Wednesday, December 31, 2008

Next Steps For Prasugrel: The Anatomy of an Advisory Committee

Eli Lilly and Daiichi Sankyo used the morning of New Years Eve (‘tis the season for hiding news) to announce that the delayed anti-clotting drug prasugrel will be considered by the Cardiovascular-Renal Advisory Committee February 3. (Shameless self-promotion alert: We predicted that February meeting in October.)

Now that a date has been offically set, let the next round of speculation begin.

That news can be viewed in two ways: optimists (like Lilly and Daiichi investors) will argue that the meeting is a signal that the review is wrapping up and a decision is close at hand. Pessimists will argue that the meeting is an indication of the internal strife at FDA over prasugrel’s benefit-risk profile—and that products that go before an advisory committee are less likely to be approved on the first cycle.

Here's our take. First, we should note that the confirmation of the advisory committee meeting is a milestone in prasugrel’s development. It’s the first word to come out of FDA on the drug since June, when the agency extended the review by three months. FDA then let the revised September 26 review deadline pass without an approvability decision.

Another positive indicator for Lilly and Daiichi is that FDA is only convening the Cardio-Renal committee—and is not asking for a joint review with the Drug Safety & Risk Management Advisory Committee. A joint meeting would indicate significant concerns at FDA regarding prasugrel’s safety profile, which we have delved into in this earlier post.

Of course, that certainly doesn’t preclude FDA from drawing from members of the Drug Safety & Risk Management Advisory Committee as needed—including its newest member, Public Citizen’s Sidney Wolfe, who is unlikely to look kindly upon the prasugrel NDA.

Wolfe is just one extra member that could be asked to show up on February 3, given the current vacancies on the Cardio-Renal advisory committee. There are just eight permanent Cardio-Renal members, including a consumer rep (Consumers Union’s Stephen Findlay) and a non-voting industry rep (AstraZeneca’s Jonathan Fox).

That can make for a lot of last-minute additions. At the committee’s last meeting, FDA added 13 temporary members, including two regulars: University of Washington statistician Thomas Fleming and Duke University human cognition expert Ruth Day.

So who might be asked to serve? With a product like prasugrel, one obvious choice for a temporary member is Steven Nissen, the head of cardiology at the Cleveland Clinic—an expert on cardiovascular drug safety and a former chair of the Cardio-Renal advisory committee.

Nissen’s participation on the committee would be a positive development for Lilly and Daiichi, given that he has come out in favor of prasugrel—first giving the drug a thumbs up for approval and then criticizing FDA for not delivering an on-time approvability decision. Nissen isn’t exactly a shrinking violet, so if he still favors a prasugrel approval, he stands a good chance of getting the committee to see things his way.

But those statements may prevent Nissen from serving—especially given FDA’s tougher line on conflicts of interest. Indeed, Nissen himself has questioned whether he is qualified to serve on an advisory committee under the new CoI guidelines. The meeting roster will be out in the next month. Lilly and Daiichi should hope Nissen's name is on it.

Human brain image courtsey of flickr user hduhadaway.

Monday, December 29, 2008

Have You Voted?

Voting for IN VIVO Blog's Deal of the Year continues, and with about 800 votes cast so far, Alnylam/Takeda is maintaining a pretty comfortable lead with 39% of the vote (not Eagles-over-Cowboys 44-6 comfortable, but still). But there's plenty of time left!

Click here to review the nominees and vote for IN VIVO Blog's Deal of the Year.

The poll remains open until January 6th.

Tuesday, December 23, 2008

Lilly's Prasugrel Widens the Gap

The gap just got wider.

No, we’re not talking about the income inequality gap, or the gender gap, or the generation gap. We’re talking about the approval gap for new drugs and biologics between Europe and the United States.

Some critics of the Food & Drug Administration argue that FDA is more conservative than its counterparts in Europe. (This is what we think of as the “too slow” contingent. FDA is also criticized from other stakeholders—like Sid Wolfe and Chuck Grassley—of being too fast.)

FDA disagrees with both sides. As Office of New Drugs director John Jenkins said at FDC-Windhover’s FDA/CMS Summit for BioPharma Executives, “We review each application on its own merits—not against some goal that we will approve 25 applications this year. Those that meet the standards under the statute get approved; those that don’t, don’t get approved.”

But with last Thursday’s news that prasugrel—Eli Lilly and Daiichi Sankyo’s beleaguered blood thinner candidate that is still sitting at FDA—received a positive recommendation from the European Union’s Committee for Medicinal Products for Human Use, the noise from the “too slow” contingent is likely to get louder.

In an effort to discredit those critics, Jenkins presented data at the FDA/CMS Summit from a preliminary analysis of new molecular entities reviewed by FDA and the European Medicines Agency between January 2006 and October 2008. What Jenkins found was that EMEA approved slightly more novel products than FDA, but that the agencies had a similar approval rate.

Jenkins then looked at new molecular entities that were reviewed by both the Food & Drug Administration. Of those 29 products, FDA approved two that the European Medicines Agency has not, and EMEA approved seven that FDA has not. (Once Lilly and Daiichi receive final approval from the European Commission—which should come in two or three months—prasugrel would make that eight.)

Jenkins argued that the numbers are too small to support any conclusions that FDA is more conservative than its counterparts in Europe—especially given that one of the EMEA-approved drugs (Sanofi-Aventis’ weight loss drug rimonabant) has already been withdrawn from the market.

Pointing to the list, Jenkins said: “Here’s where all the statements about the EMEA being faster are coming from.” But some investors still see the data as a troubling trend. The prasugrel approval in Europe is only likely to feed those beliefs. (You can read all about that debate in the latest issue of The RPM Report.)

So what's up with prasugrel at FDA?

As we’ve reported, FDA is looking at February 2009 for an advisory committee meeting. Assuming that happens, an answer isn’t likely much before March 2009—which would double prasugrel's review time to 12 months. The user fee deadline was initially set for March 2008, but on two occasions was pushed back three months—most recently to September. Since then, it has become just one of a number of missed deadlines at FDA.

Cleveland Clinic cardiologist Steve Nissen, who has accused FDA of being both too fast and too slow, thinks Lilly and Daiichi deserve an answer one way or the other. What do you think? Is FDA more conservative than EMEA? Or is the difference too small to draw any conclusions?

Photo courtesy of flickr user StevenBulman44.

Monday, December 22, 2008

And the Nominees for IN VIVO Blog's DEAL OF THE YEAR Are ...

It's time to have your say, IN VIVO Blog readers! Our poll for the Deal of the Year is now live. (Email subscribers: if you don't see the poll below, visit the blog's home page to vote.) Please vote. Get your friends and colleagues and families to vote. Tell strangers to vote too, if you like.

Below are the list of nominees, a Baker's Dozen in no particular order, followed by the poll. The poll will be open until January 6th, when we'll announce the winner. Write-ins are acceptable, just post them in the comments and we'll tally them up as well. We'll occasionally re-post this list as a reminder over the next two weeks when otherwise IN VIVO Blog posting will be in a light, holiday-hibernation mode.

Good luck to all the nominees and see you in the New Year!

Lilly/TPG-Axon/NovaQuest: In July, Lilly announced an agreement with TPG-Axon Capital and Quintiles Transnational Corp.'s NovaQuest partnering group under which Lilly's partners will pay up to $325 million in development funding for its two lead Alzheimer's disease compounds, a gamma secretase inhibitor and an A-beta antibody, each ready to begin Phase III testing.

Genzyme/Isis: Genzyme, allegedly up against ten other bidders, agreed to pay $325 million up front (including $150 million for shares, at roughly double the price they are today) and over $800 million in development and regulatory milestones for mipomersen, a Phase III, once weekly injectable that targets low-density lipoprotein (LDL).

Takeda/Millennium: Takeda's purchase of Millennium shows the determination of Japanese pharmaceutical companies to morph into global players on the biopharmaceutical industry stage.

Infinity/Purdue & Mundipharma: In return for what could be nearly 38% of its stock and the vast majority – ex-US – of its pipeline, Infinity bought probably five years of freedom from worrying about Wall Street -- enough money for both its discovery and clinical programs -- while retaining, like Genentech, the entire US market in which to create a commercial presence.

Overprotecting Therapeutic Classes In Medicare: When Congress “codified” the CMS policy on protected drug classes over the summer, it sounded like no big deal. But instead of adopting CMS’ language stipulating the classes, Congress instead gave CMS the authority to define any classes as protected. And it also made it much more onerous for CMS to create exceptions to those protections within classes.

Alnylam/Takeda: In these cash-constrained times, the deal allows Alnylam to end the year with approximately $500 million in cash and sets the RNAi pioneer up for pipeline building down the road. It makes Takeda the sole big RNAi player in Japan and cements the Japanese pharma's place among the most active and creative dealmakers of 2008.

Pfizer/Ranbaxy: In an era when product expirations – either through the lifting of exclusivity or the weight of safety problems--seem more common than product launches, this deal is an example of how big pharma can try to take its primary care jumbo jets in for soft landings.

Novartis/Alcon: Novartis is trying to minimize the problems of a pharmaceutical company managing a device business in part through the structure of its acquisition of a majority stake in Alcon. Novartis is merely investing in the company (starting out with a 25% stake -- for $11 billion -- with a plan to increase it, sometime between 2010 and 2011, to 76%, for no more than an additional $28 billion).

Vertex/Undisclosed Investors: This is the best example we can think of from 2008 of a phenomenon that will surely gather steam as biotech firms search around for non-dilutive sources of capital: Vertex's June 2008 sale of the royalty stream on its HIV protease inhibitors (which are marketed by GSK) to a group of undisclosed investors.

FDA/Amgen: The Aranesp relabeling was the the first (and, so far, only) time FDA has used its new power to order sponsors to make specific labeling to changes. FDA gained that with the enactment of the FDA Amendments Act in 2007. So far, the agency has invoked the mandatory labeling authority seven times, but in each of the other cases the sponsor (or sponsors) has agreed to the change. But not with Aranesp.

GSK/Actelion: Actelion’s worldwide licensing deal with GlaxoSmithKline for Phase III sleep drug almorexant is one of those rare (and post-crisis, even rarer) partnerships where the biotech calls the shots. And where Big Pharma is very happy for biotech to call the shots because a) it keeps risk under control and b)—here’s the good bit--it’s picking up a tip or two on the way about how to run R&D.

Daiichi/Ranbaxy: What is surprising about the Daiichi/Ranbaxy deal is that Daiichi chose to invest in a company focused primarily on generics and geographically situated in an emerging market. While India is undoubtedly an important arena, companies such as Takeda, Astellas, and Eisai have focused their efforts on building a US presence, especially in oncology.

GSK/Sirtris: Sirtris' acquisition demonstrates the sometimes astounding value ascribed to target-specific platforms and underscores Big Pharma's interest in accessing en masse technologies and human resources that may allow them to leap forward rapidly.

pre-doctored image from flickr user David Ortmann used under a creative commons license.

(Final) Deals of the Year Nominee: Lilly/TPG-Axon/NovaQuest

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Aaand, last but not least: It's not just cash-poor biotech firms that need the occasional helping hand to finance their drug development efforts. Even for the likes of Eli Lilly (and, say, Bristol-Myers, which has blazed this particular trail among larger companies), hedging pre-market risk is part of the game plan when cash is becoming more expensive and clinical development and regulatory affairs more uncertain.

In July, Lilly announced an agreement with TPG-Axon Capital and Quintiles Transnational Corp.'s NovaQuest partnering group under which Lilly's partners will pay up to $325 million in development funding for its two lead Alzheimer's disease compounds, a gamma secretase inhibitor and an A-beta antibody, each ready to begin Phase III testing.

In exchange, TPG (which provides the bulk of the capital) and NovaQuest (10% of the funding and strategic development advice) will receive success-based milestone payments and mid-to-high-single-digit royalties on future sales of the two compounds. Quintiles CRO arm will act under a traditional fee-for-service contract. Finally, to sweeten the deal and hedge the risk shouldered by TPG and NovaQuest, those partners will also receive an additional undisclosed royalty on a third, unidentified product that Lilly has out-licensed to a third party. (See our coverage of the deal here.)

Not to show you how the sausage is made, but there was some internal dispute here at IVB over what this deal signifies within pharma, if not its overall importance.

See, on one hand, the deal is forward-thinking and increasingly necessary in a difficult R&D climate; with the cost of capital increasing even for the likes of Lilly and its Big Pharma brethren it allows Lilly the flexibility to take multiple shots on goal in Alzheimer's or other diseases. It's also the first publicly announced deal (we've heard rumors of deals signed but still private) in which a private equity player takes a big financing role in a Big Pharma's development program -- something they've done in small and mid-sized companies (e.g., Symphony Capital) but which Big Pharma has always shunned.

There will now likely be further variations on this theme: former AstraZeneca CFO, now Goldman-Sachs partner Jon Symonds says he's working on putting together a pool of PE capital for developing Phase I and II Big Pharma (and maybe other) compounds, which could be pulled together as soon as January. That structure, incidentally, addresses one of the big problems for PE players (and probably one of the big sticking points of the Lilly/TPG negotiations, which apparently took about a year and a half): how do you put together a marketbasket of enough develop-able compounds to offset the awful odds facing any single on of them. The drug company wants to put as few as possible in the basket; the PE investor wants as many as it can get.

On the other hand, there is something odd about offering deal-of-the-year honors to a Big Pharma company for creative financing to mitigate risk during the year when a lot of people who are supposed to be the experts in this kind of thing are bankrupt, unemployed--or begging the taxpayers for assistance.

And it is especially odd, given that (as we wrote here) Lilly is a model of a Big Pharma company that is focusing on innovative products--rather than diversifying into OTCs or related business like some of its peers. The logic of focusing--that investors want to diversify for themselves, rather than turn their money over to Novartis management to diversify for them--seems to apply here too. Shouldn't Lilly's investors just hedge for themselves, rather than have Lilly management do it for them?

Still, everyone agrees that the deal allows Lilly to shed risk (in return for a smaller reward) in this notoriously difficult therapeutic space in a creative transaction that could prove to be a model for private equity/pharma deals going forward. It's just that we don't agree about whether that's a GOOD THING.

So there you have it--your last IN VIVO Blog Deals of the Year! Nominee. Got it in just under the wire. Why Lilly/TPG/NovaQuest? For the new-model dealmaking, for the sexy private equity angle. For the Controversy!

We'll see you later, at the ballot box.

image by flickr user jacob.theo used under a creative commons license.

Friday, December 19, 2008

DOTW: Variations On A Theme

2008 is drawing to a close. Today marks the year's final "Deals of the Week" post. As this blogger takes time to reflect on the pre-holiday deal-making activity, it's no surprise that all of the deals in today's recap reflect broader themes at work in the biopharma industry. From Big Pharma's penchant for specialty products to highly structured alliances that allow both parties to share the financial risk (and gain), these deals mirror past DOTW discussions, as well as the larger themes highlighted in our various Deals Of The Year posts. DOTY voting commences on Monday. Remember to vote early and often. Until then, we hope you enjoy this week's variations on a theme. (Bach is optional.)

GSK/Dynavax: It was a good news, bad news kind of week for Dynavax. The biotech announced that it's partnership with Merck concerning the troubled Hepatitis B vaccine Heplisav was officially over (see below). Despite the bad news, Dynavax can at least take comfort in its recent deal with GlaxoSmithKline: an option-style tie-up that gives Dynavax $10 million up-front in exchange for a worldwide strategic alliance involving endosomal toll-like receptor drug candidates in four autoimmune and inflammatory disease areas, including Dynavax's preclinical TLR7/TLR9 inhibitor, DV1079. Under the deal's terms, Berkeley, Calif.-based Dynavax will conduct research and early clinical development using its proprietary technology, and GSK has the exclusive option to license each program at proof-of-concept, or earlier if certain circumstances occur. Should GSK exercise the option, it will take over development and commercialization activities, with Dynavax getting tiered royalties up to double digits, the two firms said Dec. 17. Dynavax, which could realize milestones up to $200 million apiece in each of the four programs, also retains the option to co-develop and co-market one pre-specified product. During a same-day investor call announcing the collaboration, Dynavax CEO Dino Dina called the partnership with GSK "a transformational event" for his biotech. "The alliance will allow us to diversify and advance a very valuable pipeline of products that target significant unmet needs," he said. According to "The Pink Sheet" DAILY, that's likely to be the case even if GSK ultimately declines the option on Dynavax's drug. Certainly, given the pipeline pressures of Big Pharma companies, it's unlikely there will be the stigma of "tainted product" attached to the program if GSK ultimately declines the option--assuming no adverse side-effects and positive clinical data with DV1079. Case in point: Exelixis. In October, GSK declined its option on Exelixis' small molecule oncologic XL184, ending a six-year R&D partnership that brought the latter firm an estimated $260 million in funding, including an $85 million loan. Exelixis regained all rights to XL184 and quickly partnered the molecule, along with an earlier-stage compound, with Bristol-Myers Squibb for $240 million in assured payments plus a major co-development and marketing role. For GSK , the deal marks the continuation of a business strategy heavily weighted toward option-based deals, which involve a relatively minimal upfront commitment for the global pharma, allowing it to hedge its financial exposure until the R&D risks are known more fully. In addition to its 2002 deal with Exelixis, GSK has also inked option arrangements with Cellzome, Affiris, Anacor, NeuroSearch, Regulus Therapeutics and OncoMed, according to FDC-Windhover's Strategic Transactions database.

Wyeth/Thiakis: This deal, which sees Wyeth acquiring London-based Thiakis’ obesity candidates, could best be described by a made-up word: alli-quisition (hey, you want real words, read a book). Wyeth pays $30 million up-front for Thiakis and its portfolio of synthetic gastrointestinal peptides and up to $120 million in earnouts tagged to downstream milestones. Our Pink Sheet DAILY in-depth coverage of the deal is here. Thiakis’ backers secure an exit—the biotech had raised about $19 million from private investors Novo and Advent Venture Partners—but without some of those milestone payments it’s not a particularly good one. Expect these kind of earn-out based deals to become more prominent as we move into 2009. With Big Pharma content to sit on the sidelines and wait while prices for biotech companies fall, most investors surveyed recently by FDC-Windhover believe future M&A activity is likely to place a premium on hedging risk. Earn-outs haven’t featured in a ton of deals lately—in fact thus far in 2008, just 20 percent of all private acquisitions have included earn-outs, down from a high in 2006 of nearly 43 percent of all private deals. (Read all about it in our next issue of START-UP.) Back to Wyeth: the pharma gets Thiakis' lead project, TKS1225, a potent, long-acting analogue of oxyntomodulin, which is a naturally occurring peptide hormone involved in regulating food intake. The hormone is released by the gut following food ingestion, sending satiety signals to the brain. It is thought to work through the GLP-1 receptor and does not cross the blood brain barrier, an important consideration given the suicidality risks associated with another class of obesity treatments, the CB-1 antagonists--Christopher Morrison.

Pfizer/Auxilium: As Big Pharmas continue to have more negotiating leverage, there’s a clear preference these days for tightly structured alliances rather than the outright biotech purchases. And given the regulatory hurdles associated with many big primary care drugs, Big Pharma is much more interested in specialty care products. Pfizer's tie-up this week with Auxilium illustrates both those trends. The two companies announced this week that Pfizer would pay $75 million upfront for the European rights to Xiaflex, a biological enzyme in Phase III for Dupuytren’s contracture and Phase IIb for Peyronie’s disease. Malvern, Pa.-based Auxilium stands to earn $150 million in regulatory milestones, $260 in sales-based milestones and increasing tiered royalties on Xiaflex if all goes well. Pfizer, meanwhile, has the right to negotiate commercial rights for additional indications within its territories, including frozen shoulder syndrome, where the drug is currently in Phase II trials. It sounds as though there was stiff competition for the biologic. In a conference call discussing the news, Auxilium CEO Armando Anido said the biotech chose Pfizer as its partner over several other global pharmas, because of the larger company's success marketing drugs such as Lipitor and Viagra. As might be expected, Pfizer's newly created specialty care business unit will have the commercialization honors. The Pfizer deal likely occurs at an ideal time for Auxilium, which faces a patent fight with Upsher-Smith Laboratories over intellectual property related to Testim, the biotech's testosterone gel for hypogonadism. Upsher-Smith notified Auxilium in October that it plans to file an Abbreviated NDA with the FDA for its own testosterone gel that it believes does not infringe on Testim's patent, which runs until January 2025.

Baxter/Avigen: Like so many other small biotech companies, Avigen, which focuses on neurological compounds, has had a tough year. The company has the dubious honor of posting one of the largest market cap losses among biotechs valued under $500 million in Q3 according to Rodman & Renshaw. Avigen's share price tanked in October when it announced negative news associated with AV650, its Phase IIb drug for the treatment of spasticity associated with multiple sclerosis. The biotech terminated its development partnership with Austria's Sanochemia Pharmazeutika and said it would focus on developing AV411, a novel glial activation inhibitor, for neuropathic pain and opioid withdrawal. But during its third-quarter financial call on Oct. 28, Avigen unveiled a massive restructuring plan that entailed discontinuing work on the glial activator and another preclinical product, AV513, unless a development partner could be found. CEO Kenneth Chahine said the new direction meant Avigen would have sufficient cash for four years of operations, given the $47.4 million the company had in cash, cash equivalents and securities at quarter's end. But the company's largest shareholder, Biotechnology Value Fund, which holds 29 percent of Avigen's stock and has provided capital directly to the biotech, clearly is troubled by the news. In a Dec. 11 letter to Avigen's board, BVF's Mark Lampert decried the steep decline in the company's share price, which has fallen 90 percent since 2004. He charged the company with threatening to destroy shareholder value by broadening "golden parachute" provisions for executives to one-fifth of Avigen's market cap and adopting a "poison pill" to prevent BVF from trying to intervene by purchasing a majority share. Lampert asserted that "Avigen has no real business at this time and has abandoned the development of all its products." Instead of looking for potential new partners and directions, the letter urged Avigen to return its excess cash to shareholders or at least offer a downside guarantee - an obligation to buy shares back at a specified price on a certain date. This week comes news that might appease Lampert and the crew at BVF. Avigen announced it was partnering its preclinical, oral blood coagulation product, AV513, to Baxter Healthcare in deal worth $7 million. "The sale of AV513 is an example of building value in a product that is differentiated from current therapies, and bringing it to a valuation point that generated a positive return on investment," said Avigen's Chahine in a press release announcing the news. Hmm, we can't wait for BVF's response.

GlaxoSmithKline/Genmab: Back in the days when licensors had clout, co-promote options featured in almost every deal. Biotechs figured they would keep their strategic options open just in case going commercial took their fancy, and Big Pharma were in no position to refuse. This week’s news that Genmab has sold back its co-promote option on CLL candidate ofatumumab to partner GlaxoSmithKline makes two things clear: first, many of these options are unlikely to ever be exercised given the logistical and financial commitments required (which is in large part why Big Pharma were so relaxed about granting them in the first place); second, in today's roiling financial markets, getting a guaranteed cash payment is a wiser course of action than holding out for theoretical money in the future. (A bird in the hand, as they say.) Genmab got just $4.5 million from GSK for the option, which covered a targeted oncology setting in the US and the Nordic region. Not a lot, particularly since GSK had granted Genmab the option to co-promote two of its own drugs , too—and agreed to reimburse some sales reps. But Genmab no longer has anything behind ofatumumab that could make a sales infrastructure cost-effective (one that Genmab estimates would have cost $7 million a year); it ended development of the potentially synergistic HuMax-CD4 for cutaneous T-cell lymphoma and its other program is in head and neck cancer. So if it wouldn’t have exercised the option anyway, why not take the money? And why not re-negotiate a lower share of the (currently 50/50) R&D costs, too, in exchange for a bit of royalty?--Melanie Senior.

AstraZeneca/MAP Pharmaceuticals: Another day, another deal heavily weighted on the back end. On Friday Dec. 18, AstraZeneca and MAP Pharmaceuticals announced a worldwide collaboration to develop and commercialize MAP's proprietary nebulized formulation of budesonide, currently in Phase III development, for treatment of pediatric asthma. While the biodollars sounded huge--"AZ, MAP ink $900 million asthma deal" read one write-up of the transaction--the reality is far less glorious. Under the terms of the agreement, AstraZeneca will pay MAP Pharmaceuticals an upfront cash payment of just $40 million (certainly not bad). True, the company owes MAP another $35 million if the ongoing Phase III trial reaches certain primary endpoints with the appropriate safety results. And, it's also true that at some point in the future, MAP could receive up to $240 million in potential development and regulatory milestones, as well as sales performace-related milestones of up to $585 million in the event the product is a considerable commercial success. Don't get me wrong--$40 million is a sizeable chunk of non-dilutive change and kudos to MAP for getting the deal signed at all. But the other $860 million? It may never well materialize--and MAP and its investors would do well to remember that. (NOTE: MAP wasn't the only potential winner in this deal: Elan Pharmaceuticals may also get a welcome boost. MAP's proprietary formulation of budesonide comes courtesy of Elan's nanocrystal technology. )

Merck/Dynavax: It's official. Merck and Dynavax announced Friday Dec. 18 that they were tabling their agreement concerning Heplisav, a Phase 3 hepatitis B virus (HBV) vaccine placed on clinical hold at the FDA earlier this year after a sgnificant adverse side-effect occurred. All rights to develop and commercialize Heplisav revert to Dynavax. According to the press release, Dynavax will continue to evaluate Heplisav's development options, especially as a treatment for adults outside the U.S. and for the global end-stage renal disease markets, which the company estimates represent approximately 70% of the total market opportunity for this vaccine. If the regulatory feedback is favorable, Dynavax plans to line up a new partner or financing arrangement to support necessary clinical work with the drug. It will be interesting to see how regulators outside the U.S. view the drug. Back in October, the FDA notified Merck and Dynavax that "the balance of risk versus potential benefit no longer favors continued clinical evaluation of Heplisav in healthy adults and children." Though Dynavax is putting on a brave face--it wins our award for the little biotech engine that could--there's no denying the company faces some tough choices in the months ahead. With limited cash resources--just $65 million including the recent up-front from GSK and '08 operating expenses for the first three quarters totalling over $50 million--it's hard to see how the company will be able to push Heplisav to the point where it is sufficiently derisked for potential future partners.

through the fingers by flickr user akash k courtesy of creative commons license.

Deals of the Year Nominee: Genzyme/Isis

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

The case for Genzyme's January cholesterol deal with Isis is straightforward: it's Big. In terms of up-front money (not always easy to come by these days), it's the biggest licensing deal of 2008. And of 2007, in fact--the largest one before it was GlaxoSmithKline's Genmab alliance in December 2006.

What’s more, this deal remains top of the money-on-the-table league even after terms were adjusted following one of the year's largest clinical upsets, Schering-Plough and Merck's Enhance data.

To recap: Genzyme, allegedly up against ten other bidders, agreed to pay $325 million up front (including $150 million for shares, at roughly double the price they are today) and over $800 million in development and regulatory milestones for mipomersen, a Phase III, once weekly injectable that targets low-density lipoprotein (LDL), the bad-guy cholesterol—and is perhaps even better at doing so than statins.

Trouble was, days later, data from the notorious ENHANCE study called into question whether lower LDL actually leads to better cardiovascular outcomes—apparently undermining the entire premise on which statins—and mipomersen--is based. Vytorin scrips have been on a nosedive since then.

Small wonder, then, that the deal terms were updated in June, following a delay in April to the drug’s development timeframe thanks to a skittish FDA. Genzyme squeezed another $50 million of development funds out of Isis, bringing its total contribution up to $125 million. Isis gets certain milestones early, in exchange, but—here’s probably the biggest blow—it also shares development costs after the $125 million is used up, until the program turns a profit. (See this story.) In the original deal, Genzyme paid all the development beyond Isis’ $75 million contribution.

That matters, but only later. Mipomersen’s developers may brag that it’s more potent than statins but this isn’t a drug that’s about to displace Lipitor, at least not for a while. For now, mipomersen is being developed for a rare inherited disorder called homozygous familial hypercholesterolemia, which affects only one in a million people. Granted, FDA’s extra data requests post-Enhance will delay the planned filing date by a year (read more about that here), but this shouldn’t break the bank for Isis even under the new terms. Where it might—but where its 30% share of profits could also be significantly higher—is in the subsequent heterozygous hypercholesterolemia program (1 in 500) and the incrementally broader populations beyond that. These ramp up to people with elevated cholesterol at high risk of cardiovascular events, and then to those unable to tolerate statins or for whom statins don’t work.

Which leads us to the second part of the case for this being Deal of the Year: because of the product. Mipomersen’s pyramid-style expansion potential—starting with a tiny, orphan indication, getting the regulators and physicians on side, then broadening out, including with an orally-available follow-on—is the new way to build a blockbuster. In fact it’s probably the only way, mitigating risk and cost for all parties.

And that property of mipomersen—the potential to turn from a small product within specialist comfort zone into something worth $2 billion—explains why Genzyme left its blockbuster upfront cash-wodge on the table. Is it IN VIVO Blog's Deal of the Year?

Deals of the Year Nominee: Takeda/Millennium

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Takeda's $8.8 billion bid for Millennium Pharmaceuticals--the largest deal in its storied two century history--deserves a nod as deal of the year for a number of reasons.

Along with Eisai's 2007 acquisition of MGI Pharma and Daiichi Sankyo's $4.6 billion buy-out of a controlling interest in Ranbaxy (another 2008 deal of the year), Takeda's purchase of Millennium shows the determination of Japanese pharmaceutical companies to morph into global players on the biopharmaceutical industry stage. Indeed, as a group, Japanese pharmas were one of the top acquirers of private biotech from 2003 through August 2008, according to a recent START-UP article.

And their penchant for ex-Japan acquisitions is likely to continue, fueled in large part by a demanding domestic market where yearly price cuts on drugs are mandated by the government, stagnating growth, and a slower regulatory approval process. Add in pipeline pressures, large war chests of cash, and the relative strength of the yen to other currencies (a condition that gives the Japanese the upper hand in bidding wars), and its not unreasonable to believe that in 2009 Japan pharma companies will continue to be some of the industry's most active--and important--dealmakers.

But the Takeda/Milllennium deal doesn't just illustrate the prowess of Japanese deal-making. The transaction underscores another major theme at work in the industry: Big Pharma's apparently insatiable appetite for oncology products.

Think about it. In the past six months, we've seen Pfizer restructure with an eye to a more flexible future--a move that included eliminating early stage R&D in Big Pharma standbys like cardiovascular and obesity, and a greater emphasis on oncology, through the creation of its oncology business unit. Then there was Eli Lilly's October surprise--the $6.5 billion purchase of ImClone, a move that gives the Indianaoplis-based drug maker partial ownership of Erbitux plus a pipeline of targeted, but primarily early stage oncology products.

Indeed, Lilly's rationale for the ImClone deal sounded a lot like the reasoning Takeda offered up for its own bid for Millennium back in April: a need to bulk up in biologics, particularly in an indication with high unmet medical need and a smoother regulatory approval path.

Certainly, from a deal-making perspective Takeda has become the new deep-pockets of the cancer world. In 2008 alone, it inked handsome—some might argue excessive--agreements with Amgen, Cell Genesys, Millennium, and Alnylam to boost its abilities in oncology.

In its two-part monster deal with Amgen in February, for instance, Takeda spent $300 million up-front to gain Japanese rights to 13 compounds, including Vectibix, a humanized antibody to treat metastatic colorectal cancer, and purchased world-wide rights to motesanib, Amgen's Phase III angiogenesis inhibitor for various cancers. As part of the deal, Takeda agreed to purchase Amgen KK, Amgen's Japanese subsidiary, for an undisclosed price, in a bid to bulk up its large molecule offerings.

In May, the company announced one of its biggest research tie-ups yet: a deal with Alnylam worth $150 million up front for a nonexclusive license to develop drugs against oncology and metabolic disease targets using that company's RNA interference technology (another deal of the year nominee.)

But as we wrote in this feature, the acquisition of Millennium, which gives Takeda a potentially important marketed product in Velcade plus 10 other molecules in early-stage clinical trials, has to be considered the most significant--and perhaps strategically transformative--deal in Takeda's history.

Takeda's president, Yasuchika Hasegawa apparently played a critical role in pushing the deal through the company, convincing fellow executives and board members of its wisdom via a plethora of data that included financial simulations and pipeline studies. Key selling points in Millennium's favor: it offered Takeda geographic and pipeline synergies, dramatically expanding the company's commercial capabilities in the US, as well as strengthening its oncology franchise. In addition, Millennium already had in place a very capable management team, including president and CEO Deborah Dunsire, MD, a seasoned pharmaceutical veteran.

"Our typical approach when doing an acquisition is to select a target company with a proven track record where we don't need to implement major restructuring after the purchase," said Hasegawa in an interview with IN VIVO following the deal's announcement. But analysts have roundly criticized the deal for its expense, the lack of revenue generating products it provides, as well as the near-term quarterly hit on earning growth it will necessitate. Back in May, Takeda predicted that integrating Millennium would reduce the pharma's profit by 55% this year alone. In a November update, the company revealed just how much the acquisition cost its bottom line: ¥137.7 billion, reflecting in part the adverse impact of the U.S. economic slowdown.

Even so, six months later, it looks to have been a smart move. Velcade's approval in June as a first-line therapy for multiple myeloma has dramatically increased sales of the drug. In early December came news that worldwide sales of the product eclipsed $1 billion for the first-time. Moreover, a spate of positive news at the annual American Society for Hematology meeting suggest that the drug will remain a cornerstone of myeloma treatment for years to come.

And the truth is, Takeda' emerging cancer franchise, with Velcade as its cornerstone, is the company's lone bright spot. Recall that Takeda's two biggest money-makers, Actos and Prevacid, will go generic in 2013, at which time analysts expect profits from those drugs will drop 35% and 26% respectively. But thanks to late-stage clinical failures and missed PDUFA dates there's little beyond Velcade to make up the revenue gap.

Put another way: without eggs such as Velcade--and to a lesser extent Amgen's Vectibix--Takeda's basket of products would be decidedly empty.

Earlier this year the company announced it was shelving TAK-475, a novel cholesterol lowering drug in Phase III clinical trials, and matuzumab, a humanized antibody targeting the EGFR receptor under development with partner Merck KGAA. In late summer came news that the Phase III GVAX prostate cancer vaccine developed by Cell Genesys (for which Takeda paid $50 million upfront in a deal announced March 2008) failed to show efficacy in two different clinical trials. On October 17, Takeda officially pulled the plug on GVAX.

And the bad news kept coming. As October slid into November, the Japanese pharma announced the FDA has missed PDUFA dates for both its Prevacid follow-on TAK-390MR and its DPP-IV inhibitor, alogliptin. Both drugs fall squarely into the category of primary care drugs with high bars for regulatory approval.

TAK-390MR treats gastro-esophageal reflux disease, a non life-threatening condition well-treated by generic meds such as Zantac and Prilosec (and soon to be generic Prevacid). If regulators have any concerns about potential safety signals--Takeda attributes the delay to a backlog at FDA not something more sinister--they may be taking their time to evaluate the drug's application.

In the case of alogliptin, the drug's approval may be delayed due to shifting guidelines on diabetes meds. On Dec. 18, the agency put more stringent guidelines related to cardiovascular safety criteria into place for diabetes medicines. The new guidelines appy to all drugs in development or currently under agency review.

But to date, Takeda's oncology franchise is holding its own. Three out of six products in development registered advances. In addition to the dramatic uptick in Velcade sales, Takeda's TAP-144-SR for prostate cancer won marketing approval in Austria and Germany this year; and the colon cancer drug Vectibix recently completed Phase III trials and is pending approval in Japan.

No wonder its oncology all the time at Takeda these days.

beautiful basket of chicken eggs courtesy of flickr user woodleywonderworks through a creative commons license.

“Reflections By a Guy Who is Headed Out of Town”: The Bush Legacy for Biopharma

When we got our “exclusive” invitation to cover President Bush discussing his legacy in domestic policy from the American Enterprise Institute, we were flattered that the White House has finally recognized the importance of the IN VIVO Blog in the world. Sam Donaldson, Ted Koppel and Wolf Blitzer—who cares what they think. Its about time they started courting the real thought leaders in Washington.

Sure, our skeptical colleagues in the Fourth Estate may have suggested alternative theories. Like: “It’s tough getting any press to cover a lame duck President, especially one this unpopular.” Or “Everyone who matters is in Chicago for the Obama press conference.” Or “I knew FDC-Windhover’s strict no-shoe-tossing policy would pay off.” Or “Is he still President?”

But we weren’t about to let envious colleagues stop us from answering the call of our President. So we set off to the Mayflower hotel downtown, allowed a very polite Secret Service agent to pat us down while a German Shepherd sniffed our laptop bag (thank goodness it wasn’t the other way around!) and dutifully took our seats to hear what lessons the President has learned that would be of interest to our loyal biopharma readers.

After all—all kidding aside—President Bush’s legacy includes signing the two most important laws affecting the pharmaceutical industry in a generation: The FDA Amendments Act of 2007 and the Medicare Modernization Act of 2003.

Not surprisingly, Bush didn’t say a word about the more recent bill. FDAAA was never embraced by the administration, since it was ultimately packaged by Congress as a rebuke to the management of FDA under Bush. But it signals nothing less than a new era in drug regulation, and that alone will ensure that the Bush legacy matters for years to come.

The President did discuss the Medicare law, and especially the Part D prescription drug benefit that was its centerpiece. Bush’s reflections on the legislative debate and its ultimate outcome underscore why many in the biopharma sector will miss him when he’s gone—and why even some who won’t may ultimately owe him a huge debt of gratitude during the upcoming healthcare debate.

Bush explicitly declined to offer advice or policy prescriptions for the incoming administration, joking that his appearance was nothing more than “reflections by a guy who is headed out of town.”

But his analysis of the key lessons of Part D—as an alternative to price controls, as an endorsement of market-based health care, as proof of the power of competition, choice and consumerism in health care—has obvious resonance for the upcoming health care reform debate. (You can read more about Bush’s thoughts on Part D in “The Pink Sheet” DAILY, and on how Part D may play in the health care reform debate in an upcoming issue of The RPM Report.)

There were plenty of other things Bush said that resonate as well, things that weren’t explicitly relevant to biopharma companies—but easily could have been.

Such as:

“No matter how tough the issue might look, if we require a solution, go after it. The job of the President is to tackle the problem.” (On immigration reform, not health care reform…)

“These aren’t normal circumstances. That’s the problem.” (On the financial bailout, not biotech financing...)

“It is going to be harder to attract good people to government service if their
integrity is challenged at every level.” (On judicial nominees, not FDA Commissioner Andy von Eschenbach....)

“Technology will help change our habits.” (On hybrid cars, not personalized medicine....)

“Part of the problem is…that the regulatory scheme is such that people would risk a lot of capital and then have to seek permission for final approval late in the process
and would find themselves tied up.” (On nuclear power plants, not drug approvals…)

Thursday, December 18, 2008

FDA Drug Safety Official Seligman Set to Depart

FDA's top drug safety communication official--Center for Drug Evaluation & Research Associate Director of Safety Policy and Communication Paul Seligman--will apparently be moving to a new position focusing on food supply integrity issues.

Seligman is understood to be departing CDER to focus on food quality being imported from Latin America.

Seligman’s departure will leave a void in the safety communication area at FDA’s Center for Drug Evaluation & Research at a critical time for the agency.

FDA is just beginning to get its arms around implementing the many postmarket surveillance provisions of the FDA Amendments Act, including the Risk Evaluation & Mitigation Strategies (REMS), a new requirement for quarterly web postings of emerging drug safety signals and the evolving Sentinel active surveillance system (See “Communication Conundrum,” The RPM Report, October 2008).

Seligman was named associate director of safety policy and communication in April 2006, a newly created position at the time that reported directly to the CDER director. He was previously director of the Office of Pharmacoepidemiology & Surveillance, which was eliminated.

The associate director position was an important organizational change for CDER when first announced because it demonstrated the center’s focus on safety.

eligman’s primary role was to develop drug safety policies across CDER and oversee the MedWatch voluntary adverse event reporting system, the Drug Safety Oversight Board, the “early communication” program, the drug safety newsletter, and the quarterly safety signal web postings mandated by FDAAA.

Deals of the Year Nominee: Infinity & Purdue/Mundipharma

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Absent irrationally exuberant markets or dilution-friendly capital structures like the R&D Limited Partnerships and SWORDS of the 1980s, it’s virtually impossible to build a self-sustaining biotech without a Big Brother, contends Infinity CEO Steve Holtzman.

There’s thus a certain satisfying continuity in the fact that just a few months after Roche decided to end the most successful Big Brother relationship in pharmaceutical history by bidding to buy out Genentech, Infinity signed the latest incarnation of that legendary idea: a tie-up with the two Sackler-family owned private companies, US-focused Purdue Pharma and European-focused Mundipharma (see the transaction record here and our “Pink Sheet Daily” write-up here).

In return for what could be nearly 38% of its stock and the vast majority – ex-US – of its pipeline, Infinity bought probably five years of freedom from worrying about Wall Street -- enough money for both its discovery and clinical programs -- while retaining, like Genentech, the entire US market in which to create a commercial presence.

The most advanced compound in this enterprise: Infinity’s Phase I hedgehog cell-signaling pathway inhibitor, originally developed in a deal with MedImmune, then returned following MedImmune’s acquisition by AstraZeneca, which was developing a competing hedgehog program. (A few weeks after it signed the Purdue/Mundipharma deal, Infinity improved its position even more by bringing back from AZ its latest stage program, the Phase III injectable HSP-90 inhibitor IPI-504, as well as that drug’s younger brother, a Phase I oral compound, IPI-493 – drugs to which Infinity now owns all rights.)

But we don’t expect this deal to be much copied. The spec-pharmas Purdue and Mundipharma have no discovery programs to protect and Mundipharma has only a single cancer product in its portfolio: there should be no significant jealousies from internal R&D; no desire to interfere. Indeed, the deal is specifically not a collaboration, Infinity CSO Julian Adams points out: as Genentech has been with Roche, Infinity will remain a completely separate operation from its new affiliate.

That’s a rare situation for most companies that can afford a deal of this size (up to $75 million in equity by early 2009; another $200-400 million in R&D support; and a potential $72.5 - $100 million in warranty conversions). Indeed, one reason Roche is buying out Genentech is because it feels it can now do pretty much what Genentech can do – so why pay the royalties and other costs of maintaining an independent R&D and commercial infrastructure? Moreover, the Sacklers have no need to show investors regular profit growth – at Purdue and Mundipharma, they’re the only investors that matter, and they’d prefer the tax breaks from the R&D expense to a nicely upward sloping EPS line.

That’s because the Sacklers know Purdue is living on borrowed time. It was granted an almost magical but limited-term respite from generic attack after first losing exclusivity on its most important product, Oxycontin, and then regaining it in an utterly unexpected judicial reversal of the original ruling (See an in-depth “Pink Sheet” review here). But the drug will go generic again – no later, and possibly earlier, than 2013, just in time for the first of its Infinity products to hit the market.

So who else -- absent a Big Pharma's sudden and shocking conversion -- could do deals like this? Other private companies (or companies who act like them) – in particular mid-sized European firms and maybe even a Japanese company or two. They’d certainly accept the regional aspects of this deal and – unlike the Big Pharmas – wouldn’t necessarily feel the urge to tell Little Sib how to do its job.

Big Brother, Little Sister by Flickr user Onion and used under a creative commons license.

Changing the Face of FDA...

We couldn't let this news item pass without comment: the first face transplant in the US, performed by surgeons at the Cleveland Clinic.

The patient, naturally is not identified. Perhaps Steve Nissen is taking his campaign for FDA commissioner to the next level? If he looked like Janet Woodcock does he get the job?

Deal of the Year Nominee: Over-Protecting Therapeutic Classes in Medicare

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

When the Medicare outpatient prescription drug benefit began just three years ago (seems longer, doesn’t it?), the story was all about the glitches encountered by beneficiaries, pharmacists, governments (state and federal), and insurers as they all tried to learn together, in real time, how to make stand-alone prescription drug insurance work.

For Forest Labs, though, there was a much bigger glitch. It happened when the Centers for Medicare & Medicaid Services told plans in 2005 that they must cover essentially all drugs in a handful of big therapeutic categories: the now famous six protected classes—antidepressants, antipsychotics, anti-epileptics, anti-neoplastics, immunosuppressants and HIV therapies. The Medicare agency concluded (after hearing loud and clear from patient organizations relying on those medicines) that the need to protect access among vulnerable benficiaries trumped the plans’ need to be able to exclude medicines in an effort to extract deeper discounts for manufacturers.

That was good news, of course, for companies with products in those classes. Except for Forest. Because the Medicare agency made one prominent exception: there was no need for plans to cover Forest’s antidepressant brand Lexapro (escitalopram), the agency said, so long as they covered Forest’s closely related (and off patent) Celexa (citalopram).

In essence, the federal government told plans that Lexapro is equivalent to Celexa, and so plans could meet the agency’s goal—ensuring patients have access to all options in the six critical classes—without having to cover Forest’s biggest product.

That decision took Forest by surprise, to put it mildly. Forest was ultimately able to get the language addressing Lexapro removed from CMS’ policy, and it also managed to get Lexapro on most plan formularies—but at the cost of deeper discounts than it anticipated.

That history explains why a seemingly insignificant clause slipped into a hard-fought compromise on Medicare funding in 2008 may turn out to be the biggest deal of the year.

When Congress “codified” the CMS policy over the summer, it sounded like no big deal. It sounded like a simple matter of elevating the six protected classes from an ad-hoc principle established by administrative fiat to a formal, statutory requirement. No change from the status quo, right?

Well, then people actually read the provision of the law “codifying” the policy. It did no such thing.

Instead of adopting CMS’ language stipulating the classes, Congress instead gave CMS the authority to define any classes as protected. And it also made it much more onerous for CMS to create exceptions to those protections within classes. Call it the Forest clause.

That is a very big deal indeed.

There is nothing to stop the next CMS Administrator from expanding the list to include, say, Alzheimer’s therapies as protected classes. Plenty of people wonder why—if the goal is to protect vulnerable patient populations—AD therapies weren’t on the list in the first place. And then, why not antidiabetics? Surely we shouldn’t disrupt treatment in that class, when the consequences of uncontrolled illness can be so severe and costly. Or rheumatoid arthritis, where decisions by Part D plans have a direct affect on Part D spending. You see where this is headed, right?

Sure, there is no reason to think that the people who created the six protected classes in the first place would expand the list just because Congress says they can. After all, they invented the list and easily could have decided to add more at any time.

But those people won’t be calling the shots anymore, not after January 20. The next CMS Administrator could, with the stroke of a pen, add to the list of protected classes--and be cheered for it by the Democratic leadership of Congress.

No wonder managed care plans are concerned. They weren’t happy about CMS’ policy in the first place, since it basically takes away their leverage to negotiate better prices on some pretty big line items. But they really aren’t happy about the potential for that list to expand, potentially ad infinitum.

And, while manufacturers may feel differently, they better not gloat.

That's because Medicare Part D is itself the product of one of the more unlikely deals of all time. It came about in large part because pharmaceutical manufacturers and their long-time political adversaries, the managed care sector, were able to join forces in support of a never-before-tried concept: stand-alone prescription drug insurance.

That deal helped generate enough support in Congress—just barely—to push the Part D program through in 2003.

And, as the managed care industry is busily reminding Big Pharma, that program will only work if plans are able to do what politicians historically cannot: deny access to medicines if they need to in order to contain costs. The alternative? A program that allows broader access to medicines—but with more direct government intervention in prices.

So when the new Congress turns to price intervention proposals in 2009, remember the deal struck in 2008—a seemingly noncontroversial item slipped into a hard fought compromise bill. If that small deal helps break up the coalition that made Part D possible, that would be a very big deal indeed.

Wednesday, December 17, 2008

VentureDance: The First Round Capital Card

First Round Capital isn't an active investor in the life sciences, but that doesn't mean you can't enjoy their holiday card.

Yes, it's a direct rip off of the Dancing Guy, but it's still fun to watch. Thanks to for the link.

Deals of the Year Nominee: Alnylam/Takeda

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

This year's biggest RNAi deal isn't quite as big as last year's biggest RNAi deal, but we like Alnylam's Japanese alliance with Takeda nonetheless. First off it reinforces Takeda's position as one of 2008's pre-eminent dealmakers--the February Amgen alliance and the April acquisition of Millennium were its first two big noises this year--and it also marks Alnylam's move from simple-yet-unprecedented platform monetization into the kind of technology-for-product-rights deal that could see it gaining access to others' development candidates.

At the time of the deal we intentionally mangled Alnylam CEO John Maraganore's kegger analogy by which he describes RNAi's potential to help relieve the productivity problem in drug development and provide free beer for all mankind. (Did we do so again? Oh dear.) It's fair to say that this remains a ways off, but meanwhile Takeda's cash ought to keep the fridge full in Cambridge.

Alnylam received $100 million in up-front cash and $50 million in near-term technology transfer payments for a non-exclusive license to its RNAi platform in oncology and metabolic disease, and first right of negotiation on its RNAi programs in Asia (excluding ALN-RSV01) should Alnylam look for a partner there. Alnylam also gets first right of negotiation on any project Takeda decides to shop in the US and more importantly, gets opt-in rights for 50/50 co-development/co-commercialization deals in the US on up to four Takeda programs of its choosing (exercisable all the way through the start of Phase III), plus the usual gajillion biobucks in development and commercial milestone payments.

As we noted when the May deal was signed: it bears repeating that Alnylam has once again struck a non-exclusive deal--and can go out and re-license those same therapeutic areas again at any point. That said, on the call to announce the deal Maraganore essentially laid down some ground rules. "We wouldn't do a platform license for a double-digit upfront payment," he said. "Given the opportunity cost of enabling a partner we have to and will be very discriminate in how we value these kinds of partnership alliances."

In other words, pony up $100 million or it's not worth our time and effort. How many triple-digit deals it can do before its proposition is diluted below the $100 million low-water mark remains to be seen (it hasn't done any since, though there is plenty of time to fulfil its stated goal of two or more new partnerships through the end of 2009).

In these cash-constrained times, the deal allows Alnylam to end the year with approximately $500 million in cash. It makes Takeda the sole big RNAi player in Japan (though Japanese rights to Alnylam's Phase IIALN-RSV01 product were not included in the deal and later licensed to Kyowa Hakko [our take here]) and cement's the Japanese pharma's place among the most active and creative dealmakers of 2008. And it sets the RNAi pioneer up for pipeline building down the road.

Readers, it's up to you. The voting begins next week and will be open into the new year. No stuffing the ballot box!

image via flickr user furiousgeorge81 used under a creative commons license.

Andyisms: A Tribute to Von Eschenbach

In an email to employees this week, FDA commissioner Andrew von Eschenbach announced his resignation from the agency, effective January 20. (Read our take on Andy’s tenure in “The Pink Sheet” DAILY.)

Von Eschenbach joined FDA from the National Cancer Institute in December 2005 as an unflappable, avuncular researcher and cancer survivor who loved to espouse on the future of personalized medicine and the promise of the Critical Path Initiative.

Many of his speeches implored FDA stakeholders to accept and embrace change, usually expressed through one of a collection of metaphors he pulled out for public appearances. And so, to mark his departure from FDA a month from now, we’ve assembled a few of his classics over the past three years. Enjoy.

The Racecar Metaphor:

“One of the rigors of FDA is zero tolerance....I have asked people, do you know how a Formula 1 car can go 200 miles an hour and not kill anybody? Zero tolerance. Everything has to be disciplined and precise—every 'i' dotted, every 't' crossed. But the reason for that rigor and discipline is so the car goes faster, not slower.”

The Typhoon Metaphor:

“To find these moments of change where the change that occurs in that trajectory that the organization is on is not a wind or breeze of change, but a typhoon of change—a strategic inflection in which the change process is magnified in orders of magnitude. And when that kind of change occurs...those that grasp it can then capitalize on it experience exponential growth, and those who don’t understand it, go on to extinction.”

The Hurricane Metaphor:

“There’s a hurricane in the Gulf of Mexico, and since I happen to live in Houston, I think I better pay attention to that, as opposed to, just a little disturbance somewhere.”

The Dirty Diaper Metaphor:

“Creating that future will require change, which will affect all of us, regardless of our role or job title. Unfortunately, the only human organism who actually likes change is a six-month old with a dirty diaper. For most of us, change is what we expect in others.”

The Bridge Metaphor:

“Today we come together as heads of medical product regulatory agencies with the opportunity to collaboratively build a bridge, not a barrier. A bridge that will span the gap between all that promise of science and technology and the delivery of the interventions that can eradicate disease for all of our people. But the bridge must be morphed to accommodate the new science and technology.”

The Locker Room Metaphor, as paraphrased by Sen. Chuck Grassley in a March 12 letter to von Eschenbach:

“I understand that you told the assembled staff that it was important to be ‘a team player’ and that if someone disagreed with the coach, they should keep their opinions and concerns ‘inside the locker room.’ You also said, according to those present, that anyone who spoke ‘outside the locker room’ might find themselves ‘kicked off the team.’”

And finally, our personal favorite: The Butterfly Metaphor:

“In the last decade or two, we have been able to approach disease at the molecular level, where we now can observe and understand disease as a process. This is what I have called the ‘molecular metamorphosis in medicine,’ because it represents a phase change similar to the transformation of a caterpillar to a butterfly. As a result of this metamorphosis, the future of health care will be no more like its past than a butterfly is like a caterpillar.”

Goodbye, Andy. And good luck.

Tuesday, December 16, 2008

The Lesser Of Two Evils?

When Steve Nissen is not qualified to serve on an FDA advisory committee under the agency’s new conflict of interest guidelines, you know things are bad. Really bad.

According to Nissen, and as reported in "The Pink Sheet" DAILY, his position as chair of the cardiology department at the Cleveland Clinic likely bars him from serving another term on an FDA expert panel.

Nissen may not be exactly beloved by the pharmaceutical industry, but no one can argue that the man knows drug development, and is a global expert on cardiovascular drug safety. And when it comes to conflicts, Nissen prides himself in not only disclosing all the companies he has worked for, but also donating all his fees directly to charities so that he can't claim the tax benefit.

Plus, he has served as an advisory committee member before: Nissen was a permanent member of the Cardiovascular & Renal Advisory Committee from 2001 to 2005, that last year as chairman. Since then, he has served as a temporary member as duty calls, like the July meeting on type 2 diabetes clinical trial endpoints. So if he can't serve, then who can?

“The current rules are pretty bizarre,” Nissen told attendees at the recent FDC-Windhover FDA/CMS Summit. “The imputation of conflict of interest guidelines based on institutional contracts eliminates a lot of desirable people.”

In Nissen’s case, the trouble is with a section of the new CoI guidelines that bars the “head of a department” that is conducting or will conduct studies on a product (or its competitors) “that is the focus of a meeting and receives personnel or salary support, designs or advises on any aspect of clinical trials, or reviews data or reports from the trials.”

We emailed Nissen to clarify, and he pointed out that the cardiology department has more than 100 faculty members. So “for most advisory committees, it is highly likely that someone within our department is involved with the company in some fashion.” And given the size of the Cleveland Clinic, Nissen said, “the likelihood that someone...receives funding from the sponsor or its competitors is 100%.”

Of course, Nissen’s inability to serve on an advisory committee is most likely be welcome news for drug sponsors, who see him as, frankly, a pain in the derriere. Granted, this is the man who prevented Bristol/Merck’s Pargluva (muraglitazar) from ever seeing the light of day, and crippled the commercial future for GlaxoSmithKline’s Avandia. So you can understand that angst.

But industry should not be breaking out the champagne quite yet. If it is true that Nissen is no longer eligible to serve on an advisory committee, it underlines a disturbing trend at the agency: FDA’s continued inability to fully staff its expert panels with individuals that qualify under—and are willing to serve despite of—more stringent conflict of interest guidelines.

When we last looked at the staffing problems in the advisory committee system in The RPM Report, there were 83 vacant seats, and three-quarters of the panels did not have permanent chairs. That was despite a major recruitment effort at the agency. Things haven’t improved much since.

And when drug sponsors start to see who is qualified to serve as permanent advisory committee members under FDA’s conflict of interest rules, they may be wishing for Nissen. You tell us. As a sponsor, who would you rather have: Nissen, or Public Citizen’s Sidney Wolfe and Center for Science in the Public Interest’s Merrill Goozner?