BioSpace BioPharm Exec
Wednesday, April 28, 2010
Hurry Up and Wait

Hey, have you heard about that health care reform bill signed last month? We're already seeing some impact on the biotech and pharma industries, just weeks after passage. And the news, it seems, isn't good.

Lilly shocked some analysts when it cut its 2010 revenue guidance by $350 million to $400 million, and added that 2011 revenues will be down $600 million to $700 million, all because of health care reform. It was clear that reform would have an impact, but the magnitude of these cuts was unexpected.

Lilly drew a lot of attention because it was the first major drug company to report earnings since the passage of health care reform. Since then, many other companies have also warned about the hit to 2010 revenues they will take from reform. This includes Abbott Labs (only a little), Johnson & Johnson (more, but not as much as Lilly), Baxter (came as a nasty surprise and wasn't just about reform), Gilead Sciences (about $200 million) and others. More...

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Considering the amount of bad clinical news on lung cancer reported last month (except Abraxis, which is now thinking about putting itself up for sale even as it reports more encouraging data on Abraxane), I have to highlight Arqule's recent phase 2 results on ARQ197. They weren't notable because they were flawlessly wonderful--the six-week improvement in progression-free survival for patients on ARQ197 plus Tarceva versus Tarceva alone wasn't statistically significant, although a subgroup looked better. They are notable because they are good enough to give the company at least a decent shot of success in phase 3, and because before the release, investors had pretty much written the company off. It was trading at only around cash value, and has almost doubled since then.

It's been a good month for other small-cap companies, too. Delcath got a big bounce out of successful phase 3 results on its liver cancer device (which essentially allows doctors to use megadoses of chemotherapeutics that are then cleared out of the blood to cut toxicity). Even Molecular Insight, with creditors breathing down its neck, may have bettered its chances for restructuring its debt with a successful phase 2 cancer results.
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Bristol-Myers Squibb Company (BMY) Compound Potent Against Hepatitis C
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Delcath Systems, Inc. (DCTH) Says Late-Stage Cancer Trial Meets Main Goal
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InterMune, Inc. (ITMN) Reports Top-Line Results From Phase 2b Study of Danoprevir (RG7227/ITMN-191) in Patients with Chronic Hepatitis C
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Molecular Insight Pharmaceuticals, Inc. (MIPI) Mid-stage Cancer Drug, Onalta Trial Positive
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ArQule, Inc. (ARQL) Soars On Positive Lung Cancer Drug Phase 2 Trial
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More Bench To Clinic News
Billy Tauzin left PhRMA having secured a deal on health care reform that should bring the pharmaceutical industry long-term gain, even if many are more focused on the moment on the short-term pain (see Introduction). But who is going to fill his shoes once his resignation becomes effective June 30? The In Vivo Blog opens the flood gates of speculation with a list of rumored candidates and other logical or intriguing choices. Let the horse betting begin!

And Novartis is shaking up its U.S. operations months after a global reorg. In addition to a new CEO, it is getting four new business units: Primary Care, Multiple Sclerosis, Psychiatry/Neuroscience and Respiratory/Transplant/Infectious Disease.
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The PhRMA Search
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Christoph Westphal Resigns as Sirtris Pharmaceuticals (SIRT) CEO, Takes Over GlaxoSmithKline (GSK)'s SR One Venture Arm
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MPI Research to Add 3,300 Jobs Around Kalamazoo, MI
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Novartis, US Operations Reorganizes; 383 Positions Eliminated; CEO, Ludwig Hantson Replaced
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Johnson & Johnson (JNJ) Shows Door to 80 Execs; Most Jobs Cut at Mid-management Level
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More Career Track News
Astellas keeps extending the $52-per-share tender offer for OSI Pharmaceuticals--a hostile bid that isn't enticing many investors to turn over their shares, since the market price for OSI has consistently been in the $56 to $60 range since the deal was announced. Oddly enough, however, while Astellas and OSI are acting all crusty on the outside, they are showing their creamy centers in private: They have reached a confidential agreement that allows Astellas access to some of OSI's proprietary data. What does this mean? Wall Street continues to interpret it as meaning that Astellas will ultimately up its bid, which seems like a reasonable read to me.

Meanwhile, another friendship has unraveled. Javelin was all set to merge with Myriad Genetics but got a better deal--like, a 50% better deal--from Hospira. This just hasn't been Myriad's month.
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Elan Corporation PLC (ELN) Mulls Spinning Off Drug Delivery Unit to Create Two Publicly Listed Companies
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Celgene (CELG) and Agios Pharmaceuticals Announce Global Strategic Collaboration to Advance Unique Science of Cancer Metabolism; Agios Will Receive $130 Million Upfront
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Hospira, Inc. (HSP) and Javelin Pharmaceuticals (JAV) Enter Into Definitive Merger Agreement for Hospira to Acquire Javelin for Approximately $145 Million
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Astellas Pharma Inc.: Won't Raise OSI Pharmaceuticals, Inc. (OSIP) Bid on FDA Move Alone
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GlaxoSmithKline (GSK), Isis Pharmaceuticals, Inc. (ISIS) in Drug Development Deal of up to $1.5 Billion
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On April 22, six new companies completed IPOs. That's the most in a single day since 2007. (There were supposed to be seven listings, but one pushed back a day--otherwise that Thursday would have been the most active day for new listings since early 2006). But what seems like it should be a clear sign that investors are gaining a tolerance for risk once again is tempered by the reception these companies are receiving. Three new biotechs went public this month. Codexis managed to stick to its original range, but priced at the low end. Alimera cut its offering price to $11 from an original range of $15 to $17, while Tengion went out at $5 instead of its originally planned $8 to $10. And none have made very impressive showings in the aftermarket. Tengion is down, Alimera ended its first day dead flat, and Codexis managed a paltry 2% gain. So we continue to have an IPO window that ain't quite open, and ain't quite shut.

Of course, this kind of situation just brings out the macho side of companies that think they have what it takes to get the darn thing unstuck. Amyris filed for a public listing this month, and Nycomed--despite the recention of its COPD drug by an FDA advisory panel--says it's still going ahead, too.
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Codexis, Inc. (CDXS) Announces Pricing of Initial Public Offering
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Tengion Inc. Completes Initial Public Offering
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Alimera Sciences (ALIM) Prices Low IPO
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Amyris Biotechnologies, Inc. to Raise up to $100 Million in IPO
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Nycomed Still Plans IPO
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More Money Talk News

No mystery as to the biggest legal news of the past month...or the past many months, for that matter. It was the surprise ruling in Association for Molecular Pathology v. USPTO...better known to many as the Myriad Genetics patent case. A Federal District Court judge determined that a number of claims in Myriad's BRCA-1 and BRCA-2 patents are invalid, and in doing so basically threw out the entire conceptual basis on which genes have been patented over the past few decades. You can find information and opinion on the decision ad nauseum out there on web. What's still not so clear, however, is what real impact it will have on the industry. There was a lot of talk about the sky falling when the decision was first handed down but, even if it is not overturned on appeal, it's not clear how much impact it will have...even on Myriad. We'll have to watch this one play out.
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Ruling Rejecting Gene Patents Owned by Myriad Genetics, Inc. (MYGN)
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Merck & Co., Inc. (MRK) Loses Patent Ruling Over Zetia
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FDA Proposes New Disclosure Rules For Panels
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Genzyme Corporation (GENZ) Sees $175 Million Payment Over Plant Sanctions
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Abbott Laboratories (ABT) Must Produce CEO's Emails For Probe
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More Legal Briefs News
BioSpace Research Store Building Biotech Technology Transfer Opportunities: Sponsor and developer strategies for success. Understand the driving forces behind biotech tech transfer. Save time and money with the report's succinct compilation and analysis of current biotech tech transfer trends. Understand the reasons behind biotech tech transfer success and failure. Develop strategies to optimize biotech tech transfer methodologies and protocols. Learn how biotech tech transfer will evolve over the coming years and why. More... Datamonitor American Academy of Neurology 2010: New Treatments Address Unmet Needs In Alzheimer's And Epilepsy. A number of leading drug makers used this year's meeting of the American Academy of Neurology to present new data for promising pipeline candidates. Despite promising results, however, Datamonitor believes that the epilepsy drugs will struggle to find their place in the market. Moreover, the positive Phase II data for Baxter’s potential Alzheimer’s therapy Gammagard do not guarantee later success. More...
What is it with FDA? They're either all 'yes' or all 'no,' it seems. April may not be the cruelest month the agency has in store for industry, but it and its panels were kinda negative all the same. No to Acura and King; no to Forest Labs and Nycomed; no to Cell Therapeutics. Moreoever, it's moving closer to saying 'no' on things its said 'yes' to in the past: FDA is considering halting a head-to-head safety study comparing GSK's Avandia to Takeda's Actos, which could result in the drug being pulled from the market. Luckily for Amylin, the agency's ongoing concerns about Byetta's thyroid cancer risks point at worst to a black box warning--something that doesn't come as a great surprise.
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US FDA Panel Rejects Acura Pharmaceuticals, Inc. And King Pharmaceuticals®, Inc.'s Painkiller Acurox
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FDA Mulls Killing GlaxoSmithKline (GSK)'s Avandia Safety Study
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US FDA Panel Rejects Forest Laboratories, Inc. (FRX), Nycomed Lung Drug
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Novartis Pharmaceuticals Corporation (NVS) Receives US FDA Approval for Zortress(R) to Prevent Organ Rejection in Adult Kidney Transplant Recipients
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Roche (RHHBY), OSI Pharmaceuticals, Inc. (OSIP) Win U.S. Approval for Wider Tarceva Use
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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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