road with CollaGenex’s COL-118, a formulation of the ophthalmology drug brimodine, expected to move into Phase III in mid-2008 as the first potential treatment for erythema, the skin redness associated with rosacea. Galderma also gets Collagenex’s early Phase II vitamin D analog becocalcidol, licensed from QuatRx Pharmaceuticals in May 2007, in development for mild/moderate psoriasis.
And finally a bonus no-deal of the week: Wyeth has dumped its bifeprunox partner Solvay, citing commercial considerations. In a statement the jilter noted it was terminating the deal after "assessing the opportunity for bifeprunox and determining it would not have sufficient commercial value for the two companies to share." Solvay investors sent the company's shares down more than three percent. We noted Wyeth's pipeline troubles in a post last year.Heparin Investigation: "Unsettling" Indeed
"We at FDA understand how unsettling this whole situation with heparin is."
That is how FDA Office of New Drugs Deputy Director Sandra Kweder wrapped up FDA's latest media teleconference discussing the agency's investigation into adverse event reports associated with Baxter's heparin multi-dose vials in the US.
Unsettling indeed. We have written previously about the ugly turn the investigation has taken, and things keep getting uglier.
Apart from the adverse reactions and potential shortage of a critical hospital product, the heparin story seemingly confirms everyone's worst fears about globalization (though no one knows for sure, the suspicion is that the adverse events result from problems with the raw material sourced from China), FDA (the agency got confused and didn't inspect the Chinese plant in question), and the overall safety of the drug supply (if we see any more pictures of pig intestines in China we are going to be sick.)
In case you missed the latest news, Baxter has now recalled all remaining supplies of the product, having received assurance that the only other supplier, APP, can meet demand in the US. And FDA has completed its inspection of the Chinese facility. The agency determined that it is no longer manufacturing API and--surprise surprise--that there are some "objectionable" issues with its Good Manufacturing Practices compliance.
FDA is not ready to issue a formal regulatory pronouncement about the Chinese facility. However, it did post the standard inspection report (an FD-483--inset above) on its website.
They say a picture is worth a thousand words. The inspection report probably won't do as much to shake public confidence in the drug supply as images of pig intestines at the start of the heparin production process, but for quality control professionals in industry, it takes just 642 words (allowing for redactions) to paint a devastating portrait of the facility.
Our favorite section:
"The inside surface of large, 'cleaned' [Redacted] tanks ...were very scratched, with unidentified material adhering to the insides and the inverted handles held liquid, which spilled to the bottom of the tank when it was uprighted. There was no written procedure showing that the tanks were dedicated to a particular process step. There was no data collected to verify marker and tape volume markings on the outside of the tanks and, the cleaning method was not validated. It was noted that equipment cleaning tags were made of paper and taped to the piece of equipment unprotected from liquids used in the processing room environments."One prediction: that will definitely not be the last word on the heparin investigation.
Thursday, February 28, 2008
Novartis’ POC Bottleneck
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Forget the R&D productivity crisis. Novartis’ translational medicine initiative—the bench-to-bedside concept whereby exploratory molecules are accelerated into human proof of concept trials—has been so successful that the Big Pharma now has a Phase II/III bottleneck.
So says Trevor Mundel, the architect of Novartis’ now much-expanded Exploratory Clinical Development group of ‘physician-scientists’, set up five years ago to provide a bridge between the Swiss giant’s research operations and the development group.
To clear that bottleneck, “we have to shift up a gear in the later development stages,” Mundel told IN VIVO Blog during the Economist Pharma 2020 conference this week (slowing down the early work isn’t an option).
And that, apparently, is why Mundel himself has moved from his previous role as Global Head of Exploratory Clinical Development into a downstream position, as Global Director, Immunology and Infectious Disease Business Franchise.
The therapeutic focus is no coincidence: these areas are particularly applicable to the translational medicine approach, since, with relatively well-defined pathways, they lend themselves to mechanistic and rational development—unlike, say, CNS, which remains somewhat black-box.
The move means Mundel gets involved in proving whether this translational medicine experiment will actually result in more approved drugs, rather than just a Phase II bottleneck. He gets to sort out issues such as how POC results are turned into concrete endpoints in regulatory studies, and to patch up any scientific disparities between early- and late-stage groups. Mundel claims proof of the pudding—in terms of a healthy late-stage pipeline and close-to or approvable assets—could come as soon as within the next three years.
Novartis needs the boost. It has been hit by a series of late-stage setbacks over the last 18 months, most prominently the US regulatory delay of DPP-4 inhibitor Galvus, the withdrawal of GI drug Zelnorm, and the non-approval in the US (and withdrawals elsewhere) of Cox-2 inhibitor Prexige. But Mundel sees the silver lining in these otherwise black clouds, too. “If anything these experiences have highlighted the importance of this R&D bridge and of doing better and deeper science,” he says. And as for the critics of Novartis’ R&D experiment (which, as we explain here, included the controversial appointment of ex-academic Mark Fishman and a massive investment on the East Coast), “there are fewer of them now asking whether this can work.”
The success or failure of Novartis translational medicine approach will be of interest to many besides the Swiss group and its shareholders. Fast-to-POC-focused groups are springing up all over the place, including at Lilly, where the slimline, low-cost Chorus group (read this) has even spawned an independent offshoot, Flexion. “They’re doing what we’re doing,” confirms Mundel. “The question is what happens after Chorus has been successful.”
Shareholder Balks at Endo's Growing Pains
Endo Pharmaceuticals biggest institutional shareholder says it's time to change tack--in particular, to sell itself, and failing that, to make better use of its cash.
We aren't surprised at the complaint (neither, it seems, is the market). The pain specialist has been at a strategic crossroads for some time now. It admitted last year that it needed to move beyond pain into new therapeutic spaces and to take on additional development risk as competition for later stage assets increased. But while noting the increased competition themselves, Endo's management remained confident that at least in pain, the company remained the go-to partner.
Endo isn't the only spec pharma in a pickle. Last December MGI Pharma--unable to see an indepenent future for itself--sold out to Eisai. The problem for these groups is that they can't rely any longer on in-licensed, low risk assets to sustain the growth they need.
But some investors, it seems, don't like the new direction Endo's trying to move in. 9.8% holder DE Shaw Valence Partners claims the group is "overly focused on the need to complete a large acquisition or in-licensing deal," rather than focusing on strengthening its existing pain businesses. The investor goes on:
We are strongly opposed to the Company’s strategy of acquiring companies or in-licensing expensive assets, especially in new therapeutic segments outside of the Company’s core expertise in pain management. ENDP currently has no head of R&D, and recent development efforts have been marred by numerous setbacks and delays. Further, ENDP has a history of involving itself in value-destroying product licensing deals (including Synera, DepoDur, and Propofol IDD-D). This focus on business development as the source of future growth is even more confusing in light of management’s and the Board’s seemingly increased confidence in the duration of ENDP’s lead asset Lidoderm (as stated by your CFO, Charlie Rowland, on your year-end results conference call). ENDP also just reported high quality results for the fourth quarter and full year 2007, highlighting the strength and momentum of its underlying business and core assets.With CEO Peter Lankau's resignation to take effect on Saturday, some loose ends recently tied up with regards to Endo's disappointing relationship with Vernalis, and according to some investors, an undervalued stock, certainly DE Shaw can't be faulted for its timing. The company breached $1 billion in revenues for the first time in 2007 and has about $663 million in cash.
And with a roughly $3.6 billion market cap Endo is certainly affordable for any of the Big Pharma looking for more of a specialist shine to their product portfolios and pipelines. Nor is it beyond the reach of the mid-sized European or Japanese pharma firms anxious for a foothold in the US market, a la Eisai's MGI buy. Astellas, for example "does not rule out an option to pursue a deal which could simultaneously bring both late-stage/marketed drugs and a U.S. presence," Masaki Doi, VP business development at the Japanese drug company told IN VIVO Blog recently.
An Unhappy Face Book for Pharma
The government’s got a new type of social networking site under consideration for pharma. It is likely to create a list of key names and contacts which will generate a lot of sad faces.
Pharma will not want to list its friends and the friends would rather have some relationships be not quite so public.
Pharma companies may not have been paying much attention to developments in the medical device field. They should pay a little more attention to the new rules for disclosing consulting relationships between medical device companies and their consultants, including their agreements with doctors for speaking arrangements and market advice.
In September of last year, four medical device implant manufacturers (Zimmer, DePuy Orthopaedics, Biomet, Smith & Nephew) signed agreements with the US Attorney’s Office for New Jersey to address allegations that the firms had used “consulting agreements, lavish trips and other perks” as marketing and sales tools.
The companies signed the “Deferred Prosecution Agreements” and made payments totaling $311 million to avoid further court proceedings on the charges.
To use the power of publicity as a restraining tool, the prosecutors called for the companies to create lists of all of their outside paid consultants and post it prominently on their websites. (See here for a link to the 14 pages of Zimmer's consultant listings.)
This is a stripped down type of social network: Zimmer’s key contacts, where they are located (city and state) and how much the device company paid them in the last year.
One listing for Zimmer, for example, is Robert Booth, the chief of orthopaedic surgery at Pennsylvania Hospital and one of the surgeons who worked with Zimmer on the NexGen Legacy Knee and a knee designed specifically for women. Booth is listed as receiving over $1.8 million from Zimmer in the ten months of 2007 through October.
The government now wants to apply its new web spotlight approach on pharma companies and their relationships with the medical community.
Greg Demske, assistant inspector for legal affairs at the Health and Human Services Office of the Inspector General, told a Senate Special Committee on Aging hearing on February 27 that the OIG “is considering requiring similar disclosure requirements in future CIAs [corporate integrity agreements] with device manufacturers and pharmaceutical companies.” (See here for Demske's testimony.)
That’s a nice way for OIG to warn pharma companies that the next negotiations with OIG over a fraudulent marketing practices agreement or over alleged inappropriate gifts or inducements to doctors will lead to the requirement that the drug company publicize all of its contacts and grants/payments to the medical profession.
Zimmer is taking the corporate responsibility seriously after its run-in in the New Jersey settlements. The company testified to the Senate Aging Committee that it would take further steps to distance itself from the recipients of its largesse.
"With respect to Zimmer’s future funding of medical fellowships, residencies, and general educational programs,” for example, the company testified that “we plan to make cash donations to one or more appropriate, independent third-party institutions. These third-party institutions will choose the programs and applicants that will receive Zimmer funding globally. Zimmer will have no control or influence over the selection of the ultimate recipients of these funds.”
The company also embraced the “Physician Payments Sunshine Act” introduced by Senate Special Committee on Aging Chairman Herb Kohl (D-Wisc.) and Iowa Republican Charles Grassley. Zimmer says that it is looking forward to the sunlight and public disclosure from its agreements and the Congressional action.
Some lucky pharma company is likely to be next in welcoming the chance to create its facebook of contacts.
Wednesday, February 27, 2008
It’s Time to Disaggregate, Says GSK’s Mike Owen
We have been ranting on about how Big Pharma should disaggregrate—split into smaller, biotech-like units that are perhaps even separately listed—for at least a year now. Refresh your memory here, or here, or here.
So imagine our surprise—and delight—when Mike Owen, SVP of GlaxoSmithKline’s Biopharmaceuticals Center of Excellence for Drug Discovery, this morning put up a slide during The Economist’s Pharma 2020 conference in London calling for ‘separately listed therapy/technology areas’.
And that wasn’t all: Owen highlighted several other actions that Big Pharma could take in order to produce significant shareholder return, including dividing R&D businesses based on risk (so for example, in GSK’s case, splitting out vaccines, or consumer health), operating R&D funding like a VC firm, and generally allowing investors to choose which disease franchises to back.
Had we heard right? Was Big Pharma’s ubiquitous ‘need for change’ rhetoric about to become reality? Not quite. Owen clearly prefaced his remarks as his own views, not a corporate line, and the slide’s title—“R&D Models—Blue Sky” reflected his skepticism as to whether spinning out TA-focused biotech-like units would actually happen. “I don’t think it will,” Owen told IN VIVO Blog afterwards, “which is why I said it was a personal view.” In fact, to his knowledge, “these ideas haven’t been discussed [seriously] within GSK management.”
Now granted, GSK took what was seen as a fairly radical step in 2001 when it created its TA-focused Centers of Excellence for Drug Discovery (CEDDs), which supposedly operate as quasi-autonomous units and compete with one another for research and downstream resources. (See here for an early account of the CEDDs, and here for their offspring.) But that was seven years ago. And although the CEDDs “did work,” according to Owen, pointing to “a good pipeline,” he’s quick to admit that the proof will lie in whether any of the programs get to market. Meantime, “we need to move to the next stage,” he opines. It’s time to refresh the CEDD structure and to do more, in other words.
In Owen’s 2020 world—strongly inspired by GSK’s own experience with its Belgium-based biologicals business, which reports directly to the CEO, not to R&D, and whose decision-making is relatively unfettered--separately listed TA focused units would have more autonomy and thus be more accountable than divisions of a large corporate. Scientists would see their innovation quickly and clearly rewarded if their programs made it to market; likewise investors would be able to pick and choose the risk-profile and timeframe of their investment based on that business’ particular focus and pipeline.
Would this be practical? A similar tracking stock experiment that Genzyme tried in the 1990s didn’t work out (although we discussed at the end of this feature how the drivers were different and thus why that mightn’t be a useful precedent). There are certainly unanswered questions: who would market the units’ drug output, and how would they be compensated by, say, a corporate commercial arm? How would cross-TA ideas be fertilized between these units, and how would they efficiently share common R&D tools, as GSK’s CEDDs currently do?
Indeed, these are just the issues that put most other Big Pharma executives right off the idea of disaggregation. “I simply don’t agree with Mike [Owen] about breaking out into TA-focused units,” asserted AstraZeneca’s Executive Director, Development John Patterson in response to a question from IN VIVO Blog. “The viability of those units would thereby be called into question,” he continued, and areas likely to deliver value in the future, rather than today, might be overlooked and lack support. “I don’t think the break up model works if you think that the strength of an organization is what matters.”
That, surely, is the question: Is the Big Pharma organization, as it currently stands, adding enough value? Are common development organizations delivering economic value; are these giants combining the best of both large and small? Big Pharma PE ratios—down from the heady mid-twenties fifteen years ago to just 8 or 9 now—suggest investors don’t think they are.
Patterson acknowledged that “we’ve got to change,” and that “our investors are telling us as much with these PE ratios.” But granted, disaggregation isn’t the only (or necessarily the best) route to change; it’s just an attractive one given the talk about “learning from biotech” and given that it’s effectively the antidote to mega-mergers, now widely, if not always explicitly, categorized as value-destroying.
Patterson went on to argue that change is happening, but (at AZ at least) it’s happening from inside. “It may look like a swan on the surface, but there’s a lot of paddling going on underneath,” he told the audience in London. And although this transformation is relatively fast —“the atmosphere within Big Pharma management has changed hugely from three years ago”—it’s not happening overnight. If it did, “R&D productivity would disappear," Patterson declared.
But, with Mike Owen, let's not hold our breath for disaggregated pharma.
GSK's Secret Vaccine Engine: What Drives Prepandrix and Pandermrix?
Hey, what are theses guys hiding in there?
GlaxoSmithKline has taken a lesson from the secrecy and protection of the new model as a way to stimulate excitement and curiosity. They have taken auto industry marketing skills into the usually mundane world of vaccines.
Two GSK pandemic vaccines passed major regulatory milestones at the end of last week: Prepandrix (the pre-pandemic vaccine for use on high risk groups prior to an outbreak) and Pandemrix (the mock-up vaccine for use during an outbreak) received positive opinions from the European Medicines Agency on Thursday, February 21.
Each vaccine is described as an “adjuvanted” product but the adjuvant remains unidentified: GSK’s secret system to drive efficacy at a low antigen dose.
GSK has been assiduously protecting information about its proprietary adjuvant for the pandemic flu vaccines throughout development. They have scrubbed their communications about the product to keep its description off the internet. Clinical trial results were reported on the vaccine with an oil-in-emulsion adjuvant in The Lancet in August 2007.
Against the backdrop of mystery, GSK has emphasized that adjuvants hold the key to reducing the amount of antigen necessary to permit large-scale production for a pandemic situation and to give the company’s product a proprietary niche.
The company’s refrain: “adjuvants will play a key role in improving pandemic preparedness.” The positive actions on GSK’s pandemic flu vaccines in Europe come as a positive piece of news to offset the slowdown of another of the company’s major adjuvant vaccine candidates in the US: the HPV adjuvanted vaccine (Cervarix) which is stalled at FDA. (See here for a full discussion of the Cervarix delay and its meaning to the onset of the age of adjuvants in the US.)
But the secrecy will have to end soon. If not with the final approval documents around the EMEA filing, the formula for the adjuvant will have to be revealed in the future in the US where the company is working under a January 2007, $63 million contract with the Department of Health and Human Services to support pandemic vaccine research. Novartis and IOMAI also are working under research contracts at the same time.
The HHS contracts call for the companies to provide their adjuvants to HHS for consideration with other antigens. A member of the HHS National Vaccine Advisory Committee, Cornelia Dekker (Stanford Medical School) explained that the HHS contract offers the first step towards a “mix-and-match” approach to building adequate pandemic vaccine supply, using one company's adjuvant to stretch another company's antigen. As part of that, GSK will have to share the adjuvant with the government (if not the other manufacturers). The loss of secrecy is part of the deal that GSK will have to accept to keep in the HHS development effort.
But FDA can help GSK in this development effort. Where the agency's review has slowed down Cervarix, its review procedures will provide an extra layer of proprietary protection to the pandemic flu projects. Even if GSK won't be able to keep the adjuvant under wraps for ever, FDA's review of vaccines as the full product of all ingredients and delivery systems will provide a further proprietary cover.
Tuesday, February 26, 2008
FDA, You’re a Heartbreaker
So far this month, the agency has canceled three advisory committee meetings, including two last-minute cancellations by the anti-infective drugs division: Theravance’s telavancin (February 27) and Basilea/Johnson & Johnson’s ceftobiprole (February 28). Both antibiotics are pending at FDA as treatments for complicated skin and skin structure infections.
And that’s on top of the earlier cancellation of a February 20 pulmonary-allergy drugs advisory committee for Jerini’s icatibant (proposed tradename Firazyr), for the treatment of attacks of hereditary angioedema.
FDA certainly has canceled or postponed advisory committees meetings before, but it’s unusual to have three cancellations so close together. And it’s really unusual for the agency to cancel a meeting with such little notice to the sponsor. (Theravance had just three day’s notice, and had already previewed part of the committee briefing documents with investors.)
Is it coincidence, or something else altogether?
There are a few ways to look it:
(1) The optimistic view: FDA is so confident of the quality of an NDA that it decides it doesn’t need its outside experts to weigh in on an application. In general, products that don’t have an advisory committee review have a much easier time at FDA, with a better chance for a first-cycle review.
(2) The pessimistic view: FDA finds enough deficiencies with an NDA that it determines it’s not even worth holding a meeting. Pessimists would argue that the cancellations are indicative of an overall tougher regulatory environment.
(3) The lack-of-resources view: FDA is so budget- and personnel-stressed that it simply cannot afford to hold a meeting.
And here’s one other thing to consider: under the FDA Amendments Act, the agency must hold an advisory committee meeting for every new molecular entity that crosses a reviewer’s desk, or provide a written explanation as to why a meeting is not needed. So perhaps FDA scheduled the advisory committee meetings as required under FDAAA, but then decided they weren’t necessary.
But unfortunately for the drug sponsors, it looks like the pessimistic view is the correct interpretation.
According to FDA’s communications office, all three meetings were canceled “to allow time for the FDA to review and resolve several outstanding issues.” A meeting “was not appropriate at this point” for any of the applications, the agency said. “FDA will continue evaluating the data and will schedule an AC meeting as needed.”
So that’s certainly not good news for Theravance, J&J and Basilea. But it has broader implications as well.
For antibiotic drug sponsors, the cancellations open up the possibility that the anti-infectives division may have bigger-picture issues to work out before the NDAs can be considered. And for all of industry, they serve as yet another reminder that FDA can pull the rug out from under a sponsor at the last minute. For a drug sponsor, that's heartbreaking.
Can Italy Kick-Start Europe’s IPOs?
It’s a tough time for any biotech company to go public—let alone one, like Italy’s Molecular Medicine (MolMed), that’s working in two of the most controversial and risky biotech areas, stem cells and gene therapy.
But MolMed’s going for it anyway. The company, spun out of Milan’s San Raffaele Scientific Institute in 1996, hopes to see its first shares traded on March 5 on the Italian Electronic Stock Exchange (MTA). No matter that global markets face their gloomiest prospects ever, according to many economists and bankers. No matter that compatriot PhiloGen, focused on the more conventional, and certainly less risky antibody field, and at about the same development stage (Phase II) as MolMed, pulled its planned January 2008 IPO. “Biotech investments are not that cyclical; they don’t always follow the path of other investments,” opines CEO and President Claudio Bordignon, MD.
There’s nothing wrong with optimism. And granted, macroeconomic trends don’t directly influence R&D success per se. But let’s face it, in times like these, with talk of credit-crunch and global recession, investors are hardly likely to pour money into one of the riskiest sectors out there.
But MolMed doesn’t need much, as Bordignon argues: the global offer will represent only 25% of the company’s post-offer share capital (the minimum float required for Italy’s exchange), worth just over €70 million ($100 million--which certainly sounds like more than 'much' in terms of IPO hauls elsewhere). And it will also, Bordignon claims, benefit from a significant local hero effect. “We’re an Italian company, with Italian investors,” he points out. The link with San Raffaele, one of Italy’s most prestigious research institutes, and management’s pedigree, will also help, he says. (Click for MolMed's history and management.)
As for PhiloGen’s U-turn: that means “we benefit from a scarcity effect,” says Bordignon. With or without PhiloGen, mind you, there's already a scarcity of biotechs trading on the Italian market: Italy’s last biotech IPO was NovusPharma (now part of Cell Therapeutics) in 2000. Other Italian firms including Newron and BioXell have opted instead for Switzerland.
Still, Bordignon is hoping that Borsa Italian’s recent tie-up with the London Stock Exchange will help provide the breadth of exposure that other domestic firms have found lacking. “This [tie-up] was one of the main reasons for floating in Italy,” he told IN VIVO Blog, besides the local recognition. “Investors will see MolMed alongside other significant biotech companies as a result,” he points out.
MolMed hopes to use the funds raised to move its lead cell therapy program TK, for high risk leukemias, into Phase III trials and to progress recombinant fusion protein Arenegyr through Phase II solid tumor trials. Few potential investors appear put off by MolMed’s cell- and gene-therapy focus, according to Bordignon. Most (though not all) “understand the safety and efficacy data we have” supporting the programs, he says. “We’ve had very positive feedback.”
If those encouraging words translate into Euros, it would be a spot of brighter news for an otherwise depressed European biotech sector in which many companies, as in the US, are opting for trade sales rather than public listings. But it’s already clear we are not the only skeptics. “We were offered the [MolMed] IPO work but turned it down,” says an executive at one of the top five investment banks, “just as we did that of PhiloGen.” Why? “Because of scarce clinical data on any of the programs—basically, it’s too early.”
Bankers are sometimes wrong, mind you. Bookrunners Societe Generale and Banca IMI may yet pull off MolMed's IPO—though even if they do, and don't get us wrong, we hope they do—it’s unlikely that this will kick-start a European floating frenzy.
UPDATE: Molmed grossed €56.2mm ($82.3mm) in its IPO, selling 26.1mm shares at €2.15 each, the bottom of its €2.15-2.75 range.
Lucentis Congressional Oversight Hearing Put On Hold
Genentech will get a reprieve from lawmakers investigating the company’s pricing practices for its age-related macular degeneration drug ranibizumab (Lucentis).
The Senate Special Committee on Aging, which has been conducting the investigation, has decided not to initiate an oversight hearing on the issue.
“I don’t think that we’re going to schedule a hearing at this time,” says a Senate investigator. “However, we may have some staff findings on this matter which we may make public in the near future.”
While the committee aims to win the battle of public opinion, it’s a welcome development for Genentech knowing that one of their executives won’t be called in front of a Congressional panel—along with the television cameras—for intense questioning.
Last October, Senate Special Committee on Aging Chairman Herb Kohl (D-Wisc.) sent a letter to the Centers for Medicare and Medicaid Services asking why Medicare was paying a steep premium for Lucentis when the “chemically similar” cancer drug bevacizumab (Avastin) can be used off-label for AMD at a fraction of the cost.
The committee then launched a formal investigation in November with letters to FDA and Genentech. To read the specifics, click here.
CMS responded to the October 2007 committee letter at the end of February, according to the Senate investigator. Staffers intend to put together a staff memo containing findings from the investigation.
The staff identified “interesting details” in the FDA inspectional papers, e-mails and interviews, as well as noteworthy findings on the issue of whether Genentech promised to provide free Lucentis for the NIH/National Eye Institute-sponsored, head-to-head CATT study evaluating microdoses of Avastin compared to Lucentis (more on this later).
The findings of the investigation could be made public in a few weeks.
Monday, February 25, 2008
Measuring Pipeline Self-Confidence
Earnings season is over for most of Big Pharma, and the simple good and bad news (’07 net up or down; ’08 guidance depressing or positive) pretty much out.
To try to determine which lovers fall into which categories, and in preparation for a longer meditation due out in the March IN VIVO, we have been scuba diving the new cash-flow statements and combining what we’ve found with information from our Strategic Transactions Database. Our object: to classify companies as one or the other kind of lover.
None of this would be particular relevant were the drug industry’s cash flow to continue gushing at traditional rates, which would allow companies to do both – invest in their pipelines and generously dispense cash to shareholders.
The problem stems from what we suspect is the industry’s straitening cash flow.
Then there's challenge number two. At ever increasing rates: relatively new drugs are falling off the market (Avandia, Zelnorm)... or finding their growth stunted by new, confusing data (Vytorin)... or collapsing just before they get across the FDA’s finish line (Galvus). Indeed, just getting across the finish line will cost more than anyone, ten years ago, would have credited, given the requirements for safety and, we believe for next-in-class drugs, head-to-head outcomes data.
Put both those situations together, and it looks to us like pharma is soon going to have to make a big philosophical choice about what it wants to do with its cash: please investors in the short term or invest in the only thing that creates long-term pharmaceutical value: productive pipelines.
Hence, we’re trying out a new ratio for measuring pipeline confidence. In essence, we compare how much companies spend on their pipelines (via internal R&D spending and dealmaking) to how much they spend on shareholders (dividends and share repurchase programs). The higher the number, the more confidence they appear to have. The lower the number, the more the company feels it must pay to keep shareholders’ interest.
For the last three years, Eli Lilly has been relatively confident, with a three-year ratio of 2.29 (that is, they spend on internal R&D and dealmaking better than two times the amount they spend on more direct payments to shareholders). In contrast, Pfizer is at 0.7 ($41 billion on shareholders; $29 billion on deals and R&D spending).The statistic, like all single-number measures, is hardly perfect. It masks changes over time, for one thing.
Take Novartis. Over the last three years, it seems to have demonstrated an extraordinary confidence in its ability to grow its business and thereby create shareholder value – spending on pipeline-filling activities more than twice what it’s spent on shareholders. But as Novartis’ business outlook has darkened, its wooing of shareholders has increased in ardor. When things looked rather more promising, in 2005 and most of 2006, it bought back a relatively minor amount of shares while continuing to increase its R&D spend and paying nearly $5.1 billion to buy out the rest of Chiron.
But in 2007, with big setbacks to Galvus and Zelnorm and shareholders fleeing the stock, Novartis upped its total dividend outlay by more than 50% (OK, that’s in dollar terms, where the increase is boosted considerably by currency changes) and bought back $4.7 billion worth of its own shares – 10 times the amount it had purchased over the previous two years. It also announced, during its January earnings meeting, that it would buy back another $10 billion.
While You Were Just Happy to Be Nominated
- In a deal valued at up to $1.5 billion, Irish biopharmaco Elan may be spinning off its drug delivery technology unit, according to the Sunday Times (via Reuters).
- Theravance said on Saturday that FDA's planned advisory committee review of its antibiotic televancin was canceled. The meeting, scheduled for Wednesday, was to discuss Theravance's NDA for televancin in complicated skin and soft tissue infections; televancin was deemed 'approvable' by the agency last October. No word yet on the reason for the cancelation.
- The New York Times profiles the evolving science of schizophrenia treatment, focusing on Eli Lilly's development of the glutamate-modulating drug candidate LY2140023, led early on by neuroscientist Darryle Schoepp (who has since moved to Merck).
- The Boston Globe reveals the latest FDA insight: all employees must wash hands. Yes with soap!
Friday, February 22, 2008
A Question of Priorities: Lilly Prasugrel Prospects Looking Up
Lilly shareholders woke up this morning to find their company suddenly worth $1.4 billion more than it was at the close of trading yesterday.
Why? Because the Food & Drug Administration agreed with Lilly and Daiichi Sankyo that the new drug application for the clot-busting drug prasugrel (proposed trade name: Effient) merits a priority review. That means FDA plans to complete its initial review of the application in six months (by June 26) rather than 10 (October 26).
On paper, that sure doesn't seem like it justifies the 2.5% jump in Lilly shares prompted by the news. But Lilly should be used to that by now. Its shares have been on a rollercoaster ride while investors handicap the prospects for a critical new drug for the company.
In this case, the rollercoaster is heading back up, since many on Wall Street view the priority designation as more than just a possible four-month faster review time.
With good reason. A priority review designation implies a much higher probability of a "first-cycle" approval--meaning that not only will FDA provide an answer sooner than it would on a standard application, that answer is much more likely to be "yes" (an approval letter) rather than some form of "maybe" ("approvable" or "not approvable.")
In recent years, first cycle approvals for "standard" applications have become about as rare as white elephants. (We published that data in The RPM Report last year.) But priority applications still have been approved on the first go-around more often than not.
So, statistically speaking at least, the priority designation could mean the difference between a 2008 launch for prasugrel and a 2010 launch. That is a very big deal--especially since Lilly and Daiichi Sankyo desperately want to establish the drug before the market leader Plavix faces renewed generic competition in 2011.
Then there is what the priority designation suggests about the Lilly's plans to position prasugrel as superior to Plavix. Recall that the pivotal study of the drug--TRITON--compared prasugrel head-to-head versus Plavix, and found a significant reduction in cardiovascular events in favor of prasugrel. It also, however, showed an increased risk of major bleeding--though not nearly as big a risk as the magnitude of the efficacy advantage, especially when you exclude some high-risk subpopulations from the analysis.
Still, in a safety-first regulatory climate, the TRITON data spooked Wall Street, prompting concerns that FDA might not approve the drug at all without more data.
The "priority" designation does not guarantee that FDA will approve the drug without more data. It does, however, mean that the agency decided not to use the excess bleeding risk as an excuse to buy more time with a standard review designation.
FDA certainly could have gone that route: Bristol and Sanofi Aventis, for example, will argue that the apparent superiority of prasugrel in TRITON is simply an artifact of the loading dose of Plavix used in the study. A higher dose of Plavix, they say, would have shown the same reduction in cardiovascular events (and the same increase in major bleeds).
By granting a priority review, FDA is accepting the sponsors' claim that the drug would be an advance over Plavix based on the TRITON data. And the agency is also saying that it won't avail itself of an extra four months to dig into the data before making a decision.
Last but not least, the stock market's reaction reflects the element of surprise. Just yesterday, Daiichi Sankyo hosted an analysts briefing in Japan which included a slide suggesting an action deadline of October 26 for prasugrel.
The company said that it still hadn't heard from the agency regarding the formal designation of the application, but they sure seemed to be joining in the general belief that when it comes to priority designations, no news is bad news.
FDA's procedures call for notification to the sponsor of priority or standard status 60 days after filing. However, since 60 days is already one-third of the way through a priority review schedule, the agency often alerts sponsors that they have priority status well before that deadline.
So Wall Street, at least, seemed resigned to a standard review timeline. Now they have to reassess their perceptions of the drug.
The next milestone for prasugrel will be the scheduling of an advisory committee. Daiichi Sankyo says it fully expects one for prasugrel, noting that the new FDA Amendments Act directs FDA to convene committees for all new molecular entities or else provide written justification for skipping one. Separately, the agency also has to answer to Congressional overseers who want to see open discussion of any dissenting views on applications--making it even more perilous for the agency to skip a committee if there is anything but total consensus on approvability.
For now, FDA's next tentatively scheduled meeting of the Cardio-Renal Drugs Advisory Committee is June 24-25. If prasugrel is added to that committee, it clearly won't be approved by the end of June. But there is nothing (apart from logistics) to prevent FDA from scheduling a meeting before those dates. FDA typically announces a meeting agenda at least a month in advance, so that would imply a notice in the March/April timeframe.
One thing you can bet on: this rollercoaster ride isn't over yet.
Deals of the Week: A Bear of Very Little Brain
LINES WRITTEN BY A BEAR OF VERY LITTLE BRAIN Oh, help and bother. It's time for deals of the week, where we delve into the details of all things pharma. We admit to suffering an attack of nostalgia for the wisdom of a certain bear, given this week's relentless news coverage of Oscar (what's a girl to wear?), spy satellites, stagflation, and worries over the safety of the pharmaceutical supply chain. (Fear not. It's unlikely to happen again before the next total lunar eclipse.) But whether you are "a bear of very little brain" or an "owl who knows something about something", we pledge that though our spelling maybe wobbly, our analysis is not.
Celgene/Acceleron: This week's bio-bucks winner--and one day, perhaps, and Oscar--has to be Acceleron. On Wednesday, the biotech announced its first major collaboration--a tie-up with Celgene that could be worth more than $1.8 billion. Acceleron's ace-in-the-hole, so to speak, is ACE-011, currently in Phase I clinical trials for bone loss associated with multiple myeloma. In order to gain rights to ACE-011, Celgene agreed to pay a $50 million up-front, plus downstream milestones of up to $510 million. As part of the agreement, Celgene also gains rights to three discovery programs at Acceleron that target bone-loss. (That privilege could cost the New-jersey specialty pharma another $1.3 billion in downstream milestones if the science pans out.) As we noted here, the up-front fee is monstrous given ACE-011's stage of development; and it's yet another piece of evidence suggesting that early stage deal values are sky-rocketing. Though Celgene investors may question ACE-011's price tag, it's hard to deny the logic of the deal. Celgene already markets three multiple myeloma drugs, including Revlimid and Thalidomid; undoubtedly, having a compound that prevents bone loss in the same patient population is a nice strategic fit. (One can almost imagine Celgene's commercial team salivating about "synergies at the point-of-sale".) Certainly, in prior deals, Celgene has shown it's willing to pay a hefty price tag if a deal makes tactical sense. Last November, the spec pharma shelled out $2.9 billion to scoop up Pharmion and gain ex-US rights to Revlimid. We've opined in previous posts about various spec pharmas and their futures as independent entities. Perhaps the Acceleron deal, much like the Pharmion acquisition, will ensure that Celgene's name still exists a year from now.Pfizer/ Encysive: It's no secret that Encysive has been for sale since mid-summer 2007. Following the FDA's third rejection of its pumonary arterial hypertension drug, Thelin, and deep budget cuts to stem the bleeding, the company retained Morgan Stanley to evaluate strategic options. And this week, a surprise buyer finally surfaced: Pfizer announced Wednesday that it was buying the company in an all cash deal worth roughly $195 million. Pfizer, of course, has its own PAH treatment, Revatio, which contains the same active ingredient found in Viagra. Analysts speculate that the two medications would not actually be competitors for the limited PAH market, because of the possibility of combining them into one treatment. Before that happens, however, Pfizer will need to run its own Phase III trials in the US. (The drug is already approved in several EU nations--including the UK, Germany, and France--and Australia and Canada.) Beyond Thelin, the Encysive acquisition gives Pfizer access to two other compounds: Agratroban, a marketed product to treat thrombosis in heparin-induced thrombocytopenia, and TBC3711, another PAH medication.
Teva/Antisense Therapeutics: It's been a busy week for the folks at Teva. At a Thursday analyst meeting in New York, company execs predicted that the Israeli pharma would double its revenues to $20 billion by 2012. ($20 Billion! Already Teva is big enough to do at-risk launches; two in particular, Seroquel and Nexium, may kill AZ’s dividend. And recall what it's done to Wyeth with Protonix.) But the company is hardly content with its leadership position in the booming generic drug market--and that's led to some innovative deals. Just last month, the company ponied up $400 million for Cogenesys to access technology that could help Teva become a primary player in the follow-on biologics market. (For more on that deal, see here and here.) Anyone doubting just how important that market is to Teva should read the company's Feb. 21, 2008 press release touting its biosimilar G-CSF, which garnered a positive opinion from European regulators. And just one day earlier came news that the pharma had entered into an exclusive, world-wide license with Australian-based Antisense Therapeutics for that company's ATL1102, a second generation antisense inhibitor of Very Late Antigen-4 (VLA-4) originally discovered by Isis Pharmaceuticals and currently in Phase II clinical trials as a treatment for multiple sclerosis. This was not a big money deal: Teva's only paying $2 million up-front. (Down the road, Antisense could receive another $100 million, in addition to royalties in the low double-digit range based on ATL1102 net sales.) But the dollar value isn't what makes the deal interesting. No, what makes this agreement worth noting is that it represents a shift in Teva's strategy as it moves away from generics into branded products-- especially those of the biologics and specialist variety. Indeed, the deal continues to solidify the Israeli firm's desire to be a major player in the MS market. Recall that one of the company's branded drugs is Copaxone, a non-interferon injection widely expected to become the number one MS therapy worldwide sometime this year. And thanks to an alliance with Active Biotech, the company also has access to an oral MS treatment, laquinimod, which is currently in Phase II clinical trials.
Medrad/Possis Medical: At first glance, Medrad’s $361 million acquisition of Possis Medical appears to be an odd combination. But a closer look at each company’s leading product shows that they share common technology and customer bases. Both companies have technologies to deliver fluid under high pressure into the vasculature for cardiovascular applications. For Medrad, this takes the form of contrast injection markers, and for Possis, this involves thrombectomy devices used to clear clots from blocked arteries. The Possis deal gives Medrad’s sales force another tool to offer their interventional cardiologist customers, and with Medrad’s international sales force (as a Bayer subsidiary), this also significantly broadens the availability of Possis’s products, which had little international presence. (To learn more about peripheral vascular disease check out these articles from START-UP and MEDTECH INSIGHT.) NOTE: That we are just now getting round to an analysis of this particular deal--yes, we're aware it happened last week--may prove that we have more in common with Pooh than Owl. What can we say? We've been busy hunting woozles and heffalumps with the short people...
Photo courtesy of Flickr user WallyG via a creative commons license.
Thursday, February 21, 2008
Heparin Investigation Takes an Ugly Turn for Baxter, Industry
There's nothing like a picture of pig intestines being sorted in China to dramatize the fears that outsourcing is jeopardizing the safety of the US drug supply.
The picture to the right is just one in a series posted on-line today by the Wall Street Journal, showing the first step in the production process for heparin, one of the mostly widely used hospital pharmaceutical products in the US. (You can see the rest of the pictures here if you have the stomach).
You can expect those photos of the heparin production process to show up again, any time someone wants to question the impact of manufacturing outsourcing in the pharmaceutical industry. Like maybe when House Agriculture Appropriations Subcommittee chair Rosa DeLauro holds a hearing on drug safety issues (and especially the Trasylol controversy) February 27.
The photos accompany a lengthy discussion of the investigation into an apparent increase in adverse reactions associated with Baxter's heparin product, which has been recalled in the US. The Chicago Tribune also weighs in with a story including some comments from Baxter CEO Robert Parkinson.
Now, bear in mind that no one knows for sure at this point that the Chinese facility has anything to do with the heparin adverse events. Not that that will make too big of a difference in how much damage the story will do to confidence in FDA, the industry and the drug supply.
First came the embarrassing admission by FDA that it never inspected the plant in China that serves as one raw material supplier for the product in question. That prompted a key overseer of FDA--Michigan Democrat Bart Stupak--to call for the resignation of Commissioner Andrew von Eschenbach.
But Baxter may face some tough questions of its own--at least based on comments made by top agency enforcement officials during a Food & Drug Law Institute conference February 19-20. According to the Tribune, Parkinson says Baxter wasn't even aware that the plant in question was part of its supply chain, since it was a subcontractor to the firm Baxter relied on for bulk API.
David Elder, director of the agency's Office of Enforcement, pointed out that FDA believes it is the responsibility of the finished dose product manufacturer to assure the quality of its products. He was responding specifically to a question about components of medical devices, not heparin. But he pointedly expanded to his answer to include finished dose pharmaceutical manufacturers being responsible for their suppliers.
Deputy Chief Counsel for Litigation Eric Blumberg also discussed the agency's ability to hold individual corporate executives criminally responsible for allowing adulterated products on the market. The authority--known as the Park doctrine after a Supreme Court ruling upholding the principle--allows FDA to file misdemeanor cases against executives even if there is no evidence of intent or even knowledge of GMP violoations.
The principle, Blumberg reminded FDLI, is that an executive has at least the opportunity to prevent a dangerous product from entering the market, while consumers cannot protect themselves from a contaminated drug once it is in distribution.
If Congress does look more broadly at supply-chain responsibility, things could get really interesting.
Both the Journal and the Tribune quote American Pharmaceutical Products Inc. CEO Patrick Soon-Shiong, asserting the advantages of his company's approach to supply chain management. APP is the big winner (if there is one) in the heparin recall, since its product is now the only one available.
Soon-Shiong has been in the news before. APP was the subject of a front page story in the New York Times in 2002 because of its relationship with the group purchasing organization Premier; that was during a time when Congress was looking into GPO practices following allegations by small device manufacturers that they were being shut out of the market.
Before that, Soon-Shiong played a part in the controversy surrounding generic launches of Bristol-Myers Squibb's paclitaxel (Taxol). APP asserted that a patent it held on a cremaphor free formulation of paclitaxel should block generics of the Bristol product. The issue briefly delayed generic launches and prompted a Federal Trade Commission inquiry. (Bristol ultimately settled a series of antitrust claims regarding its patent defense strategies for several brands; APP was never charged.)
One last thing: APP also has first-hand experience with the challenges of global supply chain management. The company acquired its injectable generic product line from Fujisawa USA in the 1990s. Shortly after the acquisition, APP had to recall injectable gentamicin due to endotoxin contamination. The culprit? A Chinese raw material supplier.
Soon-Shiong should make an interesting witness...
Acceleron Deals ACE-011 and More to Celgene
Privately held Acceleron yesterday announced a broad co-development/co-promotion alliance with Celgene on Phase Ib lead project ACE-011 in bone disease and a further three discovery-stage compounds.
The upfront money looks good, given the compound's stage of development: Acceleron will receive $50 million, including a $5 million equity investment. That's close to the total upfront average for Phase II deals in 2007--$58 million, according to Windhover's Strategic Transactions Database. Celgene has also committed to a further $7 million minimum investment in a potential Acceleron IPO.
Development, regulatory and commercial milestones could reach $510 million for the ACE-011 program, and $437 million apiece for the three discovery-stage programs. (Since they're not split out into pre-and post-approval, we won't comment on size.) Acceleron will shepherd the projects through Phase IIa, and then hand them off to Celgene for later-stage development.
ACE-011 is an activin receptor IIa mimic that inhibits activin, a negative regulator of bone mass--you can read more here, and more here in our profile of Acceleron. The company specializes in the regulation of bone and muscle growth to treat a variety of diseases, and has raised nearly $100 million over three venture rounds and a debt placement since 2004.
IPOs are a rarity these days, but just in case, the Celgene deal sets Acceleron up nicely. And the young company still holds some cards: muscle loss, neuromuscular, and metabolic programs remain unpartnered.
image from flickr user bk-robat used under a creative commons license
Investigating the Investigators: Another Headache for Drug Sponsors
This would be a good time for biopharma companies to review their ongoing clinical trials to determine whether any investigators involved in the study are vulnerable to potential disqualification proceedings by the Food & Drug Administration.
All signs point to a crackdown coming from the agency, likely to take the form of a spate of proceedings to disqualify individual investigators from participating in clinical trials.
What tea leaves are we reading? How about these comments by the Center for Drug Evaluation & Research’s Office of Compliance director Deborah Autor, who told the Food & Drug Law Institute’s annual Enforcement & Litigation Conference yesterday that the Division of Scientific Investigations is “becoming more activist. I think that they are really gaining momentum in what they do from an enforcement context.”
The agency is working on “streamlining” the process involved in disqualifying clinical investigators when FDA uncovers fraudulent or violative practices, Autor said. She acknowledged that the process currently is “Byzantine” and slow-moving—a fact that works to the benefit of investigators facing potential disqualification.
“The agency is working to clean up those procedures,” she told the audience, adding the wry observation that “I’m not so sure this is good from your standpoint.”
Autor’s comments verify the observations of two attorneys sharing the dais with her—Douglas Farquhar of Hymen Phelps & McNamara and Philip Katz of Hogan and Hartson—who sense greater urgency and a tougher stance from the agency in cases involving clients potentially facing disqualification.
A crackdown on investigators accused of fraud would hardly be surprising, given the recent round of hearings and Congressional reports focusing on claims that FDA failed to take action quickly enough to respond to allegations of fraud in clinical trials of the antibiotic Ketek.
We won’t rehash all the allegations here. Suffice it to say that there is bipartisan concern that FDA is not sufficiently vigilant in overseeing the conduct of clinical trials. The debate on the Hill focuses on whether FDA needs new enforcement powers (the subject of the most recent Ketek hearing in the House) or simply needs to use its current enforcement authority more aggressively (as recommended in a report by Republican Representative Joe Barton).
Any move by FDA to step up disqualification proceedings against investigators means headaches for industry.
It's not just the individual accused of fraud or that investigator's clinical center that suffers in a disqualification proceeding, Katz pointed out. “What you then quickly get to is: what do we do with the data that this disqualified clinical investigator has been involved with?”
And it “is not just the data in the study that was the subject that led FDA to the disqualification proceeding,” Katz said, “but also other data with which that investigator was affiliated. That becomes suspect as well.”
In some cases, there may be nothing sponsors can do to avoid the taint—except hope that their clinical trial findings are robust enough to support safety and efficacy even if the investigator’s site is excluded from the analysis of the trial.
But sponsors can also prepare by double checking whether their investigators have been cited by the agency in public inspection documents (known as FDA 483 reports) or, even more critically, in warning letters from the agency. Those are warnings signs that an individual may be vulnerable in an enforcement crackdown.
Autor added that the agency is not relying on enforcement alone, but is working to modernize its overall regulatory approach to clinical trial monitoring.
“The regs, as everybody knows, are outdated and don’t really fit the way trials are done today,” she said. “Hopefully, over time you will see that changing so that clinical trials will really be subject to appropriate regulation for how they are conducted today.” The goal will be “putting the onus on sponsors and monitors to ensure quality in clinical trials.”
That may sound like yet another regulatory burden on drug development (and it is), but if the alternative is a series of enforcement actions that knock out individual trial sites from multiple applications at a time, this may be a case where industry has a lot to gain from moving to a new regulatory model.
Wednesday, February 20, 2008
Vernalis Assets, Anyone?
Get 'em while they're hot. Just don't go near Frova, though. When owner Vernalis received a non-approval letter from FDA last September to extend this triptan’s label into menstrual-associated migraine (MAM), the writing was pretty much on the wall for the UK group.
A victim of FDA’s by-now notorious jitters, particularly when it comes to primary-care pills? Perhaps. After all, the agency had acknowledged that long-term safety wasn’t the issue. Even so, it was unlikely even with the additional label that this under-performing, un-distinguished drug would have much chance of success against its better-established, larger competitors—some of whose triptans are being used off-label for menstrual associated migraines anyway.
But Vernalis also in 2004 took a $50 million loan from Endo to buy out Elan, offset-able on MAM approval. That debt has since grown to $56 million—the other reason for the share-tank.
This loan—repayable in August 2009—was about to push Vernalis into administration, perhaps as early as the middle of this year. The company narrowly escaped that by today announcing a settlement with Endo and a restructuring—complete with asset-divestment, staff cuts of over 50% (mostly corporate) and closure of Canadian development operations.
So what’s up for grabs? Vernalis’ other marketed drug, Parkinson’s disease treatment Apokyn (to which it acquired US rights in 2005 from Mylan), and its US commercial operations. Be quick, though, because “detailed discussions” are already ongoing.
There will be more. Vernalis’ restructuring is turning it from a commercially-focused organization into one that takes its assets to proof-of-concept (POC) only. Sound familiar? Because it is--Vernalis is now forced to partner its assets since it is selling its downstream operations, but elsewhere, the ‘to POC only’ model is an increasingly popular first choice for newer start-ups. Think Synosia, Flexion or the UK’s Summit PLC, and read this.
So if anyone’s after a clinical stage CNS asset (see the PR for the list of candidates) you know where to go. And there’s no CEO to prevent you buying out the whole group, either—Simon Sturge stepped aside. So whether you want to take over development of the remaining assets (less likely) or, as one analyst suggests, come in, eliminate the cash burn but make good use of offsetting Vernalis’ several hundred million pounds’ worth of tax losses (or part of them, anyway—much more likely), then you also know where to go.
And no, there’s no loan duty: Endo accepted just $7 million (£3.6 million) in cash and Vernalis’ foregoing future US royalties on Frova until sales exceed $85 million (not exactly a huge punishment: they were just $38 million in the first nine months of 2007). The US spec pharma “could have been more hard-nosed” and forced Vernalis into a full payment, says one analyst. But with problems (and a recently-departed CEO) of its own, Endo likely didn’t want to spoil its reputation among potential future partners.
We already knew UK biotech was in a sorry state. 2007 was an annus horribilis according to Piper Jaffrey senior research analyst Sam Fazeli. 2008 may be even more horribilis. With raising money impossible, and IPOs a long-forgotten art, those biotechs that aren’t, like Ardana and Cenes, already up for sale soon could be, since many have less than a year’s cash. The credit crunch, talk of global recession, and high risks across all sectors are compounding the usual complaints: annoying pre-emption rules, insufficient analyst coverage, too few specialist investors, generalists’ attention turned elsewhere.
Vernalis’ sorry story won’t exactly lure those investors back. Its predecessor companies, including Cerebrus, RiboTargets, British Biotech (remember them?) and Ionix collectively raised hundreds of millions in private and public equity over the years. Yet, with Vernalis’ shares now worth 8p each, as the analyst points out, “there’s not much to show for it.”
