BioSpace BioPharm Exec
Wednesday, January 28, 2009
Off On the Right Hand in 2009

This year's J.P. Morgan Healthcare conference in San Francisco took a sinister turn. When Genentech's Art Levinson took the stage, he pointed out that the DNA helix on the official meeting logo, splashed on every badge, had a left-handed spiral--something that doesn't occur in nature. Oops!

Kudos to Levinson on his powers of observation. But perhaps the meeting organizers were making a symbolic rather than a literal statement. It seems like biotech's corkscrew has been spinning endlessly into the ground over the past year, and the question at this year's meeting, the unofficial kickoff to the life science's Year of the Ox, is whether we're soon going to see change we can believe in.

Certainly at ground level the industry will see unavoidable change. Biotech companies will have to continue to do more with less, and that unfortunately means some companies will probably pursue more "Hail Mary" phase 2 programs that push compounds into pivotal trials before enough is really known about them. The upshot will be more risk pushed onto shareholders who probably don't appreciate the difference between a well-vetted phase 2 program and a quick "shot on goal." And that could in turn increase the perceived risk of drug development and further depress investment dollars, a vicious cycle in the making.

Not that this is unavoidable. Personally, I'd like to see venture capital investment more focused on developing platform technologies and less on leveraging the single-product opportunities that have been so popular over the last few years ...and that again leave shareholders with more risk that I think they typically appreciate. More...

--Karl Thiel

More By Karl Thiel

Elan has lately been making news for what it's not doing. First, it's not in talks to be acquired by Pfizer, according to CEO Kelly Martin. (Shortly after making this claim, however, the company brought on Citigroup to explore strategic options, including a sale or merger.) Second, Elan is not extending phase 3 trials of bapineuzumab, its Alzheimer's treatment. A Bloomberg News report indicated otherwise, which put more pressure on the company's already troubled stock and besieged management. Actually, a lot of clinical news this past month is more about what is going to happen soon rather than what is happening now. A number of key study results are expected over the next few weeks--Intermune's pulmonary fibrosis drug and Synta's melanoma drug, for instance--and an absolute slew of data is expected around mid-year. -KT
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Novartis Corporation (NVS)'s RAD001 Phase II Trial Results Positive in Patients with Advanced Gastric Cancer After Failure of One or More Prior Treatments
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Nobody can accuse the Obama Administration of wasting time when it comes to making political appointments. His cabinet was filled in record time, and it has become reasonable to think that the role of FDA commissioner--often a political afterthought that in the case of former president George W. Bush remained vacant for over two years--will be quickly filled. Indeed, an appointment may already have been made by the time you read this, but as of this writing, media outlets are reporting a very short list and predicting an imminent decision. In Vivo Blog suggests it's down to two names: Baltimore Commissioner of Health Joshua Sharfstein and Duke University researcher Robert Califf. Sharfstein is already working on the team for the Health and Human Services transition, which In Vivo suggests might give him an edge. What's truly remarkable, however, is that we probably won't have to wait long to find out. -KT
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Belgium's Galapagos NV may be named for a place that moves at the slow pace of evolution, but the company has lately been advancing pretty briskly. A big deal with Merck on obesity/diabetes targets was closely followed by an expansion of an existing partnership with GlaxoSmithKline on anti-infectives. And the company recently scored a couple milestone payments under programs with Janssen and GlaxoSmithKline.

Meanwhile, on the less friendly side of the deal-making world, Exact Sciences is trying to fight back against a hostile bid from Sequenom. Given that the money-losing company only has six months of cash left, I'm not sure how wise it is to turn down a deal that represented a 68% premium to Exact's stock price at the time it was offered. But Exact's job is to maximize return to shareholders, and if they believe their patent portfolio or anything else can substantially sweeten the deal, more power to them. They have a good fit with Sequenom, so it's not clear to me there will be other offers in the wings. -KT
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Everyone these days know that money talk is mostly about how to hold onto it. And that thrift is ravaging through the life sciences sector in the form of an unprecedented IPO drought, a lack of secondaries, and slow M&A. Especially hard hit are those companies that rely on the capital budgets of hospitals--most particularly medical device makers. Hospitals get their capital budgets from a variety of sources. Many count on charitable contributions (uh-oh!); some even rely on investment gains (yikes!!). So it's a tough time to be trying to convince a hospital to invest in fancy new gadgets, which has led to soft sales and/or warnings from a broad swath of device companies...everyone from robotic surgery expert Intuitive Surgical to heart catheterization company Hansen Medical to diagnostic and imaging company Hologic. At the J.P. Morgan Healthcare conference, device behemoth Stryker said that over half of hospitals have frozen (or nearly frozen) capital spending altogether. Biotechs can take solace in the fact that pharmacy comes from a different budget, but this is a tough time to be introducing anything that even hints at unnecessary novelty. -KT
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In the final days of the Bush Administration, FDA okayed guidelines allowing drug companies to distribute medical journal articles describing off-label use of drugs. This modest form of off-label promotion is a slippery slope, critics argue, that could lead to unsafe prescribing and give companies less incentive to do the rigorous studies necessary for label expansion. That's theoretically possible, I suppose, but I've never seen the wisdom to any policy based on denying people information. In any case, it will be an interesting test of the Obama Administration to see if this policy is allowed to stand. Congressional Democrats have generally been hostile to any formalization of off-label promotion -KT
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Let the fibromyalgia wars begin! Forest Labs and Cypress Bioscience have gotten FDA's blessing to launch Savella. It will compete against Pfizer's Lyrica--which I've already seen getting more advertising air time--as well as Lilly's Cymbalta. With fibromyalgia being a disease of uncertain etiology and variable symptoms...and with some doctors doubting it even strictly exists outside the mind...companies are likely to count on ad dollars to embolden patients and drive revenue. Cypress is touting a superior label for Savella, which they say is approved to treat a broader array of symptoms than just the pain targeted by Lyrica and Cymbalta. -KT
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Karl Thiel is an analyst for The Motley Fool, a columnist for BioWorld Today, and a contributor to Nature Biotechnology. He lives in Portland, Oregon.

You may contact Karl Thiel at Karl.thiel@biospace.com.

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