How Close Avastin Really Came To Adjuvant Colorectal Cancer Use

Six events. Six additional cases of recurrence out of the 2,710 patients being treated in the C-08 trial of Roche/Genentech’s Avastin in adjuvant colorectal cancer, and there would have been an entirely different outcome.

Six more cases at the interim look and everyone would be using Avastin in adjuvant colorectal cancer patients. That’s how close the study was to meeting the early-stopping rule at one year, lead investigator Carmen Allegra said at Roche/Genentech’s on-site ASCO analyst event.

To be sure we hit this home hard enough: if just an additional six events had occurred at the one-year interim look, than the trial would have been stopped early. As the full analysis of data presented at ASCO made clear, at one year (not coincidentally, the time period that patients received bevacizumab), there was a significant benefit for the drug. A 40% advantage, to be precise. Lots of zeroes in the p-value to make the statisticians happy. More than enough benefit to drive utilization even before FDA approval.

Contrast that to the actual end of the study. At the pre-specified three-year endpoint, when there were 603 events, disease-free survival had dropped out of significance. The end result for Avastin was 77.4% versus 75.5% for chemo alone. But the eventual failure is old news, previewed in April and heard round the world.

The study investigators, and Roche/Genentech executives, were very keen on the one year results in unveiling the full dataset from C-08, stressing that the drug was extremely effective while being given and it was only after bevacizumab was stopped that the benefit diminished. Their take-away was that more study was needed with a longer duration of treatment with bevacizumab.

That’s not to say there wouldn’t have been valuable and appropriate questions raised about long-term tolerability and about the level of benefit versus alternatives and about the cost-effectiveness. However, it’s awfully close to taking what was ultimately a negative trial and finding it instead to be a runaway success based on an interim peek.

What the experience does show is exactly why long-term follow-up is important (both to see whether there’s a spike in hypertension, or hey, that benefit seems to disappear pretty quickly). It also underscores the value of designing a trial for a more clear-cut look at overall survival, which wouldn’t leave us with the potential variability from the disease-free surrogate. It’s also much harder to make a cost-effectiveness argument when you have data in hand to show that lives are saved.

For more on the implications of the C-08 data release, including the potential to establish Avastin as adjuvant therapy in other cancers (and possibly still colorectal), and the potential need for caution given tolerability and cost concerns, check out this week’s “The Pink Sheet” here and here.--Mary Jo Laffler

image from flickr user Shovelling Son used under a creative commons license

While You Were Watching Your Sugar

Or maybe instead, while you were skipping sessions at ADA to get sugar-coated beignets at Cafe Du Monde. Either or. Mmmmmmmmmmm.

In any case we've got your weekend wrap-up below, a few morsels of general industry news sprinkled with the sweet taste of clinical diabetes announcements. Or you know, the other way around.

While you were should have been sweeping the Dodgers ...

• Aileron, a biotech developing a new class of molecules it calls 'stapled peptides', raised a $40 million Series D. What's particularly noteworthy is the participation by SR One (GSK's corp. VC arm), which led the round, as well as Lilly Ventures, Novartis Venture Fund and Roche Venture Fund. For the kind of analysis that predicts deals like this, see this May START-UP feature by Ellen Licking.
  
• ADA: From late on Friday, a new GSK-sponsored study, RECORD, says Avandia doesn't up heart-attack risk. Not everyone is sold. Hmmm, we wonder who might have a comment. According to a WSJ report: “The Record trial is seriously flawed,” Nissen said, adding that there weren’t enough patients who remained in the study to say conclusively that the drug doesn’t pose a high risk for heart attacks and other cardiovascular problems.
  
• ADA: GLP-1 candidate from GSK, Syncria, better than Byetta in Phase II trial. Good enough for a major Phase III program, anyway. Reuters has the wrap up here.
  
• ADA: Meanwhile, Novo's liraglutide was beating up on Sanofi's Amaryl. Details on that two-year study here.
• ADA: Hi, we're from Boehringer Ingelheim. Did we mention we're in diabetes now?
• The NYT Magazine on the challenge of passing health care reform.
• EHA: ADA wasn't the only game in town this weekend, depending of course on what town we're talking about. At the European Hematology Assn meeting in Berlin Calistoga Pharma touted new results on its PI3k inhibitor.
  

image by flickr user jasonrowland.org used under a creative commons license

Random Observations from the Chaos of the JPMorgan Meeting

It's a hell of a show, the annual JPMorgan shindig, even when its slightly muted by the disastrous economy. We've heard some of Roger's early observations but let us weigh in with a few of our own thoughts. More, uh, serious insight to come at our annual Webinar.

• We're definitely behind the ban on bottled water and any other greenish campaign the folks in San Francisco undertake. This only led us to scratch our heads a bit when we walked into Union Square. How can any environmentally minded folks justify expending the energy necessary to keep an ice skating rink frozen on a sunny, 70-degree San Francisco day. Will this be a refuge for polar bears? According to one observer the influx of conference denizens this week made it seem more like "The Matrix On Ice." Now that's something people would pay to see.
  
  
• Who knew we'd have to travel to balmy San Francisco to learn about freezes and frosts? Stryker executives, speaking at the company's breakout session, confirmed that many hospitals were putting a lid on capital spending. In fact, over half of the hospitals surveyed recently said they'd implemented a freeze or frost. This lead one wiseguy in the back to holler, "What is a frost?!" Okay, we didn't know either. Well folks, a "frost" apparently has become acceptable salespeak for a soft, mushy freeze.

• Biotech CEOs! Need a quick buck? Start printing some T-shirts emblazoned either with "ObamaCare" or "Flat Rounds Are the New Up" or maybe "DRIPFED." Speaking of ObamaCare, popular opinion--at least among those willing to express themselves at the conference--is behind some form of nationalized health care plan in the US.
  
  
• Poor Merck & Co. Not only were they inexplicably bounced from the Grand Ballroom into the slightly cozier confines of the Colonial Ballroom (what, Storage Room B wasn't available, mmmkay?) but CEO Dick Clark was put in the unenviable position of taking the stage to the sounds of Queen's 'Another One Bites the Dust.' Clearly Merck hasn't been doing enough transactions with J.P. Morgan.
  
  
• If we handed out awards (perhaps they should be called Jamies) to the most entertaining presentation, NuVasive Inc. would be a definite nominee and likely favorite. Not too many other companies fit both Jeopardy and Ultimate Fighting into their 20 minutes. And even fewer CEOs have an MRI of their own spine, complete with implants, as their company logo. Yep, that's Alex Lukianov's spine profile that you're looking at. As he noted, he's not only CEO, he's also a client.
  
  
• The Jamie for subtlety goes to Art Levinson of Genentech. As the Wall Street Journal noted, not only did he set the record straight about the helix printed on conference badges, he also sent a subtle message to Roche and other big pharma about the role Genentech continues to play as an innovator. In his 25-minute presentation, he made sure to note the biotech's numero uno status for six of the past seven years as the best place to work according to Science magazine. He also pointed out that in 2007 the company earned the mantle of having the most life science patents issued, more than double what the US government's NIH behemoth were awarded. Nor is he so keen to diversify Genentech's business model. We're loosely paraphrasing here, but he intimated that while adding generic capabilities might be a perfectly good business strategy to hedge risk, if he went to his board proposing that kind of model, it would be grounds for firing. Indeed, it was an elegant performance--and likely his swan song given the rumors circulating about Roche's ability to finance the deal.
  
  
• Sometimes actions do really speak louder than words. Pharmas trawling for innovation have been buying up biotechs and ring-fencing them, running them as so-called independent entities. But you've got to wonder, isn't that really lip-service? In the case of GSK, maybe not. Christoph Westphal did his annual magic at the event, representing Sirtris, a GSK company. Contrast that approach with Takeda, which presented at J.P. Morgan for the first time, and is heavily reliant on the success of its Millennium franchise given the approval delays facing its other drugs. Did Millennium's Dunsire give the pitch? No but she was trotted out in the very limited Q&A session in the break-out room.
  
  
• Someone, somewhere out there did the math for a handful of normally easily accessed receptions: yep, it's cheaper to hire bouncers to keep out the riff-raff than to throw the doors open wide to assorted thirsty bloggers and other varieties of conference lowlife. Cheaper still to cancel the annual Monday night confab at City Hall.

--Ellen Licking, Tom Salemi, Chris Morrison

image from flickr user http2007 used under a creative commons license.

What’s Wrong with Pharma? One Answer from JP Morgan

Sunday night we attended what we now think of as the kickoff to the JP Morgan meeting, the extraordinary concentration of biotech/pharma movers and shakers which is the MPM Capital dinner at San Francisco’s Ferry Building.

The dinner operates as a kind of temperature gauge for the industry; lots of folks with the power to actually do something looking for each other’s opinions and sharing their own.

Our quick sense this year: they were worried. But it was less the conversations that struck us as indicative of the industry angst than the unusually frank remarks of the dinner’s keynote speaker: Thomas Ebeling, once the GM of Pepsi in Germany, the CEO of Novartis Pharma and Novartis Consumer Health, and soon to be the boss of Germany’s largest broadcasting group ProSiebenSat.1 Group.

Ebeling’s a controversial guy. But he’s also got a very pretty broad view of the practical side of the business world. Which was why Ebeling’s theme -- a critique of the drug business – was so compelling.

There were plenty of things he said he liked about pharma (the passion to do good, for one; the extraordinary return-on-sales, for another). But there were plenty he didn’t. Not that the criticisms were particularly novel: you hear many of them in private conversations. But you rarely hear them publicly from one of the business's big shots and never aggregated. Here are the points we can remember (who thinks to take a reporter’s notebook to these shindigs?):

• Some of Big Pharma’s very senior managers (one assumes not excluding the speaker) are very sharp. But there’s a huge fall-off in quality as you get below the top.
  
  
• Big Pharma managers, trained in consensus decision making, don’t take individual responsibility. Not a lot of bold decisions, therefore, likely to get made.
  
  
• Pricing in pharma will change to a pay-for-performance model.
  
  

• This industry – and all its constituents – hates bad news. So rather than confront it, managers generally try to avoid it, exacerbating the problems pharma faces.
  
  

• Given the R&D productivity problems, in-licensing is crucial – but no one wants to say "yes" to them. Everyone will remember the executive who championed an in-licensing candidate that fails after millions in trial expenses. No one remembers the person who said “no” to Lipitor.
  
  
• If that ain't enough to block most deals, the not-invented-here syndrome can help. NIH remains a powerful force in pharma: fundamentally, all R&D heads all want to develop their own drugs.
  
  
• Pharma will evolve to a holding company model – it’s just too complex to run as it is.
  
  

Ebeling finished up his excoriation by answering a question from MPM partner Vaughn Kailian: “If you were appointed CEO of Sanofi Aventis what would be the first three things you’d do?”

The answer must have warmed the hearts of the biotechs in attendance – though the per-company math wasn’t particularly exciting. First, Ebeling would raise $800 million to $1 billion in capital and use the money to buy eight to ten biotechs. Then, because he wouldn’t be able to afford to develop all those products, he’d find Big Pharma partners to help. It’s a shots-on-goal strategy, he said: better 20% of something than 100% of the one asset you can afford to do yourself – and which doesn’t make it to market.

And finally: “I’d find a great head of R&D. Good marketing guys are common; great R&D heads are very, very rare.”

Picture from Der Aktionar Borsenmagazin

While You Were Going to California

Greetings from balmy San Francisco (where our colleague Ellen Licking is taking full credit for the good weather, so if you see her at the JP Morgan meeting do thank her). Your IN VIVO Blog will be well represented at the meeting as will the broader FDC-Windhover team & we look forward to meeting some interesting companies and seeing old friends. Stop us and say hello! And don't forget to buy Roger a (free) birthday drink.

So while you were watching the NFL divisional playoff round ...

• Matthew Herper at Forbes writes about a management shuffle at Merck & Co., where Bev Lybrand, formerly leader of the pharma's Gardisil vaccine business, will move to cardiovascular drugs.


• Eben Tessari at Pharmababble expresses his dismay at Alnylam's Cubist partnership for its RSV project. Our (slightly rosier) report on the alliance is over at Pink Sheet Daily...


• The NY Times takes a look at the wacky and divided world of food safety, where FDA shares responsibility with the dept of agriculture, and where "Frozen cheese pizzas are inspected by the F.D.A., pepperoni pizzas by the Agriculture Department." May we humbly suggest the madness be ended by establishing a new federal Department of Pizza?
  
• WSJ op-ed at first glance argues for naked doctors/nurses, on closer inspection merely advocating for short sleeves.
  
• More voting: WSJ Health Blog among finalists for the best health blog! You can find the link to vote for Jacob, Scott & co. here.


• Hey look, it's an All-Bird NFC Championship game ... go Eagles!

While You Were Hobnobbing with Hematologists

Much of the industry news this weekend comes out of the American Society of Hematology meeting in San Francisco, which runs til Tuesday. For a roundup of everything out of ASH click here, and we will break down some of the highlights below.

Of course it wasn't 'all ASH, all the time' over the past few days; the fallout from the financial crisis continues, and combined with the cold weather across the Northeast and in parts of Europe it's enough to make you want to curl up with a good movie, or six.

While you were rebuilding your bloody Netflix queue ...

• Blood Simple: Among the newsmakers at ASH this year, as of the wee hours of Monday morning: Seattle Genetics presented Phase II monotherapy data from its dacetuzumab NHL therapy and preclinical data in combination with Rituxan. SG also reported positive Phase I monotherapy data for its SGN-35 antibody-drug conjugate. Antisoma said that an interim look at a Phase II study of its AS1411 aptamer in AML in combination with cytarabine was positive (it was the first such randomized study involving an aptamer in oncology, says Antisoma). Genentech reported positive results for two Phase III Rituxan studies in CLL. Allos Therapeutics announced positive Phase II data from a study of its lead compound pralatrexate in PTCL, as well as data from earlier stage studies in CTCL and NHL. And Sunesis said that two trials of its voreloxin naphthyridine analog revealed the compounds promise as a single-agent or in combination against AML.
  
• Blood Diamond: Year-to-date sales of Millennium-Takeda/J&J's Velcade multiple myeloma therapy have reached $1 billion, putting it in official blockbuster territory. The WSJ notes that sales have increased roughly 25% this year, thanks to an expanded label.
  
• There Will Be Blood: Is January 26th the day Pfizer will announce more layoffs? Jim Edwards has the roundup (and drinks your milkshake. He drinks it up!)
  
• In Cold Blood: VCs face a future that includes the phrase 'defaulting limited partner,' says the WSJ. And rumors are floating around that some major university endowments are selling their VC stakes. We'll have more on how life sciences VCs are reacting to the simultaneous pressures exerted by the financial crisis and a difficult partnering/regulatory/reimbursement climate in the next Start-Up.
  
• First Blood: They've gone and pissed off Ben Goldacre again. The Rambo of Bad Science fights back against more MMR vaccine scare stories.
  
• Youngblood: We got nothin' for this one. But come on readers, yes, we can all agree that Slapshot is the best minor league hockey movie ever made, but we figure you probably have a soft spot for mediocre 80s hockey melodrama. Youngblood of course stars Rob Lowe and Patrick Swayze, but look out for a young Keanu Reeves and the cameo by former Philadelphia Flyers center Peter Zezel. Remember: "You can learn to punch in the barn, but you gotta learn to survive on the ice." Your own blood-related filmage in the comments, please.
  

Avastin for Breast Cancer: Progress for Progression-Free Survival?

Most of the American Society of Clinical Oncology annual meeting is a blurry whirlwind of posters and presentations, but one thing is certainly clear: people are still puzzled by FDA’s approval of Genentech/Roche’s Avastin for first-line treatment of metastatic breast cancer.

The approval came in February. Although Genentech had been seeking full approval for additional bevacizumab indication based on the strong progression-free survival results of the E2100 study, FDA took the more traditional option and cleared it under its accelerated approval mechanism. The agency requested the results of the AVADO and RIBBON-1 studies as post-marketing commitments.

ASCO provided the first real look at AVADO. Roche’s study, which used Avastin in combination with docetaxel instead of paclitaxel, showed a modest improvement in PFS. Survival data are not yet mature. (You can read more in “The Pink Sheet” DAILY.)

The data, though, aren’t what people are talking about.

The Saturday press briefing on the highly anticipated, late-breaking study turned into a chance for some of the investigators and breast cancer thought leaders to vent on FDA approval standards.

Progression-free survival (PFS) versus overall survival is a perennial issue for regulators, who are tasked with upholding standards and always keep precedent in mind. PFS is commonly used for approvals in second- and third-line settings, but FDA clings to the gold standard of overall survival for first line indications.

The issue is clearly different for practitioners.

“As a practicing physician,” AVADO lead investigator David Miles said he views PFS as a reflection of the period of time where the disease is controlled and the patient remains relatively well. There is an expectation that the patient is “doing better than if their disease is not controlled,” he told the press briefing.

“We have studies where PFS does reflect overall survival and studies where it doesn’t,” Miles observed. “I think when you have a patient whose disease is well-controlled, there is benefit to that, there is utility to that. Particularly when studies are not powered for overall survival.” None of the Avastin breast cancer studies have been designed for a full survival analysis.

He suggested there are “recurrent problems … in recognizing utility in trials, and perhaps that’s why there is this ambivalence or perhaps uncertainty about what things should be approved on.”

“I don’t think any of us have any question that improvement in overall survival is worth more than an improvement in PFS in the end,” Dana-Farber Cancer Institute’s Eric Winer added. “We are all trying to help people live longer, and a drug that achieves that goal is a drug that we are going to use that much more frequently and has that much more reason to be approved quickly.”

Since it seems unlikely that AVADO will go on to prove a survival advantage, Winer stood by the position that there is intrinsic value in PFS, even if it is only improving quality of life. “With that in mind, I think that it’s fair to say that bevacizumab in treatment of metastatic breast cancer is an advance, but it’s not as big of an advance as it would be if in fact it had changed overall survival,” he stated.

The debate only escalated when the study was presented on Sunday. Breaking from the script of reviewing only the study data and its application, Kathy Albain – a former ODAC member and CDER consultant who filled the role of discussing the AVADO findings – used her time slot to focus on FDA and the approval standards.

She was a staunch advocate for PFS endpoints. “Assuming that there is a real treatment benefit for whatever agent you are testing, I believe that PFS should be accepted as a proper surrogate,” Albain maintained. She pointed out that in metastatic breast cancer in particular, it may never be possible to prove surrogacy for overall survival, given the thousands of patients that would be needed.

Albain took it upon herself to conduct a survey, sending out a questionnaire to a sample of 47 experts. She was overwhelmed by the volume and vehemence of the replies. The clear consensus was that PFS should be considered a meaningful approval endpoint. Getting to “the crux of the matter,” Albain’s group suggested PFS should be used in Phase III trials, but maybe it should be prospectively determined how large a benefit is desired. For full approval perhaps two trials should be required, or perhaps there should be a mandatory cross-over design.

Concluding on a high note, Albain issued a charge for the oncology community and for FDA: to challenge the current methods of study design and approvals. “There is no time like the present,” she said.

-- Mary Jo Laffler

GSK’s Promacta at ASCO: Advisory Committee “Show and Tell”

When it comes to finding ways to recruit new members for its advisory committees, the Food & Drug Administration is getting pretty creative.

Having already undertaken various activities to fill vacancies among its expert panels, FDA embarked on the Ultimate Roadshow at the American Society of Clinical Oncology’s annual meeting last week in Chicago: a committee review of GlaxoSmithKline’s eltrombopag (Promacta), a non-peptide oral platelet growth factor for the treatment of idiopathic thrombocytopenic purpura.

As the saying goes, if you can’t bring the candidates to the advisory committee, bring the advisory committee to the candidates. And we’ve got to hand it to FDA: what better opportunity to attract new members then to hold a meeting smack dab in the middle of one of the biggest medical conferences of the year?

FDA has been working to fill advisory committee vacancies for some time—by creating a central database for committee openings and asking medical associations to nominate potential candidates. But there are still more than 100 openings between the drugs and biologics review centers alone. (For a breakdown by advisory committee, check out this chart in the latest issue of “The Pink Sheet.”)

The committee that reviewed Promacta at ASCO, the Oncology Drugs Advisory Committee, or ODAC, currently has four vacancies. Compared to other advisory committees, oncology isn’t doing too badly: the Dermatologic and Ophthalmic Drugs Advisory Committee, for example, has 12 vacancies, and the Anesthetic and Life Support Drugs Advisory Committee has nine.

But the decision to hold Promacta’s review at ASCO is based less on ODAC’s relative need for additional committee members, and more on the vision of the lead oncology reviewer at FDA, Richard Pazdur. (For more on Dr. Pazdur, check out our earlier story in the The RPM Report; those who don’t subscribe can sign up for a free trial.)

Pazdur is quite dedicated to an open, transparent review process. Summaries of ODAC’s meetings, for example, are published in peer-review journals. By scheduling the Promacta meeting during ASCO, oncologists have a “convenient opportunity to observe first-hand the processes and issues that are considered during an ODAC meeting,” FDA says.

With any luck, the agency says, some of those oncology experts in the audience might become interested enough to serve on the committee. Hence, “it can also serve as a recruitment tool.”

Pazdur has done this sort of thing before: Promacta is actually the second committee meeting to be held off-site at a medical conference. At Pazdur’s suggestion, Bristol-Myers Squibb’s dasatinib (Sprycel) for chronic-phase chronic myeloid leukemia was the lucky subject of a committee review during the ASCO conference in June 2006.

We say “lucky” because Sprycel was unanimously recommended for approval, and was quickly cleared for marketing later that month. Likewise, Promacta was recommended for approval by a 16-0 vote, despite concerns that eltrombopag’s marketing plan includes, according to FDA, a risk management program that encourages off-label use.

With a sample size of two—and FDA's final say on Promacta's approvability still outstanding—we suppose it is premature to assume that a cancer treatment would have an easier time getting past an FDA advisory committee held in the midst of the greatest oncology R&D love fest in the world. But it is something to think about.

So far, none of the other FDA review divisions have followed Pazdur’s lead. But it may make good sense. Consider this: the Dermatologic and Ophthalmic Drugs Advisory Committee May 29 review of Sirion Therapeutics’ difluprednate (Durezol) convened with just four voting members. That's a lot of power in the hands of just a few people.

While You Were at ASCO

Plenty of news out of the big ASCO meeting in Chicago this weekend and we've selected a few stories to highlight below. Go here for more ASCO-related press releases than you can shake a stick at.

• ImClone's Erbitux demonstrates good results as first-line therapy for certain lung and colorectal cancers--but good enough to take market share from Genentech's Avastin? Probably not, docs tell the New York Times.
• Two targeted cancer therapies aren't necessarily better than one--in fact, combinations can lessen time-to-disease-progression, the WSJ's Health Blog reports from Chicago. (Lots of great posts from ASCO over at the WSJHB.)
• Infinity's Hsp90 inhibitor IPI-504 (partnered with AstraZeneca) will move into Phase III trials, the company said on Saturday, after data from a Phase I trial of the drug in patients with gastrointestinal stromal tumors confirmed previously seen safety and efficacy trends. The study in refractory GIST patients will begin in the third quarter of 2008. The Pink Sheet Daily has the news.

Photo by flickr user Atelier Teee used under a creative commons license.

Deals of the Week: Kicking Off ASCO

This weekend marks the kick-off of that other highly anticipated biotech event: the big ASCO meeting in Chicago. Appropriately, this week's deal activity in biopharmaland involved several oncology-driven pacts, which we highlight below.

Elsewhere during a short week, the US lost to England 0-2 in a football soccer 'friendly' (the corner kick captured above was among several easily cleared by the English defense) which after a spirited first thirty minutes or so seemed like a foregone conclusion. A lot like if ASCO had released all the abstracts waaaay before the meeting. Wait, they did?

Nevermind, it's time for ...


Takeda/Alnylam: Those groggy from a long Memorial Day weekend woke up to Alnylam's latest non-exclusive technology deal, a $100 million up-front alliance with Takeda Pharmaceuticals in oncology and metabolic disease. Alnylam will also get $50 million in near-term technology transfer payments. Takeda once again illustrates its willingness to spend on new technologies--we took a closer look at the deal and Takeda's recent spate of business development activity, here--and Alnylam once again manages to pull down massive upfront payments for technology it can turn around and license again tomorrow. Takeda also gets first right of negotiation on Alnylam RNAi programs in Asia (excluding ALN-RSV01) should Alnylam look for a partner there. Alnylam gets a reciprocal 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-dev/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.

BMS/Kosan: Not all observers were overwhelmed by the 230% premium BMS shelled out to acquire Kosan yesterday. After all, the biotech boasted a handful of clinical-stage compounds, including the Phase III Hsp90 inhibitor tanespimycin. As we argued here, however, Bristol probably didn't attach much value to Kosan's lead project--and we should note that Kosan itself had put partnering efforts for tanespimycin on the back burner while it looked for a deal for its Phase II epothilone program, not exactly a vote of confidence. The acquisition values Kosan at $190 million, net of its cash pile, not a bad result for a company trading at a valuation on par with the value of its liquid assets. BMS is more likely interested in Kosan's epothilone programs, which also have potential in neurodegenerative disease and were the subject of an insurance policy in the event the acquisition doesn't close. If the deal falls through BMS will license Kosan's epothilone programs and IP for $25 million upfront plus milestones and royalties. BMS has pioneered this class of drug, with its Ixempra franchise, approved last October for monotherapy and combination therapy in cancer settings.

OncoGenex/Sonus: After a seven month struggle to find strategic alternatives, Bothell, WA-based Sonus Pharmaceuticals announced it had found a solution: it would merge with the Canadian drug developer OncoGenex Technologies. The combined company will be called OncoGenex Pharmaceuticals and will be run by OncoGenex CEO Scott McCormack, with bases of operations in Vancouver and Bothell. The combined entity will have have three products in clinical trials, including Sonus’ only remaining clinical candidate SN-2310. Sonus’s share price had been in a tailspin since September 2007, when it became apparent that its lead candidate, the Phase III breast cancer drug Tocosol Paclitaxel, was associated with a greater number of side-effects than the existing breast cancer regimen it was supposed to improve upon. Partner Bayer Schering promptly cut ties with Sonus, and the biotech was forced to lay-off half of its workforce in the aftermath. But the company did have two valuable bargaining chips: its Nasdaq listing and a $29 million cash reserve. Those certainly captured OncoGenex’s interest. The Canadian company had hoped to go public last year, but axed those plans due to poor market conditions. And with just $4 million in cash to support its lead product, OGX-011, currently in Phase II clinical trials for refractory prostate cancer, OncoGenex certainly needed a cash infusion.

Boston Scientific/Cryocor: Well, we’ve been down this path before haven’t we? We go on to suggest that Boston Scientific won’t be acquiring any new companies and then—just to spite us—Boston Scientific goes ahead and makes a deal. So we’re not going to point to the closing of BSX’s acquisition of CyroCor Inc. as anything more significant than it is: a $17.6 million bet on the potentially large atrial fibrillation ablation market. To be sure, Boston Scientific’s recent weight loss efforts have garnered nearly as much attention as Oprah’s. Over the past year, it’s sold off divisions, products or sizable equity stakes related to aortic aneurysm, brain monitoring, cardiac, vascular, drug pump, and hearing loss businesses. But the acquisition of CryoCor pits it against others—including St. Jude Medical—in the atrial fibrillation market. Read more on the area here. A group of CryoCor shareholders were resisting the deal and threatening a law suit, but the deal closed officially this week. Boston Scientific had entered into a collaboration with CyroCor last year to work jointly on cryoablation products. Boston Scientific already had a cryo-therapy balloon catheter while Crycor had the means to deliver the freezing agent, nitrous oxide. Together, the product would ablate or kill tissue near the pulmonary vein, which is seen as a likely initiation site of the electrical misfires that bring on atrial fibrillation. In April, St. Jude paid $92 million to acquire publicly traded EP Medsystems Inc., maker of workstations used in atrial fibrillation procedures.

blurry picture by invivoblogger chris morrison used under a creative commons license

The Message from Euro-Biotech: Still More Dealmaking Flexibility from Big Pharma

Some weeks ago, IN VIVO Blog noted the odd coincidence that stocks of public biotechs who had done major pharma alliances had, on average, fallen since announcing the deals. Things have improved a bit since then -- the median gain, as of last Friday, is zero – but the phenomenon was still much on the minds of dealmakers at this week’s Euro-Biotech Forum in Barcelona. (We’ve updated the chart below).

True, as Genzyme SVP corporate development Stephen Potter noted, many of the biotechs whose shares had fallen since the deal had seen major projects hit clinical speedbumps, if not walls. He noted for example that Isis was down 18% since news of the deal because FDA wanted more data on mipomersen (for more see this IN VIVO article and this blog post) before it approved it in the larger cholesterol-lowering indication it’s aiming for.

OK. But after its initial rocket-launch trajectory, and well before the bad news from FDA, Isis’ stock leveled off at maybe 1% above its its pre-announcement level. That’s because, said Potter, investors recognized that the deal wasn’t as astonishingly rich as the initial press reports bragged. But theoretically it had to add some value, right?

So do deals bleed value from biotechs by taking out of their hands clinical and commercial control? Kinda sorta. It’s at least a concern on the minds of Big Pharma’s dealmakers, if only because it’s a concern of the biotechs with whom they want to do deals. And the result is that deals are going to get richer – in terms of downstream value accruing to licensers.

That will be almost inevitable. Lehman Bros vice chairman Fred Frank, who chaired a panel on project financing, noted that, within the broader biopharmaceutical industry, Big Pharma now has more than 90% of the cash and market value – but just a third of the products in the pipeline. The rest, he said, were in small companies and biotechs. To get back to 10% growth, noted Peter Corr, the former boss of Pfizer’s R&D and now a managing director at project financier Celtic Therapeutics, Pfizer will need to deliver 8.6 new products per year (11 according to Fred Frank).

Meanwhile, with patent life draining out of blockbusters – different Euro-Biotech speakers used different numbers, all extremely large, to describe the cliff (we go with a relatively moderate Cowen estimate: Big Pharma will lose to generics $58.2 billion in US sales between 2008 – 2012) – the capital-rich, pipeline-poor companies will have to make the deals they have to with the capital-poor, pipeline-rich biotech world.

That’s why virtually all the Big Pharma speakers at Euro-Biotech stressed the flexibility of their dealmaking. Jose-Maria Romero, head of late-stage dealmaking at GlaxoSmithKline, rattled off a laundry list of structures the company had used to meet biotech’s needs to retain for investors the downstream value of their compounds (among them: options, pooling of assets, and co-promotion with and without profit-sharing) and to enable it to sign an industry-leading four late-stage deals a year (compared with just one per year for the next five most active companies, he said).

Sharing commercialization rights was hardly a Big Pharma preference but they’re squarely on the table – as are regional deals for players for whom global deals might have once seemed prerequisites, like Novartis, noted Corinne Savill, that company’s head of search and evaluation. Even indication splitting isn’t unthinkable, despite the chances that problems in the data from one company’s trial could affect the progress of the other’s.

Ultimately, indeed, some of the industry’s biggest successes involve shared commercialization and development: the shared products of Roche and Genentech, for example, noted Roche’s head of Surveillance and Analysis Andrew Jefferson, or Erbitux, developed and marketing in North America by ImClone and Bristol-Myers Squibb and in Europe by Merck Serono, noted Gary Buell, that company’s head of search and evaluation.

If joint programs are hardly the most efficient ways to develop drugs, they at least offer a path forward that keeps some control in the biotech’s hands – and gets Big Pharma the assets they desperately need.

Private Equity Goes Public

One of the simplest metrics we have to measure interest in a company or industry is just how jammed the rooms are at the JP Morgan conference. It's there people can literally vote with their feet...and their elbows and shoulders and briefcases and pepper spray (well, not yet) to find a few square feet to take in a company presentation.

So if an SRO presentation reflects strong interest, then this year will be a big one for private equity and health care. (The entire discussion is available here, btw.)

Last week's Private Equity Panel discussion literally could not have been more crowded with every seat, storage container, alcove and appropriate patch of carpet filled by people eager to hear what four sages from the Private Equity World had to say about their own industry and health care.

The conversation was lively and informative, and since no one left early to hit the cocktail parties (the session started at 5 p.m.) we’re guessing those many in attendance found it useful.

Unfortunately, the conversation seemed more focused on the services sectors. This isn’t a knock on the collective wisdom of Madison Dearborn Partners (represented by Tim Sullivan), CCMP Capital (Steve Murray), Welsh, Carson, Anderson & Stowe (Paul Queally) and Bain Capital (John Connaughton). All are well-heeled firms led by brilliant folks. But the firm we really would have liked to hear from was Warburg Pincus.

WP’s sweet spot seems firmly in line with our own: biopharma, devices and everything in between. Of course what moved us to write this is this week’s announcement that Warburg Pincus would spend $239 million to acquire Lifecore Biomedical Inc. The announcement came just after last week’s panelists suggested the criteria for “take private” would be much higher than last year, resulting in a slow down of such deals. “I think the vast majority of the deals done in the last 18 months will have very disappointing returns,” says Queally. “Risk was mispriced throughout the system. So I think it was a great time for public equity investors but not so good for private investors.”

But the panelists drew an important distinction. Murray says transactions aimed at taking a company private “because there was the availability of cheap financing and the other parts we’ll figure out later” will be scarce. But those firms with a plan to turn around or advance companies that have a strategic fit will still happen.

Warburg Pincus generally falls in the latter category. Last year, the firm paid $4.5 billion for Bausch & Lomb and invested $75 million in publicly traded Inspire Pharmaceuticals Inc. In 2006, Warburg Pincus secured a deal with French Orthopedics company Tornier.

IN VIVO Blog expected big things from the private equity industry in 2007 following the Biomet acquisition in 2006. (See our look at the new Biomet here.)


At first, the results were disappointing. Overall private equity dollars being used to acquire device companies dropped from 2006-2007. But the drop seemed far less significant when you realized that 2006 consisted mainly of the Biomet deal while 2007 figures were made of up of several smaller deals, including the Bausch & Lomb acquisition.

What’s going to happen in 2008? The panelists predicted a slow recovery as the private equity industry tries to digest all the companies consumed during the all-you-can-eat-affair of 2007. But we’re a little more bullish on the life sciences front. Warburg Pincus will still find deals. Meanwhile, firms like Avista Capital are identifying spin out opportunities from larger firms like Bristol-Myers Squibb and Boston Scientific. In fact, 2008 is starting with more than $1 billion in private equity acquisitions since Avista’s two deals didn’t close until this month.

Life sciences companies will probably draw much attention from the folks on the panel. “We will not take drug discovery risk,” says Connaughton. “But we love to build companies that help biotech and small and large pharma develop their drugs. But we do not want to take drug discovery risk, we're not smart enough.”

But then again. “We’ve done diagnostics, device and pharma,” says Queally. “It’s almost the nature of the company as opposed to the specific sector. In other words, is a company is going through dislocation? Is it maturing? The device industry over the past few years has matured to the point where they are trying to optimize a portfolio. Pharma is trying to figure out how to focus. All those things are things we bring to the table. If we can get those companies at appropriate valuations we can bring some value and generate some good returns.

“There was a time 10 years ago where every single device or pharma company was trading at 15 times,” he continued. “It’s very difficult given that leverage is a piece of our capital structure to garner that kind of return. But now they have come down and are going through dislocation. I would see a lot of opportunities in upcoming years.”

Well, this would explain why the room was so crowded.

Lesson from the JPMorgan Conference: Exceptions That Prove the Rule

Look both ways before you cross The Street

Roger Longman's earlier post about biotech hype got us thinking about a few conversations we had and presentations we watched last week, the way the financial markets respond to--or don't respond to--the optimism of chief executives, and how sometimes that optimism turns out to be quite warranted.

For example it seems like every year we sit down at the St. Francis on Day One and listen to Celgene chairman/CEO Sol Barer, PhD, promise the world to the room chock-full of investors. This year that promise was more stratospheric growth for the company's blockbuster Revlimid, even in the face of competition from Millennium's Velcade.

And you know what we thought to ourselves this year when a once-again upbeat Barer suggested that "in many ways we are at the beginning of Revlimid's commercialization," then threw up a slide crammed with ongoing or planned studies of the blockbuster and guided that sales at the firm would jump to $1.8 billion from $1.4 billion? We thought well why the hell not? Celgene keeps delivering. Barer didn't even have to mention the company's acquisition of Pharmion to get investors excited; that deal, and Pharmion's products, barely registered during his spiel.

That said, skepticism has to be the default view when countered with the overwhelming optimism that characterizes the hype Roger wrote about last week. And in today's R&D and regulatory climate (the results of which we've well documented) it's relatively easy to be a skeptic. Technologies may be fascinating and drugs may be promising (we heard about our share of fascinating technologies and promising drugs last week, for sure), but in the end most technologies don't end up churning out dozens of drug candidates for one reason or another and most drug candidates themselves fail. That's simply just the way it is.

But then there are the Celgenes of the world. And maybe the Vertexes? We sat down with Vertex Pharmaceuticals CEO Joshua Boger, PhD, at the JP Morgan conference to talk about telaprevir (née VX-950), its leading HCV protease inhibitor. (We won't go into the specifics of the massive HCV opportunity here, but note we've covered the area pretty extensively in the past in this IN VIVO feature and this shorter piece on Vertex's landmark ex-US deal for telaprevir with J&J's Tibotec, among other pieces.)

Vertex's stock has been pummelled by Wall Street in recent months following the interim analyses of its first two large Phase IIb trials of telaprevir last November. Those trials have so far established telaprevir, which is further along than any other experimental direct antiviral in HCV, as a potential breakthrough therapy in HCV. The company's stock fell because even though the interim look suggested the drug would find a place in first line HCV therapy (SVR rate at 24 weeks was 61% in the first trial, 65% in the second), given the confidence Vertex displayed in the molecule's prospects--and the sheer size of that J&J deal--one could be forgiven for thinking telaprevir was going to do better. And then make you a sandwich and wash your car.

And then there are the concerns about the drug's thrice-a-day administration that we have heard from other observers, who suggest that even if Vertex is first to market by a couple years, HCV patients might wait for something more convenient. They've waited for years already, in some cases, why not another year or two?

Boger seemed weary of explaining the fallacy of this argument but gave it a go for us anyway. "There are a lot of amateur market opinions," he said, and people are confusing HCV treatment with HIV treatment: the latter is a chronic, for-the-rest-of-your-life regimen, but the former could be shortened to less than six months with the addition of telaprevir to existing interferon and ribavirin standard of care (currently a 48-week therapy). Vertex's critics "couldn't be more wrong," he said. "This isn't a chronic condition where you take the drugs forever--this is a cure."

Vertex hasn't seen a compliance issue in its clinical trials, Boger maintained, and even if it would be nice to have a protease inhibitor with twice-a-day or once-a-day administration, he said, it wouldn't be as a means to boost compliance. Rather it would be easier to combine a twice-a-day drug with other direct antivirals that could follow telaprevir to the market, such as an HCV polymerase inhibitor.

And as for patients waiting for a better drug, Boger bristled and chalked that up to wishful thinking from competitors. HCV is a case where a drug that makes the first leap in patient benefit will define future drugs' clinical and regulatory pathways, he said, plus take the lion's share of pent-up market demand that will never exist again. "I've never seen a field where the potential of being first to market is this big," Boger said.

Is that more hype? And has Vertex's own hype come back to bite it recently? Maybe, but that doesn't mean they won't succeed with telaprevir. We wouldn't bet against them.

At JP Morgan, Stryker's Big Smile

As he strode to the podium in during last week’s JP Morgan investor conference in San Francisco, Stryker Corp. CEO Steve MacMillan was all smiles. Of course, most CEOs try hard to put on their happiest face at conferences like JP Morgan. But MacMillan—and Stryker—had particular reason to smile.

According to Mike Weinstein’s medtech team at JP Morgan, over the past two years, Stryker has been the second-best performing medical device stock, up 70% over that time. And 2007 was a particularly good year for the company; after divesting its slow-growing—and not particularly core--physical therapy business, the company seems likely to have recorded its seventh straight year of double digit sales growth (final 2007 numbers had not yet been reported by the time of the conference). MacMillan noted that only 14 companies in the Fortune 500 have achieved six straight years of double digit growth, and half of those are retail companies. Stryker’s 2007 year-end sales should reach $6 billion, double what it was five years ago.

Plus, in what was clearly the orthopedic industry’s biggest story of 2007—the settlement of the DOJ investigations into surgeon contracts—all orthopedics companies fared well, but Stryker may have come out smelling best. (See our take here.) Of all of the Big Ortho companies, it was the only one not to have had to pay under the settlement terms, a reward some say for playing a key role in the original investigation.

What next for Stryker? Apparently more of the same. MacMillan cited two priorities going forward: finding opportunities from some recent investments in the company’s sales force and in its R&D, spending on which increased nearly 20% in the past three years over the previous three years, and what he called “a disciplined assessment of potential future platforms.” What does that mean? Not clear. But at last year’s French Orthopedics meeting in February, the hot rumor was a reported acquisition of Smith & Nephew by Stryker. Nothing ever came of those rumors (At least nothing yet, and who knows?) But at JP Morgan, MacMillan himself seemed to suggest that Stryker wasn’t likely to pull off any big deal soon. He said that while Stryker is “opportunistically” looking for new technologies and new deals, the company “doesn’t need to do any deals.” Particularly big deals. Indeed, MacMillan, referring to his relatively recent assumption of the CEO post at Stryker, noted that some CEOs try to make an impact on a company right away by doing a major deal, only to find they’ve done a bad deal. It’s a temptation, he says, he’s strongly resisted and for now at least Stryker doesn’t seem to need.

For more from MacMillan, check out this interview from IN VIVO the Magazine.

Deals of the Week: far from the Westin St. Francis

Attention JPMorgan attendees: we trust you've consumed enough resveratrol to make up for the pickled brain cells. Your steadfast Deals of the Week writer has been keeping tabs from afar and sighing over the gossip missed. (Feel free to drop a line with any juicy conference post-mortems.) Meantime, here's a review of the items you may have missed while talking it up at the Westin St. Francis.

Genzyme/Isis: The deal of the week, and the one generating all the buzz in the Westin hallways and Union Square restaurants was Genzyme's agreement with Isis for the southern California biotech's phase III anti-cholesterol medication mipomersen. As we wrote here, the deal, which included a $325 million up-front, $825 million in development and regulatory milestones, and an additional $750 million in commercial milestones, is a bold statement by specialist play Genzyme to remain an independent entity. Mipomersen, a lipid-lowering compound that targets apolipoprotein B-100, is a weekly injectable being investigated first for the rare, inherited disorder familial hypercholesterolemia (FH). Henri Termeer, Genzyme's CEO, describes the asset in the press release as a “very Genzyme-like product.” No doubt he's also eyeing its possible use in the general population in patients with high cholesterol and at high risk of cardiovascular events who are ineligible for statin therapy.

Pfizer/Tacera: Genzyme wasn't the only company dealing in the biologics space this week. On Monday, Pfizer signed yet another large molecule deal, this time with Tacere Therapeutics for world-wide non-Asian rights to the biotech's RNAi hepatitis C drug, TT-033. (Back in June, Tacere brokered with Oncolys BioPharma for the Asian rights to the same compound.) TT-033 is pre-IND, but that didn't stop Pfizer from agreeing to pay--potentially--more than $145 million in development and commercialization milestones. And that doesn't include the undisclosed up-front fee signed by the two companies. Pfizer has been among the most aggressive of big pharma's biologics acquirers, buying both Coley Pharmaceuticals (vaccine technology) and CovX (antibody scaffolds) late last year, as well as inking licensing deals with Xoma (antibodies) and Direvo Biotech (bioengineered proteins) last fall.

Wyeth/ Mochida Pharmaceuticals: Wyeth was another big pharma betting heavily on a preclinical compound this week. On Jan. 9, the pharma announced a deal with Japanese drug maker Mochida Pharmaceuticals for that company's experimental pain medication, a TRPV1 antagonist. Financial terms were not disclosed, but news reports cited Wyeth paying a one-time payment upon the signing of the contract, as well as milestone payments. In addition, Mochida retains the right to co-develop and market the drug in Japan. TRPV1 antagonists are in vogue within Big Pharma: Eli Lilly and Merck both have compounds belonging to this class in development. As we've mentioned before, Wyeth is not known for its overly aggressive business development team, which prefers early stage licensing deals over major acquisitions. Clearly Mochida's TRPV1 dovetails nicely with such a strategy and adds to the company's pain franchise, which also includes (the recently delayed at FDA) methylnatrexone thanks to a 2005 deal with Progenics Pharmaceuticals. (Though whether the deal can stem some of the pain resulting from last summer's troubles with Pristiq and bifuprenox remains an open question.)

Teva Pharmaceuticals/India: The Business Standard reports that Israel's Teva Pharmaceuticals plans to invest more than $1 billion dollars over the next 24 months buying Indian drug companies and setting up manufacturing facilities. We admit this isn't really a canonical deal of the week, but it does represent yet another example of off-shoring infrastructure, one of our major themes for 2008. (For more, check out the January issue of IN VIVO.) And it's not like this is something Teva is musing about doing. A few weeks ago, Teva acquired over 100 acres of land near Gwalior, Madhya Pradesh, to set up active pharmaceutical ingredient (API) manufacturing facilities that will match the production capacity of India's major generic players Ranbaxy, Cipla, and Dr Reddy’s.

While You Were Going to California

Before the eyes of the healthcare world turn to the overcrowded hallways of the Westin St. Francis, here's a quick roundup of the weekend that was--and it was Quiet. We'll try to post a few missives from the conference while we're here & hopefully we'll meet some loyal readers.

• The San Francisco Chronicle's primer on the JP Morgan health care conference.


• Bad Science has some thoughts on the as-yet-released ENHANCE trial of Zetia, which we wrote about here.


• Reuters reports that Sanofi-aventis is looking for growth in the vaccines market.

Deals of the Week: New Year's Resolutions

It's day four of the New Year and you've already broken that resolution to exercise, eat better, or spend more time with the family. Hey, it's okay. Those are tough ones to keep.

So how about an easy one: tune in every Friday for a run-down of the week's most interesting biopharma deals. It's a quick, easy way to stay on top of the industry's events, leaving more time for the kiddos or the gym, or your blackberry.

Once again, we bring you:

(Aren't you glad we aren't on strike?)

Admittedly, deal-making activity has been lighter than usual this past week. We surmise that's because execs are shining their shoes, amassing their business cards, and honing their laser pointer skills in preparation for the biotech's annual coming out party, aka the JPM conference. (The burning questions: 1. Can a company's success be correlated to its executives' neckwear preferences? 2. What color will the famous tote bag be this year?)

Sepracor/Bial: Specialty pharma Sepracor inked a much-needed licensing deal with Bial on Wednesday for the Portunguese drug maker's Phase III anti-epileptic compound BIA 2-093. (Naturally enough for Sepracor, the drug is an enantiomer, (S)-licarbazepine, a metabolite of an analogue of the off-patent anti-convulsant carbamazepine.) Last year the company lost the bidding war for Kos Pharmaceuticals to Abbott Labs and analysts began raising questions about the company's pipeline beyond its insomnia drug Lunesta. (For more, read here.) Under the terms of the agreement, Sepracor will pay Bial a $75 million up-front fee, plus an additional $100 million in development and regulatory milestones for rights to the compound in the US and Canada. In addition, Sepracor will also file the compound's new drug application with the FDA, which should occur late this year or early in 2009. "Strategically, BIA 2-093 further strengthens our existing central nervous system portfolio, which includes Lunesta for the treatment of insomnia, as well as earlier-stage candidates for various central nervous system disorders," said Adrian Adams, President and Chief Executive Officer of Sepracor in a company press release.

Merck/Addex: In terms of "biobucks", the Merck/ Addex agreement was the week's biggest splash. As we wrote yesterday, the two companies announced an exclusive licensing agreement centered around the Swiss biotech's ADX63365, an allosteric modulator currently in preclinical development for schizophrenia and other undisclosed indications. The deal terms are potentially rich: Addex could see up to $680 million in downstream development, regulatory, and sales milestones, but that would require an unlikely alignment of the R&D planets. Guaranteed money was not quite as generous, but the solid upfront of $22 million for a non-clinical compound does suggest Merck is taking the idea of allosteric modulation seriously, and is roughly an order of magnitude greater than the company's previous discovery deals ... so who knows what a deal around its lead Phase IIb candidate might look like (you'll have to wait til next year to find out). For more on Addex and allosteric modulators check out this profile of the company from the January 2006 START-UP.

Sanofi-Aventis/IDM Pharma: Bad news for IDM Pharma this week. On Monday, the company learned that its partner since 2002, Sanofi-Aventis, would no longer help develop its dendritic cancer vaccine, Uvidem, which is currently being tested as a melanoma treatment. No reason was given for the move, but cancer vaccines have had a tough go in recent months, especially after the FDA required one of the field's leading lights, Dendreon, to submit additional efficacy data for the approval of its immunotherapy Provenge. IDM noted in a release that it will continue to evaluate the Uvidem clinical program, which recently completed Phase II trials "with promising results." But already, restructuring plans are in the works, involving "staff reductions in the Company's workforce and a review of the assets and costs associated with products under development." The news comes just weeks after the biotech issued a press release with updated news about its pipeline and a promise to investigate "strategic alternatives."

Sanofi Pasteur/Crucell: On Thursday, Dutch antibody maker Crucell and Sanofi Pasteur, the vaccines division of Sanofi Aventis, announced they were teaming up to develop next-generation rabies biologicals to be used in association with a vaccine for post-exposure treatment against this fatal disease. Under the terms of the agreement, Sanofi will pay Crucell 10 million euros following the deal's execution; Crucell could receive an additional 66.5 million euros in milestones as well as an undisclosed percentage on sales of the final product if the rabies antibodies pan out. To date, Crucell has developed a combination of two rabies mABs that are well tolerated and provide immediate neutralizing activity in Phase I clinical trials. Crucell expects to enter Phase II clinical trials in the first half of this year. If approved, peak sales of the rabies antibody cocktail could exceed $300 million.

PSA Day 2: Buying into Biologics

AstraZeneca's $15.6 billion acquisition of MedImmune may well go down as the deal of the year. Though it has been described as overly expensive, David Mott, MedImmune's CEO who remains at the helm of the "operationally independent but strategically aligned" biologics business, begs to differ. Think of it this way, he suggested this morning at our Pharmaceutical Strategic Alliances conference: AZ paid 20% of their market cap to secure 25% of its pipeline going forward, a target for AZ's biologics output.

Still, if AZ investors had sticker shock, well, it was a seller's market. Still is. "Fully built biologics capabilities are rare," says Mott. Acquiring MedImmune gave AZ the whole biologics package; it was too late for the Big Pharma to build those capabilities through collaboration.

Building biologics expertise and capabilities piecemeal, says Mott, will be a long, slow and high-risk proposition, thanks in part to the dearth of biologics industry talent in key areas like regulatory affairs.

To get the most out of MedImmune, AZ will have to keep the group at arms length, while at the same time fostering a sort of collaborative independence in R&D as well as sales and marketing between the Big Pharma's traditional small molecule business and its biologics business--which (Cambridge Antibody Technology included) is being transferred in practice if not in geographical terms, to MedImmune.

For example, "juxtaposing the biologics commercial business with a traditional pharma primary care commercial business will help us take the best of both worlds to create a new commercial model" with a lower cost base--something in line with, instead of twice as big, as R&D costs.

Mott noted that the biggest challenge arising from the integration of MedImmune has been subsuming CAT into the organization. "CAT was in a difficult position" after AZ bought MedImmune, having been sidelined only a year after it was itself acquired by AZ to become its biologics arm, explained Mott. Becoming part of MedImmune "was not the vision that CAT had for itself." That said, "what we can do together is actually quite persuasive, and it's striking how non-overlapping" the companies' technologies and strengths really are.

Beyond bringing CAT into the MedImmune fold, the biotech is taking the lead in AZ's venture activities through its own MedImmune Ventures business, as well as ownership of AZ's existing large molecule collaborations and programs such as those with Silence Therapeutics in RNAi and Abgenix in antibody development.

We're taking a look at the state of the industry's biologics efforts in the next IN VIVO.

BIO Security

The BIO annual meeting never ceases to amaze. This year in Boston, the conference drew over 20,000 people. The exhibit hall had the feel of a World Cup soccer event and was as creative as ever with espresso bars and great beers from all over, and Biogen Idec put together a great booklet of places to see and be seen if you decided to leave Shangri La and take a tour of the city.

I found the meeting sessions to be particularly strong in the content department, something I hadn't felt the last time I went in Philadelphia. The policy and regulatory tracks were what I stuck to, and I found myself rarely bored. By the way, Nicolas Rossignol, who heads up the European Commission's division on pharmaceutical legislation, is a rising star. I thought that when I saw him testify before the Senate HELP Committee a few months back, and that perception was reinforced during the follow-on biologics session at the conference. So, all in all, BIO and the conference team deserve a round of applause for putting on such a large and high-level event.

But what was up with the security? My decision to go to the meeting was last minute so I had to register on site. Bad choice by me. No badge, no soup. I was told to go to a side door, take an elevator down to "level zero" and then, "you'll see signs" the guard told me. As an aside, I would love to see the crime rates for the last week in Boston because all of the cops, special forces and snipers were at the convention center. I followed the guard's directions to the letter, but the "you'll see signs" part of it was a lot longer than I expected. You have to travel the entire outside perimeter of the convention center, which looks like the type of place you would get offed in the Sopranos , to get to the registration site. The badges have barcodes and you are scanned into each and every session by people guarding the doors. When did we get to this point? Where's the trust people? The head of FDA's biologics center Jesse Goodman complained that it took him 45 minutes to get into the building and they weren't going to let him in at one point.

Did anyone else have the same feelings as me on the tight security? I would love to hear some anecdotes. I know a few people missed their one-on-ones because of it.

One last note: in San Diego next year, can we please have more coffee stations separate from the exhibit hall? I went through serious withdrawal at one point and didn't have time to make it down to "level zero." Just a thought.