Friday, July 30, 2010

Deals of the Week Waits for the Bear Hug

C'mere and gimme some sugar!

Sanofi's much-anticipated bid for Genzyme should arrive some time this weekend, or maybe Monday. Reports of the so-called Bear Hug strategy popped up on the wires this week, and a formal bid for the Big Biotech has been rumored between $18-20 billion.

The French pharma's CEO Christopher Viehbacher declined to comment directly on the situation during yesterday's earnings call, but he said enough that pretty much everybody expects Sanofi to at least attempt the acquisition, reports "The Pink Sheet" DAILY:
"We are clearly looking at external growth opportunities," he said. "We've
always said we are going to avoid the mega mergers and concentrate on small- to
medium-sized." Those targets include companies with market capitalization
ranging from $5 billion to $20 billion, he said, a ceiling high enough to
include Genzyme. The Cambridge, Mass., biotech - plagued recently with
manufacturing contamination that has limited supply of its key drugs and
dampened revenues - has a market cap of $18.6 billion.
The rationale, as far as large-scale M&A rationale goes, is pretty compelling. Sanofi's work to rebuilt its pipeline has been steady (33 deals last year according to the CEO) -- but remains no match for the hit it will take when generic competition for Lovenox, Plavix, Eloxatin, and Taxotere hits over the next couple years. Genzyme's well publicized manufacturing problems make it vulnerable. Big Pharma has become enamored by high value, niche-market orphan drugs. And Genzyme has a couple near-ish market opportunities in alemtuzumab for MS and even perhaps mipomersen that could ease some of the tension at Sanofi.

And so: we await the bear hug; perhaps the white-knight (an old Viehbacher rival, at that, in Andrew Witty); and then the inevitable haggling over premium. As one institutional investor told us recently, "most shareholder protections are just delay tactics -- if an acquirer really wants to acquire you, it's all middle game. They'll eventually get you."

Ah, that's right. Sometimes, the bear gets you. And sometimes you get ...

UCB/Actient: It's tempting here to go back and dig up the last time we wrote about a UCB deal in this space and just cut and paste the whole blurb. UCB ... you know what? Why not. We'll change the relevant bits: UCB has slowly but surely been paring down its primary care activities in favor of specialty products, even garnering an IN VIVO Blog Deal of the Year nomination for its emerging markets deal with GSK. Today, the company announced it would accelerate that process by offloading US rights to its soon-to-be-off-patent allergy drug Xyzal to Sanofi-aventis and end its co-promotion around Teva’s albuterol ProAir six mature products to Actient Pharmaceuticals, a company owned by PE fund GTCR. Those products, which Actient has the option to buy, brought in a combined $53 million in 2009 and comprise: Edex (alprostadil for injection), Theo-24 (theophylline anhydrous), Semprex-D Capsules (acrivastine and pseudoephedrine hydrochloride), Levatol (penbutolol sulfate), Robaxin (methocarbamol tablets, USP) and Dilatrate-SR (isosorbide dinitrate). The future of UCB now rests largely on the emerged-market performance of its immunology and neurology franchises, dominated by Cimzia, Vimpat and Neupro.--CM

Astellas/Regeneron: For big mAb technology platforms, Regeneron seems to think it may be the only independent game in town, and that suits it just fine. On July 28, Regeneron announced that it and Astellas had more or less torn up and replaced their ongoing six-year, non-exclusive licensing deal through which the Japanese drug maker uses the VelocImmune technology platform to discover fully human monoclonal antibody candidates. Under the original deal signed in 2007, Astellas paid Regeneron $20 million annually for VelocImmune access. Terms of the new deal call for Astellas to pay Regeneron $165 million upfront for continued use of the platform from 2011 to 2018, a slightly higher annual rate than the original agreement specified. Further, if it wants to continue the relationship through 2023, Astellas will pay another $130 million in 2018. Regeneron said Astellas has 20 ongoing development projects from VelocImmune, for which the biotech could receive a mid-single-digit royalty on products that reach the market. The Astellas cash adds to an impressive pile of up-front payments Regeneron has stacked up from the likes of Sanofi-Aventis and AstraZeneca for non-exclusive use of its technology. "This is just a reaffirmation of the fact that some very sophisticated consumers have believed and invested at an unprecedented level in this technology," CSO George Yancopoulos told "The Pink Sheet" DAILY. "Astellas has gotten to play with this for three to four years and they're so excited about it that they don't want to risk at all not maintaining their access to this, so they're willing ... to pay the $165 million upfront."--Joseph Haas

Illumina/Helixis: The deal closed almost three months ago, just days into its second quarter, but Illumina did not announce the acquisition of real-time quantitative PCR specialist Helixis until this week, when it said it would begin shipping the latter’s benchtop Eco Real-Time PCR System for benchtop genetic analysis next month. Though clearly not anything close to a material event, the deal, for $70 million cash plus up to $35 million in potential contingent revenue milestone payments through 2011, extends Illumina’s product line, “very consistent with our strategy of having tools that address the broad range of complexity that customers want, all the way from full sequence down to single marker,” said CEO Jay Flatley on Illumina’s 2Q conference call, held the same day the product launch was announced. “This is a technology that reinforces that to a great extent on the very low end,” he said, referring to genetic analysis requiring less than 96 markers, at “approximately a quarter of the price of systems with comparable performance,” and with a smaller footprint. Initially focused on the research market, the Eco system will run most commercially available qPCR assays. But Illumina also expects to add its own consumables, creating a high-margin follow-on business and more closely aligning itself with competitors such as Life Technologies. The acquisition is expected to be breakeven to “somewhat accretive” in 2011. -- Mark Ratner

GSK/Anacor: Not actually a new deal, but we like to highlight when options get exercised -- or passed over -- given how much we like to talk about option-dealmaking as an integral part of the future of biopharma business development. This week Anacor said that GSK was optioning GSK2251052 (f.k.a. AN3365 and thankfully abbreviated '052), one of the systemic antibiotics from Anacor's boron-chemistry platform available to the Big Pharma under the terms of the companies' 2007 option-alliance. Anacor gets a $15 million option-fee and is eligible for further milestones and royalties as GSK takes over the program and pushes it toward commercialization. The compound, which is in a Phase I study, is potentially active against a raft of gram-negative bacteria and will be developed as a potential treatment for complicated urinary tract infection, complicated intra-abdominal infections, and hospital/ventilator-associated pneumonia. --CM

Charles River/Wuxi Pharmatech: Shanghai's WuXi PharmaTech has been abandoned by the Massachusetts-headquartered Charles River Laboratories on the eve of the two contract research organizations' merger. To halt a nascent rebellion by shareholders who were set to vote on the merger one week from now, Charles River called off its $1.6 billion pursuit of WuXi and will instead pay China's leading drug research outfit a $30 million breakup fee. It’s not the first time WuXi was left at the altar; the CRO was jilted in mid-2008 by Covance, which abandoned plans for a joint preclinical drug testing lab. RiskMetrics Group, a proxy advisory firm, issued a report on Monday recommending that Charles River Laboratories shareholders vote against the WuXi acquisition, tipping the scale toward the vocal opposition. The insurrection by shareholders was led by New York money management firm Jana Partners, which cited its high cost, integration risks and bad timing. Not everyone saw it that way. The combination, aimed at creating a platform allowing innovative drug developers to conduct preclinical studies across the Northern Hemisphere, would be "laying the foundation for future R&D in China," predicted WuXi CEO Ge Li. Full coverage in today's PharmAsia News.--Kevin Holden

Thursday, July 29, 2010

Financings of the Fortnight Sees More Conflicting Indicators for Biotech VC

By Joseph Haas

Reading the sometimes conflicting data from the venture capital sector can be just a bit confusing. Last time out, for example, this feature tried to divine whether VC fundraising was on a slow pace or was rallying, with a pair of sources differing on the sector’s second-quarter take by nearly $2 billion.

As Congress would say, now we’re talking about real money.

One possible factor that could dampen the hopes of life sciences companies looking for VC investment is the difficulty some venture firms are having raising new funds themselves. See our Valuation Watch piece in the July/August 2010 issue of START-UP for details on how big life sciences backers like Polaris Venture Partners, Atlas Venture and Sofinnova Partners are closing new funds well short of stated goals and an update of our 'gas tank chart' that got, um, a lot of mileage last year. Of course at least a few VC firms recently met or exceeded their fundraising goals, including OrbiMed Advisors and SV Life Sciences. Once again, the indicators in VC financing appear somewhat conflicted.

Still, an attempt to read the quarterly trends suggest that the outlook for biotech companies looking for venture investment may be a sunny one, even as a few venture outfits lower fundraising expectations.

The life sciences sector (both biotechnology and medical device firms) saw venture capital investment increase during the second quarter by 52% in dollars and 36% in deal volume, according to the July 16 Money Tree Survey by PWC and the National Venture Capital Association, based on data from Thomson Reuters. Such investments totaled $2.1 billion as 234 deals were crammed into the April through June period; we covered the survey in-depth in “The Pink Sheet” DAILY.

Of those, biotech deals accounted for $1.3 billion spread across 139 deals. Biotech accounted for the largest share of venture capital financing during the quarter, enjoying a 59% uptick in dollars compared to the first quarter, as well as a 34% increase in the number of deals.

Overall, venture capital investment occurred at levels not seen since 2008, said Tracy Lefteroff, global managing partner for venture capital practice at PWC.

“The rise in companies lining up to go public in the life sciences space in Q2 was also a likely driver of the strong rebound we saw in investing in this sector during the quarter,” he said. “If the markets remain positive, we’ll likely continue to see robust investment levels for the remainder of the year, with VC funding in 2010 poised to surpass 2009 levels.”

Another hopeful trend suggesting an improving environment for start-ups during the second quarter was an increase in seed and early-stage investments. These rose 54% from the first quarter to the second quarter to a total of $2.3 billion, with deal volume rising 32% to 429. Likewise, first-time financings were up 7% during the quarter to $1.1 billion, with biotech leading the way among sectors in terms of first-time dollars raised.

Speaking of leading the way, it's time for another installment of ...
NuPathe: Central nervous system drug developer NuPathe revealed terms for its initial public offering, scheduled for next week. The Conshohocken, Pa.-based company is expected to sell 5 million shares for $14 to $16 apiece, raising about $75 million and giving it a market capitalization of about $212 million after the offering, based on the midpoint of the price range. Lazard Capital Markets and Leerink Swann are co-lead underwriters of the offering. NuPathe has completed Phase III trials on a patch that delivers the migraine drug sumatriptan through the skin via a small electric charge. NuPathe expects to file an NDA for its patch, called Zelrix, during the fourth quarter of 2010. NuPathe has raised $53 million in private funding to date; Quaker BioVentures, which led NuPathe’s $30 million Series B round in May 2008, is the company’s largest outside shareholder, while Safeguard Scientifics, Birchmere Ventures, Battelle Ventures and SR One hold smaller stakes.—Paul Bonanos

Euthymics Biosciences: A new company formed to advance and commercialize a novel anti-depressant, Euthymics raised $24 million in a tranched Series A round from a venture syndicate led by Novartis Venture Funds and Venture Investors LLC, along with Hambrecht & Quist Capital Management, GBS Venture Partners and the State of Wisconsin Investment Board. The Cambridge, Mass.-based start-up paid $2 million to acquire shuttered DOV Pharmaceutical Inc., which ceased operations last year when it ran out of capital. Publicly-traded DOV was in the midst of Phase II trials on a triple reuptake inhibitor that features unbalanced potency against the neurotransmitters serotonin, dopamine and norepinephrine, in an effort to reduce side effects such as weight gain, sexual dysfunction and cognitive impairment. Euthymics expects to use the funding for a Phase II/III trial on the drug, which if approved would be marketed to patients who do not respond to selective serotonin reuptake inhibitors. Among Euthymics’ founders are former Orexigen executive Anthony McKinney and longtime Lilly executive Frank Bymaster, who was on the original development team for Prozac in the 1970s.—PB

Xoma: Through a committed equity financing facility, antibody specialist Xoma has the option to sell up $30 million of its registered common shares at a discount to Azimuth Opportunity Ltd. over a 12-month period. Just for signing on July 23, Azimuth got 1.7 million Xoma shares. Despite diluting shareholder equity and having a potential short-term negative impact on the price, CEFFs help companies avoid the more time-intense and often more expensive FOPO path. Like with most CEFF arrangements – limited only in how much capital is drawn down within a specific time period – Xoma controls the timing, dollar amount and share price of each draw, is not obligated to dip into the fund, and is free to pursue other financing. Azimuth is no stranger to Xoma; the private equity firm provided $26 million last September through two separate CEFF draws and now holds about 42 million of Xoma’s shares (approximately 261 million were outstanding as of May 31). With $28 million cash in its coffers, Xoma’s priorities – according to CEO Steven Engle – include expanding IL-1 beta antibodies IP, pursuing new partnerships, and advancing other autoimmune, cardio-metabolic, inflammatory and oncology candidates. Lead antibody XOMA52 is in Phase II for diabetes and cardiovascular disease. Xoma's isn't the only CEFF signed this fortnight -- just this morning Omeros announced a $40 million/24 month CEFF deal with Azimuth.—Maureen Riordan

Immune Design Corp.: Nearly doubling its June 2008 $18 million venture financing, Seattle start-up Immune Design took in an impressive $32 million in a July 26 Series B round led by new backer ProQuest Investments, which was joined by returning Series A participants Alta Partners, Column Group and Versant Ventures. According to Elsevier’s Strategic Transactions, the only immunotherapy firm raising more in a recent Series B – in 13 such transactions done since January 2007 – was CureVac GMBH (in a $47.7 million round July 2007); in fact, the average take of vaccine players in a Series B raise during that time period was about $20.5 million. So how did IDC manage to secure such a hefty sum? Perhaps its strong management team led by Corixa alum Steve Reed, also founder of the Infectious Disease Research Institute, promoted investor confidence. Recent success of its IDRI-pioneered GLA adjuvant technology in a second Phase I study in flu, couldn’t have hurt either. The financing gives IDC at least two-and-a-half years-worth of cash to advance GLA as well as its second platform, known as DC-NILV, designed to target and stimulate dendritic cells (from David Baltimore’s Caltech research team). IDC’s near-future plans include a Big Pharma partner to further finance development costs.—MR

Wednesday, July 28, 2010

FDA and REMS: A Symbolic Start

FDA just wrapped up a two day public meeting to review the implementation of its Risk Evaluation & Mitigation Strategy authorities.

The hearing involved almost 70 different presentations from a diverse base of stakeholders offering input into how to make sure that REMS best allow drugs to be marketed safely without disrupting the entire health care system.

It also featured an unusually active and engaged panel of FDA officials; these agency meetings are often fairly magisterial in nature, with FDA listening but saying nothing. Not here: questions and comments aplenty.

So there is tons to digest, and we will have plenty of coverage of the meeting in The Pink Sheet, The Pink Sheet DAILY, and The RPM Report.

But we wanted to take note of how the meeting began, since we think that says volumes about where FDA is going with REMS.

The very first presenter was the American Society of Clinical Oncology’s Karen Hagerty. As we have written, ASCO has some concerns with how FDA has been developing REMS, and especially with how the agency and Amgen put together a new program for use of erythropoiesis stimulating agents in oncology. ASCO wants to make sure that they have more input in the development of REMS in the future.

That, to us, is the key theme of the two day hearing—and it surely says something about FDA’s openness to that theme that it kicked off the two days with a panel of providers, including ASCO, the American Medical Association, specialty pharmacy execs, and Kaiser. Industry (the Pharmaceutical Research & Manufacturers of America, the Biotechnology Industry Organization, Eli Lilly) came second.

The input of outside stakeholders is what prompted FDA to reconsider its REMS implementation—and we’re betting those stakeholders will end up gaining more input into the actually crafting of REMS for products going forward.

It won’t be easy: after all, as FDA officials pointed out, they regulate sponsors and many of the discussions about the potential need for and design of a REMS has to remain confidential. But providers and other stakeholders want in, and they are not likely to give up until they get in.

Take Kaiser. The non-profit health plan submitted a petition at the end of last year that really kicked off the REMS reappraisal at FDA. And Kaiser is clearly committed to seeing the process through: the non-profit had three different representatives speak during the meeting, making a total of six presentations on each of the six topics identified by FDA for the agenda.

For sponsors, the concerns raised by providers may sound like a blessing. After all, anything that stops FDA from slapping restrictive distribution programs and other post-marketing controls on new products willy nilly has to be a good thing, right?

Sure. But one other thing is clear from the two day meeting: REMS are here to stay. Providers don’t want them eliminated altogether, they just want a seat at the table in helping to shape programs before they are launched. We’re not sure how or when they will get their way, but we bet they will eventually. And then sponsors may pine for the days when the REMS was theirs to control.

Monday, July 26, 2010

While You Were Watching Mad Men

On Friday, it seemed like everything happened at once. Generic Lovenox. Teva saying generic Lovenox doesn't mean generic Copaxone (we described that contortion in Pink and on IVB back in January: nobody is in quite the same predicament as Teva). Sanofi-Genzyme? GSK-Genzyme??

Thankfully that momentum failed to generate a wave of weekend announcements and let everyone keep their mind on Sterling Cooper Draper Pryce. Oh, but there was news anyway, of course, news aplenty. And since this is going out late on Sunday, maybe even more news than this -- we'll try to update.

While you were following "team orders" ...

  • Britain's new Lib-Con governing coalition is shaking up the NHS, as we and many others wrote about a couple weeks back. The New York Times takes everyone's temperature on the proposal. The reaction is predictably mixed.
  • The WSJ profiles NIH's TRND program -- Therapeutics for Rare and Neglected Diseases. Last week "The Pink Sheet" took another look at the program, launched in 2009, to create a drug development pipeline within NIH that can get compounds through preclinical testing and ready for licensing to biotech or pharmaceutical companies in a competitive process.
  • Onyx data on carfilzomib expected around 7am -- conference call at 8am ET.
  • Bloomberg does the math: Teva fell as much as 8% on news that generic Lovenox was approved; analysts suggest shares will be volatile no matter how well Copaxone continues to grow.
  • Yet another murine version of human disease falls to the almighty sirtuin family, reports the NYT. This time, mouse-Alzheimer's.
  • Cerenis pulled in more than Eur 50 million to advance its HDL-mimetic program, and JP Garnier is joining its board. PR on the Eur 40mm Series C here, we'll have more -- including info on the Eur 10.7mm grant the company landed, in today's "Pink Sheet" DAILY.
  • A Boston Globe editorial suggests: "Publish data on drug trials -- even when it's not flattering."
  • A New York Times editorial asks: "Will the agency have the courage to reverse course when a medical treatment that it approved based on preliminary evidence flops badly in follow-up studies?" Gee, i wonder what they're talking about?
  • Roche's Genentech has licensed a late-preclinical stage fully human IL-17 mAb from NovImmune. Upfront, milestones, royalties -- but specific terms not disclosed.
  • This is from last week, but it's not every day someone gets a prosthetic arm belonging to the mannequin of Lefty O'Doul in the mail.
  • Contador doesn't lose his chain or take a tumble, wins 3rd Tour.
  • I'm not sure what I think about Brewdog's End of History beer. Not that I'll ever get to try one. Meanwhile, about a week until the GBBF. Recommendations? In the comments, pls.

Friday, July 23, 2010

Deals of the Week Watches Medigene Squeeze Out of a Jam of Its Own Making

On Tuesday, Medigene said it had landed €25 million from its Eligard partner Astellas as part of a renegotiation of the companies' distribution deal for the prostate cancer drug in Europe. In addition, Medigene will get about a 2% royalty from Astellas -- roughly a third of its current net margin on the drug now. We're not covering it below the DOTW banner because it's not a new deal, or a no-deal. It's not even a terribly unusual deal (agreements get renegotiated all the time, right?) -- but the circumstances around why Medigene needed this deal are very peculiar indeed.

Medigene secured European rights to Eligard (leuprolide), an LHRH agonist used to treat hormone-receptive prostate cancer, from Atrix Labs (now Tolmar) back in 2001. The tab, for a drug at NDA stage in the US, wasn't that huge: $6mm up front--$2mm in cash and $4mm in equity at a premium--plus clinical, regulatory, and sales milestones. In addition, the deal also included royalties, with Atrix manufacturing the products for MediGene.

Medigene got Eligard to the European market in 2004, and that same year signed up Yamanouchi (now Astellas) to sell the drug. It nearly made its money back doing so: the deal netted Medigene an up-front payment of €4mm, success milestones of up to €19.5mm, and royalties.

So: Medigene pays Tolmar royalties and cost-of-goods. Astellas pays Medigene royalties. And therein lies the squeeze, and the reason why Medigene has extricated itself from the middle of this deal-chain.

Rock, meet hard place.

"Medigene has been in the sandwiched position between our supplier Tolmar and our distribution partner Astellas," pointed out Medigene CEO Arnd Christ on a call to announce the new arrangement. This "led to a complex and in some respects unfavorable situation for us."

Howso? The cost of sales was high and a little unpredictable, and someone at Medigene perhaps forgot to account for the fact that Eligard sales may actually take off a little, meaning Medigene would owe Tolmar a bit more cash, relatively speaking. In 2009 Astellas racked up more than €100 million in Eligard sales.

As a result, "the structure of the two contracts led to a situation in which Medigene was not able to gain from further growth of Eligard due to a decrease in the net margin," said Christ.

Come again? "Once in-market sales reached a certain level we had to pay for the incremental amount more royalties to Tolmar than we received from Astellas. We have reached this level already in 2009."

At least Medigene wasn't taking excess risk on top of that? Well there was the risk that Tolmar would raise Medigene's cost-of-goods bill too. Surely not! "According to the previous agreements Tolmar was entitled to increase the prices for Eligard, whereas Medigene was not able to pass on such an increase to Astellas," said Christ.

Is that it? "Medigene was responsible for the supply chain, and was exposed to various regulatory risks, like risk and quality assurance, regulatory product liability and so on and so forth."

It's easy to see why--oh, there's more? "Last but not least, we've been exposed to foreign exchange risk, since the contract with Tolmar was based on US dollars whereas the royalty stream with Astellas was based on euro. A significant change of the euro-dollar exchange rate had a significant impact on our P&L," said Christ.

All in all the new arrangement with Astellas seems to get Medigene out of a bind, and shores up its balance sheet with non-dilutive funding. But it was the kind of self-inflicted bind we mostly see on sit-coms, Brad Lidge save attempts, or maybe an old episode of Scooby Doo, not so much in ...

Actelion/Trophos: This deal -- in which Trophos granted Actelion an option to buy based on the results of a pivotal study for its lead ALS project -- puts the number of options-to-buy so far this year at at least six, compared to 2009's five. Actelion paid €10 million up-front to the French biotech and will pay €125 million to complete the deal upon conclusion of a Phase III pivotal trial of Trophos' lead amyotrophic lateral sclerosis candidate, olesoxime. Enrollment in that 512-patient study is complete and results are expected by the end of 2011; thus, Actelion will need to make up its mind within a couple months of seeing the data or by the end of 2012, whichever comes first. Should Actelion exercise its option, Trophos' backers could see up to €70 million in further milestone payments based on the clinical progress of the company's pipeline and the regulatory success of olesoxime. Meanwhile, Actelion has gained access to Trophos' proprietary CNS assay technology and cholesterol-oxime chemistry compound library; Trophos will also test proprietary Actelion compounds with its technology. The research collaboration is early stage and specific terms have not been disclosed, but should Actelion not exercise its option to buy Trophos, the biotech has at least lined up a fully-funded partnership to complement its internal, rare-disease focused R&D.Our full write up is in "The Pink Sheet" DAILY.--CM

Merck/Hawaii Biotech: In something of a stealth transaction – neither company issued a press release – Merck has purchased bankrupt Hawaii Biotech’s dengue fever vaccine program for undisclosed terms. The deal was approved July 19 by a U.S. bankruptcy court. Hawaii Biotech filed for Chapter 11 bankruptcy protection last December and has been operating via a line of credit in the interim. Merck said the deal would enable it to expand on its vaccine development program for unmet medical needs, which already includes candidates for hepatitis A and B, measles, mumps, rubella, human Papillomavirus and flu. A tetravalent dengue fever vaccine is set to enter Phase I testing later this year, through a contract with the National Institute of Allergy and Infectious Diseases. Funded most recently by a 2006 $7.8 million Series C round led by chairman Nick Mitsakos, with participation from other private investors, Hawaii Biotech’s vaccine program stems from a 2006 joint venture with Avantogen.--Joseph Haas

Cypress/Ramius: Investors in specialty drug developer Cypress Bioscience had already expressed their displeasure with the company's latest licensing deal. But one shareholder is going one step farther: hedge fund operator Ramius, which already holds 9.9% of Cypress' shares, has made an unsolicited all-cash offer to acquire the biotech firm outright. At $4 per share, representing a 60% premium over Cypress' closing price of $2.50 on Friday, July 16, the deal would be worth $154 million. Cypress gets most of its revenue from the fibromyalgia drug Savella, but has turned around and spent money on M&A and in-licensing development candidates. It's latest deal, with BiolineRx for CYP-1020, a novel anti-schizophrenic, has not been well received by its investors. As part of its hostile bid, Ramius proposed that shareholders and management split CYP-1020 rights but with management funding future development on its own or with third-party help. Although details were left vague, the unusual proposal seems to give shareholders upside from CYP-1020 without taking on more development risk, while rewarding them with some immediate liquidity as well. Our write up -- with full coverage of Ramius' displeasure -- is (you guessed it) in the PSD. --Paul Bonanos

image from flickr user bernatcg used under a creative commons license

Thursday, July 22, 2010

Times Are A-Changing and Tough, Says Roche

Roche's CEO Severin Schwan isn't the only pharma CEO facing a highly unappealing economic reality (and not just talking of it) – executives of practically every pharma reporting for the second quarter to date has laid made this point. But Schwan's remarks to analysts on today's half-year earnings call were particularly harsh, especially coming from one of the industry's best long-term performers. "The financial crisis has arrived for the pharmaceutical industry," he stated.

Not only did Roche suffer two important clinical development setbacks in the past month, but it, like the rest of the industry, is facing accelerating pricing pressure—a point which he and his top lieutenants honed in on repeatedly. These hits will fall through to the bottom, he noted, adding, 'We won't suddenly have more products [to offset the shortfall] because prices are coming down."

To some extent, he was playing to analysts, who are wary of Roche's promises to cut cuts in the face of a slowing top line. After all, the company, which has demonstrated its scientific prowess by launching a series of unexpected blockbusters, isn't, as one analyst put it, known for being "mean and thin."

But on another level, the setbacks to Avastin and the experimental Type 2 diabetes drug taspoglutide, really hurt --especially if FDA ultimately decides to take up ODAC on its recommendation earlier this week against full approval of Avastin in first-line metastatic Her-2 negative breast cancer. In that case, Roche will have to stop promoting the drug and re-educate physicians about its use for first-line breast cancer (it now is available for that indication under the accelerated approval process) – which could cost the company hundreds of millions of dollars in sales.

And the hypersensitivity issues that arose during a Phase III trial of taspoglutide, Roche's first drug for Type 2 diabetes, mean a delay of 12 to 18 months in the regulatory filing, which Schwan called "a big disappointment." That is likely to translate into some restructuring in the U.S., including of the U.S. primary care sales force – a group of about 750 reps – executives said, although they weren't specific about details of what they would do.

Meanwhile, Stefan Frings, Avastin Franchise director, was less circumspect in his response to the ODAC committee vote. Accusing the agency of having "stacked the deck against Avastin by choosing voting members who were previously negative" on the drug, he also noted that the briefing booklet "honed in on median PFS [progression-free-survival], ignoring hazard ratios."

And Roche, he added, wasn't alone: immediately after the vote, he told analysts, thought leaders contacted the company to say they "were appalled" by the committee's decision. "This is not a Mylotarg situation," he went on, referring to Pfizer's recent decision to withdraw that acute myeloid leukemia drug from the U.S. market because of excessive mortality. "Avastin mortality isn't excessive and risk factors work in its favor," he insisted, adding "Avastin is a meaningful option for certain patients with breast cancer."

Pascal Soriot, chief operating officer of Roche Pharma, took a less acerbic, more diplomatique tone, stating that the company "needs to work with FDA" to understand the relationships of PFS and hazard ratios and to have clear "expectations for rules of the game for all projects going forward."

Whatever the outcome of the Avastin decision - due in mid-Sept - this is a year when Roche steps in line with its pharma counterparts and focuses on the new frontier of "operating excellence."

Monday, July 19, 2010

Avandia and the Revenge of the Brain Dead Kangaroos

We're not ones to call advisory committee members names. We'll let them do that to themselves.

"I was one of the brain-dead kangaroos last time who was on the fence, largely because I did see a signal for harm that was outweighed at that time by the comparison to active comparators, which I think is much more relevant to me than placebo, and I wasn't swayed by the pioglitazone data that was presented at that time because it was pretty preliminary," Morris Schambelan, San Francisco General Hospital, said in explaining why he had voted to recommend removing GlaxoSmithKline's Avandia from the market at the July 13-14 meeting of the Endocrinologic and Metabolic Drugs and Drug Safety and Risk Management Advisory Committees, after having voted that it should stay on the market in July 2007. He was in the minority this time, however; the committees voted 20-12 that the drug should stay on the market.

Read more about the revenge of the brain-dead kangaroos in this week's "Pink Sheet" ...

-- Martin Berman-Gorvine

While You Were Relaxing ...

We hope you enjoyed a lazy summer weekend, and a welcome respite from last week's non-stop craziness. Meanwhile if you're looking for a dozen pages of in-depth advisory committee analysis, you'll find it in this week's Pink Sheet.

While you were dropping three out of four to the Cubs ...

image from flickr user virginia zuluaga used under a creative commons license

Friday, July 16, 2010

Deals of the Week Must Be Dreaming

Befitting the above image from Inception of the streets of Paris getting wrapped up like the subject of a misinterpreted Manfred Mann tune, DOTW believes a lot of weird shit happened this week. Right? (Please pardon our French.)

The dealmaking was rather quiet, attributable perhaps simply to the calendar but more likely the FDA Advisory Committee main events that were taking place down in quake-prone Maryland. First, go find your nearest In Vivo blogger, and pinch him or her. We must be dreaming. That quake should barely raise an eyebrow compared the rest of the week's strange goings-on.

Our first inkling that we were living in dreamland was when the National League won the MLB All-Star game. Clearly, this isn't reality. BP finally capped the oil leak? Now we're definitely not in Kansas anymore. Next thing you'll be telling us that Steve Jobs is going to address all those complaints about the iPhone 4. Good one.

The oddities included events closer to our -- and probably your -- industry interests. The headfake from FDA's Endocrinologic and Metabolic Drugs Advisory Committee saw Vivus' Qnexa on the short end of a close decision. But that was supposed to happen, right? Sure. But first the briefing documents came out. "Surprisingly benign!" seemed to be the universal refrain. Then the committee meeting itself, where members beleaguered from what must've seemed like a 17-day Avandia reckoning reassembled to discuss Vivus' obesity hopeful. All seemed to be going quite well! Then 7-9. Oops, no, 6-10.

Further dream-sequence confusion? The past quarter's venture numbers and our column-cousin FOTF's poetry slam. And did Avandia really make it out of committee with a very good chance of staying on the market?

Finally, know who else was dreaming (or at least putting on a very smiley nothing-to-see-here face)? Whoever wrote this headline for Vernalis. The news? Biogen and Vernalis pulled the plug on the smaller co's great hope, an A2A receptor antagonist program destined for Phase III trials, because of a preclinical tox signal.

We don't mean to get all Billy Ocean on you, but please: get out of our dreams, get into ...

Mylan Labs/Bioniche: Mylan Labs is breaking into the North American generic injectables market with the $550 million cash acquisition of privately held Bioniche Pharma Holdings from parent co Bioniche Life Sciences, the companies announced on Wednesday. The purchase price, at 4.2x revenue, is richer than the typical generics deal, but according to Mylan the buy brings in "higher-barrier" products, higher-profit margins in the oncology, anti-infectives, and CSN spaces, and sets it up for a push into generic biologics some time down the road. Bioniche adds nearly 30 products and 15 ANDAs and a substantial pipeline to Mylan's UDL Labs unit dose business and will combine with that unit to create Mylan Institutional, a new business focused on hospital and institutional sales in North America. Read our full take on the deal in "The Pink Sheet" DAILY. --Joseph Haas

Evotec/DeveloGen: The long road traveled by DeveloGen, the surviving entity from several rounds of German biotech consolidation during the past decade (Peptor, HepaVec) whose consituent parts date back to the early 90s, is finally at an end. In further German coalescence Evotec said on Wednesday that it was acquiring the metabolic disease-focused private biotech for €14 million in stock plus a potential cash earn-out. DeveloGen adds to Evotec two diabetes-focused deals: a Type-1 diabetes development partnership with Andromeda (that company in turn licenced the compound, DiaPep277, to Teva) and a Type-2 diabetes discovery deal, signed only last year, with Boehringer Ingelheim. Evotec gains a third project, targeting beta cell regeneration for Type-1 and Type-2 diabetes, which is in lead optimization and currently funded by the Juvenile Diabetes Research Foundation. DeveloGen's backers -- surely not breaking anywhere close to even here since its constituent companies raised close to €100 million over the past 17 years -- are eligible for undisclosed cash payments based on future milestones and royalties. -- CM

Watson/Itero Biopharmaceuticals: Privately-held Itero Biopharmaceuticals inked its first product-focused deal this week with Watson Pharmaceuticals. Watson will pay Itero an undisclosed upfront licensing fee to access the San Mateo, CA-based biotech’s recombinant Follicle Stimulating Hormone (rFSH), a biosimilar currently in preclinical development for the treatment of female infertility. Watson, which takes on full development, manufacturing, and commercial expenses related to the rFSH’s development, also owes Itero development and regulatory-based milestone payments, as well as an undisclosed percentage of net sales or net profits in various regions of the world. Formed in 2007, the largely stealth Itero raised $21 million in financing in 2008 from a venture syndicate that includes SV Life Sciences and Panorama Capital. In 2009 it signed an alliance awith XCellerex suggesting cheaper manufacturing of its follow-on proteins may have been one of Itero's strategies. For Watson, the deal is part of a two-pronged strategy to bolster its women’s health offerings and expand into biosimilars, an arena not without risk given the still murky U.S. approval pathway for follow-on-biologics. The New Jersey based biopharma, which develops both generic and branded drugs, has a number of proprietary drugs in women’s health, including Gelnique and four novel contraceptives in various stages of development. The company has plenty of competition from generics firms such as Teva and Novartis’ Sandoz, as well as big pharma players such as Merck and Pfizer.--Ellen Foster Licking

Genentech/MRC Technology: Genentech, in one of its first deals under the new leadership of business development head James Sabry, has brokered an exclusive alliance with the MRC Technology’s Centre for Therapeutic Discovery (CTD) to access an undisclosed number of small molecule drug candidates for treatment of neurological diseases. MRC Technology, the entity responsible for translating research discovered by the UK’s Medical Research Council into commercial products, receives an upfront payment and is eligible to receive clinical development milestones and sales royalties. Full financial terms and the target of the small molecule collaboration were not disclosed. The collaboration is yet another reminder that biopharmaceutical companies in search of innovative medicines are eager to tap the wealth housed in academia. Although this is the CTD’s first official collaboration, MRC is hardly a stranger to the dealmaking table. On July 5, the technology transfer group inked a wide-ranging discovery deal with AstraZeneca in which it agreed to screen a 150,000 compound library from both parties to identify molecules that show activity against 10 biological targets. (Financial terms of that tie-up also weren’t disclosed.) In the case of the recent deal with Roche’s South San Francisco outpost, a focus on neurological diseases is hardly surprising given the depth of talent associated with the therapeutic area now residing within Genentech. In addition to Sabry, who trained as a neuroscientist before leaving academia to play central roles at biotechs Cytokinetics and Arete, both EVP Richard Scheller and CSO Marc-Tessier-Lavigne are highly regarded neurobiologists. —EFL

Thursday, July 15, 2010

Financings of the Fortnight Is A Poet and Doesn't Know It

It's not quite thirteen ways of looking at a blackbird, but the two main venture surveys have delivered two different ways of looking at the latest VC fundraising numbers in the US. You be the judge if anyone is exercising a little poetic license.

Here's the headline of the quarterly report from the National Venture Capital Association and Thomson Reuters: "VENTURE CAPITAL FUNDRAISING ACTIVITY REMAINS SLOW: Dollars Raised Declines to Lowest Quarterly Level in 7 Years." (Their capital letters, not ours.)

Now, DowJones VentureSource: "Venture Fund-Raising Rallies After 6-Year Low in 2009: Venture Fund-Raising Up 13% in First Half of 2010; Substantial Closes By Established Firms Buoy Totals."

Caw! Ain't that something? Talk about glasses half full or empty.

(Meanwhile Wallace Stevens, who as an insurance company executive knew a little something about finance, "was of three minds / Like a tree / In which there are three blackbirds.")

Beyond the headlines, the researchers' numbers don't match up, either. (Keep in mind these are for all venture firms; the surveys don't separate life science from high tech or clean tech since most firms invest in more than one sector.) DowJones says 72 funds raised $7.5 billion in the first half of 2010. NVCA/Reuters says 69 funds raised $5.6 billion, or a full 25% less.

Half that $2 billion gap was immediately explainable: DowJones included Sequoia Capital's $1 billion Sequoia China Foreign Currency Fund III. NVCA/Rueters did not, because the fund is managed from Beijing, a spokeswoman said. So there's a difference in how each shop accounts for "US" venture. Another difference the two sides acknowledged to us could explain the gap is when they count dollars. When an active fundraiser brings in $100 million in Q4 '09 and $100 million in Q1 '10, DowJones is more likely to count the raises separately, while NVCA/Reuters only counts "closed cash," a spokeswoman said.

Enough sausage-making for now. The methodology behind the madness might not make for the sexiest blog copy, but we still have those divergent headlines to explain. DowJones chose to highlight the bump from 1H '09 to 1H '10, though their release includes a slide that shows 1H '10 still far below the first-half totals from '07 and '08. The bigger picture is that the NVCA -- the trade group for the venture community -- has been forthright for several quarters about the coming shakeout. Fewer VCs mean fewer members -- down about 7% from an all-time high of 460 -- but NVCA execs haven't sugar-coated their forecasts or descriptions, including this week's all-caps headline.

NVCA's data is more extensive and show the years 2005 to 2008 saw annual venture fundraising that totaled between $28 billion and $36 billion. Last year, the total was under $16 billion. This year, Q2 numbers are up from Q1, but it's fair to say VCs will be hard-pressed even to match 2009's dismal total.

So where's the money going if not into US venture funds? One clue can be found in the Sequoia China fund that accounts for half the $2 billion gap we just mentioned. In a VC survey released this week by NVCA and Deloitte, a majority of VCs in China, India and Brazil expect venture to expand in their countries in the next five years. Wishful thinking or not (and that Sequoia fund makes us think not), it's stark contrast to the US response. More than 90% of US VCs expect a stateside contraction through 2015. Large majorities in France, Israel and the UK said the same for their countries. In other words,

It was evening all afternoon.
It was snowing
And it was going to snow.
The blackbird sat
In the cedar-limbs.

Some call it poetry in motion. Some call it purple prose. We call it...

Trevena: The blue-chip investor group backing small-molecule drug developer Trevena has re-upped with a $35 million Series B round, two years after supporting it in a $25 million Series A. New Enterprise Associates, Polaris Venture Partners, Alta Partners and HealthCare Ventures contributed equally to both rounds, Trevena CEO Maxine Gowen told "The Pink Sheet" DAILY. Yasuda Economic Development Corp. of Japan made a small contribution to each round as well. King of Prussia, Pa.-based Trevena is exploring drugs based on biased ligands, which bind with G-protein coupled receptors but only activate pathways with beneficial effects, potentially resulting in more specific and better-targeted therapies. The startup will use the funds to support Phase II trials on its primary candidate, a compound to treat acute heart failure, as well as preclinical and early clinical development of drugs that treat pain and inflammation. Last fall, Trevena received a $7.6 million grant from the National Institutes of Health to identify and improve biased ligands that act on six GPCRs. According to Polaris’ Terry McGuire, Trevena’s research could also yield broader insights into biased ligands, potentially making its platform useful in improving a wide variety of therapies. -- Paul Bonanos

Sunesis Pharmaceuticals: Despite a stock price near 50 cents a share, Sunesis finally closed an epic three-tranche $43.5 million financing on June 30, cash it sorely needs to push its lead candidate voreloxin into Phase III pivotal trials for acute myeloid leukemia later this year. It's been a rollercoaster ride for Sunesis, which public in 2005 then suffered a big setback in 2007 in its Phase II lung cancer program and discontinued two trials. The next year it cut all discovery research and went all-in on late-stage development of voreloxin in ovarian cancer and leukemia. To kickstart the three-part financing, a group of investors including Bay City Capital, Venrock Associates and Alta Partners purchased 2.9 million preferred shares last April at $3.45 a share and redeemable for 10 common shares. The second tranche in October placed 1.45 million preferred shares at the same price. With the closing tranche, Sunesis sold 103.6 million common shares at 27 cents a share and returned to a single class of stock, as all preferred stock issued through the first two tranches converted into common stock. While the financing was highly dilutive -- the company now has 221.2 million common shares outstanding -- it netted the company $41.7 million at a time when Sunesis was cash-poor despite promising Phase II results for voreloxin in AML. -- Joseph Haas

Calithera Biosciences: It's a Jim Wells double-dip this week. The former Genentech protein engineer who founded Sunesis is also a co-founder of Calithera, which announced July 7 a hefty $40 million Series A to further its work on small-molecule oncology compounds that activate capsases. Now the head of his own lab at the University of California, San Francisco, Wells published a paper in Science last fall that detailed a method of directly activating caspases in order to induce apoptosis. Calithera took a license from the school, and it has also tapped into Mission Bay Capital, a venture fund affiliated with QB3, a research and entrepreneurial outreach institute headquartered at UCSF that shares a roof with the Wells Lab (Wells is also on QB3's executive committee). Morgenthaler Ventures led the round, which also included U.S. Venture Partners, Advanced Technology Ventures, Delphi Ventures, and Mission Bay. Calithera hopes to enter a candidate into Phase I trials within four years. Calithera’s Series A is the second-largest for a biotech in 2010, following only Incline Therapeutics’ $43 million round, which we'll dissect in the upcoming issue of Start-Up. -- P.B.

iPierian: The stem-cell startup said June 30 it lost its CEO John Walker but gained an unusual new investor in Google Ventures, the venture arm of the Web search giant that led iPierian's $22 million Series B round. Google famously backed genetic testing firm 23andMe, run by Google co-founder Sergey Brin's wife Anne Wojcicki, but the venture arm -- launched in March 2009 with a $100 million commitment from sole LP Google -- now handles all Google venture activity. At a time when the stem-cell field is starting to explore ways to generate revenue, iPierian is one of a few firms developing induced pluripotent stem cells for drug discovery purposes. The product of a merger of two tiny start-ups last year, it's jostling with rivals, particularly Fate Therapeutics, to build a patent portfolio. The B-round syndicate includes existing backers Kleiner Perkins Caufield & Byers, Highland Capital Partners, MPM Capital, and FinTech Global Capital, plus first-time investors Mitsubishi UFJ Capital and ATEL Ventures. iPierian also said that CEO Walker, who's been deeply involved in starting a regenerative-medicine lobbying group, was stepping down for personal reasons. President and chief scientific officer Michael Venuti will replace him and take his board seat. Venuti is a veteran medicinal chemist with stints at Celera, Axys, Genentech and Syntex. iPierian is Google Ventures' second biotech investment; its first was a September 2009 Series D round supporting Adimab. The venture firm has made a total of 12 investments across several industry categories including software, Internet and cleantech. -- P.B.

Photo courtesy of flickr user DigitalSextant through a Creative Commons license.

Tuesday, July 13, 2010

One Small Biomarker Step for Bapineuzumab

Our boss wouldn't sign off on a business trip to Hawaii, even to cover the International Conference on Alzheimer's Disease in Honolulu. Something about not letting us leave our brains on the beach.

Instead we've been neural surfing from the IVB HQ this week. We spent time on the phone with a couple clinical execs to discuss Johnson & Johnson and Pfizer's release of biomarker data Tuesday, which the firms say is evidence the drug bapineuzumab is having an effect on the underlying processes of Alzheimer's.

The news is not the answer to the $64 million (or several-billion-dollar?) question whether the drug is slowing or reversing cognitive decline through disease modification. No drug has shown that yet, and until one does the frustration that's come with several Phase III setbacks will continue. (We'll have to wait until at least 2012 to know the answer about bapineuzumab.)

But the new bapi data underscores the importance developers are placing on biomarkers to help understand disease progression and guide clinical trial practice in the Alzheimer's field. The Phase III bapi trials are underway and can't be modified, but the data could affect future studies. (We'll examine the effects of biomarker development and the clinical setbacks on Alzheimer's-focused startups in the upcoming issue of START-UP.)

Pfizer and J&J were quick to caution that the data are also preliminary. Taken from Phase II trials that ended in 2008, they need to be confirmed in the global Phase III program that Pfizer and J&J's Janssen Alzheimer Immunotherapy division are running. Company officials said Tuesday that bapi seems to lower the amount of a variant of the protein tau in spinal fluid (CSF) that has been linked to neurodegeneration. (Data are at the end of this post.)

Bapineuzumab itself does not target tau. The CSF measurements are a "downstream" biomarker rather than direct effect, Ron Black, Pfizer's assistant vice president of clinical R&D, told the IN VIVO Blog.

A humanized monoclonal antibody, bapineuzumab is designed to prevent the beta-amyloid plaques that accumulate in patients' brains. But the tau biomarker study, which measured "phospho" tau, or P-tau, shows bapi is also having some effect on a second Alzheimer's pathology. "Recent scientific data suggests both [Aβ and tau] processes might be important," Janssen Alzheimer Immunotherapy's head of clinical development Eric Yuen told IN VIVO Blog. "The initial step may be overproduction or underclearance of toxic Aβ...that aggregate and become more toxic. The increase in P-tau subsequently produces more toxicity to neurons. It's a long process."

Another study released Tuesday showed the predecessor to bapineuzumab, AN1792, also made statistically significant reductions in tau (as well as Aβ). Development of AN1792 was halted after Phase II trials in 2002 when patients were struck with brain inflammation. Researchers continued to follow the patients, however. "The findings give us more basic information about the interaction between beta amyloid and tau in Alzheimer's and may clarify how the disease progresses in the brain," researcher Delphine Boche of the University of Southampton's School of Medicine said in a statement.

When neurons die, the tau from the microtubules inside the neurons is released into the spinal fluid. With less P-tau in the spinal fluid, it's more evidence to suggest bapineuzumab is preventing neuronal death. (The statistically significant data came from 46 patients in two Phase II studies; 27 got bapineuzumab, 19 received placebo.)

But that's a long way from showing positive clinical outcomes. The main Phase II tests for bapineuzumab, run by J&J and Pfizer's predecessors Elan and Wyeth, showed that only patients who did not carry the ApoE4 allele had statistically significant cognitive and functional improvement. That's crucial, because in Alzheimer's trials only such "real-world" measurements, can lead to a drug's approval. It's one reason why the so-called amyloid hypothesis, which holds that to cure Alzheimer's you have to curtail Aβ, is in question these days: There's little evidence so far that fighting Aβ leads to a functional difference to patients.

That's another reason to study biomarkers: the more data researchers gather about the underlying molecular biology of Alzheimer's, the more chance to correlate changes in the biology to improved cognition and function if and when those improvements carry the day in a late-stage trial.

Elan's rights went to J&J in a far-reaching deal last year, and Pfizer got partial rights when it bought Wyeth. Janssen's data are due main trial is expected to end in 2012 and Pfizer's in 2014.

The top-line data from the Phase II CSF tau study pooled two patient populations. They showed a statistically significant decrease (p=0.0270) in P-tau in bapineuzumab treated patients (9.49±2.74 pg/mL) compared with placebo-treated patients (-0.51±3.26 pg/mL). Although not statistically significant, the analysis also showed a trend (p=0.0856) for a decrease in T-tau in bapineuzumab-treated patients (-73.31±32.73 pg/mL) compared to placebo (+9.79±38.95 pg/mL) in the change from baseline to month 12 values.

Image courtesy of flickr users Eva and Rodney Harris.

Guest Post: Advice for the New PhRMA President

Ian Spatz, the former VP-global health policy at Merck, is a contributing editor to The RPM Report. Ian is the founder of the Rock Creek Policy Group and a senior advisor to Mannatt Health Solutions. Interested in guest blogging for In Vivo? Drop us a line here.

The announcement that John Castellani, current head of the Business Roundtable, will succeed Billy Tauzin as the head of the Pharmaceutical Research and Manufacturers of America (PhRMA) on September 1 ends the speculation on who will lead one of D.C.’s most influential and most talked about trade associations.

As a small gift to the new PhRMA chief, here is a modest to do list to get things started:


There is absolutely no other goal as important for Castellani than addressing industry reputation. Everything flows from success in improving the industry’s low standing among policy makers and the public.

To his credit, Tauzin understood this and took some positive steps on reputation including substantially improving member companies’ joint efforts to provide free medicines to those who can’t afford them. Castellani needs to encourage his Board to consider more and do more.

Medical and Scientific Relations:

The foundation of member company success is access to the hearts and minds of scientists and physicians.

Companies need scientists to be willing to work for them – directly and indirectly through clinical trial participation. Companies need clinicians to accept them into their offices and to respect their information.

PhRMA has lagged in attention to this area but can’t any longer. Castellani is not from this community so will need to quickly identify leadership within PhRMA and from its member companies to make this a priority.

Congressional Relations:

It’s a dicey time in PhRMA’s relations with the Hill. Republicans are still smarting over the industry’s correct decision to do business with President Obama and Senate Finance Committee chairman Max Baucus (D-MT) on health reform.

Democrats still don’t like PhRMA and many only held off on doing a job on it because the industry was playing ball on health reform.

However, that train has left the station. Castellani brings a record of Congressional work but needs to invest the time in developing or expanding relationships with key health committee members of Congress by honestly asking for ideas and help and then listening carefully to the answers.


What people can’t see, they can’t trust.

Obviously, Castellani is not going to open up PhRMA Board meetings to the public. However, he can try to invite more key stakeholders to participate in such meeting and other PhRMA forums. He can also create a PhRMA annual meeting, unlike the current one, that attracts many others from outside the industry. BIO has already pointed the way with its annual meeting that is a meeting place for public officials, the media, and the industry.

Media Relations:

The media love PhRMA but for the wrong reason.

When they need an easy quote to make the industry look bad or convince an editor that they sought balance, they can count on PhRMA to deliver. Other than that, most reporters find PhRMA difficult to deal with and hardly forthcoming.

Castellani must, as with Congress, get out there and get to know the folks who cover the industry in the main stream media and trade press. A little time and care will go a long way to improving the coverage of the industry and its companies.

Drug Safety:

Castellani was named on the same day that an FDA advisory committee is meeting to consider the future of Avandia, GSK’s controversial diabetes drug that faces serious safety challenges.

Drug safety is the most important policy issue facing Castellani as he enters the building. With the Prescription Drug User Fee (PDUFA) program up for renewal, Congress will have an opportunity to weigh in on FDA’s safety efforts including how it is organized to address safety issues. Castellani and PhRMA should seize the opportunity to avoid playing defense and come up with some ideas on their own that will give concerned members of Congress something to support.

Drug Marketing and Promotion:

Under Tauzin’s leadership, PhRMA took major positive steps to improve its internal codes on drug marketing and DTC advertising. Despite these efforts, physicians and medical centers are still not happy and are designing tough new rules that are limiting access to physicians. Castellani can and should continue Tauzin’s efforts to get the industry to better police itself and support the efforts of others.

That’s just a start. My best to Mr. Castellani. The nation’s pharmaceutical companies need some extraordinary leadership right now.--Ian Spatz

Monday, July 12, 2010

While You Were Losing Ugly

What did we learn from the World Cup Final? Drop kicking is the new headbutting. Congratulations to the Spaniards, deserved winners last night.

Meanwhile, while you were getting ready for Avandia Week (sorry, Qnexa) ...
  • Merck-Serono's oral cladribine has been approved in Russia, and will be marketed there under the name Movectro beginning some time in 2011, once reimbursement is secured.

  • Biogen Idec and Swedish Orphan Biovitrum presented Phase I/II data on their long-acting Factor IX hemophilia B treatment at a conference in Argentina over the weekend.

  • Does Avid have an Alzheimer's biomarker on its hands with the radioactive dye AV-45? Reuters reports.

  • J&J is being sued over its children's OTC medicines recall, with plaintiffs seeking class action status. Apparently, they don't like coupons, reports Bloomberg.

  • Reata has raised $78 million in a Series G (as in goodness that's a lot of money) financing led by existing investors CPMG and Novo AS. The cash will fund a second pivotal trial of the company's lead asset, bardoxolone in chronic kidney disease.
screen cap by flickr user keith williamson used under a creative commons license

Friday, July 09, 2010

FDA's Sharfstein On Avandia: "An FDA Decision"

FDA Deputy Commissioner Joshua Sharfstein was asked repeatedly during a briefing with media: Who will make the final decision on Avandia?

His answer: "It will be an FDA decision."

In the context of the question being asked, it wasn't a seemingly helpful response. But it gets to the heart of who carries the burden when the dust settles from the two-day advisory committee review on July 13-14.

If FDA chooses to pull the drug, the agency will have to explain to patients and prescribers why the drug, which an advisory committee voted overwhelmingly was linked to increased cardiovascular risks in 2007, has remained on the market for three years and counting. One could make the argument that it's been 12 years.

If FDA chooses to keep Avandia on the market--more restrictions or not--they'll have to explain to patients and prescribers why a drug linked to increase heart attack risks is still available.

Regardless, they have to explain the decision to their overseers in Congress and the public at large.

The gravitas of that decision and subsequent fallout means there is one person at "FDA" who will indeed make the final decision on Avandia: FDA Commissioner Margaret Hamburg.

So whether or not Hamburg literally makes the decision, it's hers.

Is the PhRMA Search Over?

The buzz in Washington is that the Pharmaceutical Research & Manufacturers of America is preparing to make an announcement about its new CEO. It is just that no one seems to know WHO the pick is.

We published our own suggestions shortly after Billy Tauzin announced his intention to step down (here and here). But frankly, we thought PhRMA would wait until after election day to finalize its choice, both because it obviously makes a huge difference who is calling the shots on Capitol Hill, but also because the pool of available candidates could change dramatically too.

If the rumors of an imminent announcement are correct, obviously that thinking was wrong. And so is our thinking that PhRMA could NEVER keep the pick secret for this long. (We hear there have been very clear warnings issued about the consequences for anyone who talks out of school on the search, but still...This is Washington, DC!)

If PhRMA is ready to make the pick, it will surely be someone with management experience (rather than a "big name" political figure). We would also assume it will be someone who won't have trouble working with Republicans, since PhRMA can probably count on reasonably good access to the White House at the CEO level given the heavy lifting industry did in support of health care reform.

So who is it? Someone out there knows--and you can comment anonymously below!

Avandia: It's All About Question 7

Today, FDA released an army of briefing documents ahead of the advisory committee re-review of GlaxoSmithKline's diabetes drug Avandia (rosiglitazone). To read all of the documents for yourself, click here.

While one could argue that any number of issues will be key in helping FDA determine what regulatory action to take on Avandia, we believe the key to the whole debate is quite simple, actually: question 7.

FDA asked the joint Endocrinologic & Metabolic and Drug Safety & Risk Management Advisory Committees a large number of questions--six of which are formal voting questions with multiple options.

Most of the headline attention will be focused on question 8: "What regulatory action does the panel recommend FDA take on Avandia? A) Allow continued marketing and revise the current label to remove the boxed warning and other warnings regarding risk of ischemic CV events, or B)Allow continued marketing and make no changes to the current label, or C) Allow continued marketing and revise the current label to add warnings, or D) Allow continued marketing, revise the current label and add additional restrictions on use, or E) Withdrawal from the US market."

But none of the questions may be more important to FDA decision makers than the preceding question, number 7:

"Rosiglitazone and other oral anti-diabetic therapies share the same indication of improving glycemic control in patients with Type-2 diabetes. Based on the available data, please discuss the benefit-to-risk profile of rosiglitazone in the context of other available anti-diabetic therapies."

In other words, does Avandia provide a unique benefit over existing therapies on the market? Our bet is that FDA decision makers will be paying particularly close attention to the answers provided by committee members to question 7.

FDA knows what its regulatory options are when it comes to Avandia. But the agency will be looking for arguments--even if they are in the minority--that make the case for a unique Avandia benefit over everything else.

It will be a difficult argument to make.

Thursday, July 08, 2010

FDA Takes Control Of Avandia Debate

Score one for FDA.

As "Avandia Week" approaches, FDA made a decision to wrestle control of the debate over the safety and efficacy of Glaxo's diabetes drug rosiglitazone by offering the media an embargoed preview of the agency's briefing documents for the two-day advisory committee meeting on July 13-14.

The decision to let reporters look at the documents early was smart, effective and stands in marked contrast to how the debate on Avandia played out in 2007.

In 2007, the meta-analysis conducted by Cleveland Clinic cardiologist Steve Nissen, which showed a increased risk of cardiovascular events linked to Avandia, was published in the New England Journal of Medicine on May 21, 2007. A few days later, a House Oversight & Government Reform hearing, led by then-Chairman Henry Waxman, was scheduled before FDA ever publicly commented on the findings. On June 6, 2007, the hearing took place.

This time around, FDA has been effective, among other media savy strategies, in granting interviews in response to the Nissen meta-analysis published in the Archives of Internal Medicine and the Medicare beneficiary study comparing Avandia to Takeda's Actos conducted by FDA drug safety official David Graham in the Journal of the Amercian Medical Association.

But allowing access to the briefing documents before they were made public was probably the best stroke yet by the agency. Reporters typically get an email from FDA that the briefing documents are made public, then they have about 10 minutes to "read" 300-400 pages of FDA's in-depth analysis and write a short piece for the wires and mainstream media news sites that capture the essence of FDA's point of view.

Instead, FDA gave journalists a full day and access to FDA deputy commissioner Joshua Sharfstein and drug center director Janet Woodcock, among other officials, to digest the briefing documents and pose questions to the agency officials. Brilliant.

There's no doubt that Nissen and Graham know how to make news. But FDA, as a whole, has been equal to the challenge in both ensuring that outside voices--and voices from within--are heard while simultaneously communicating the facts on Avandia as agency leadership views them.