The folks over at the In Vivo Blog will soon be announcing their "Deal of the Year" in the biotech/pharma sector (you can scroll back over there to see the various nominees). But they could just as well run the competition in reverse, and award some retroactive Bad Deal statues based on what's been happening recently.
One of those might well go to the 2003 deal in which Pfizer paid over a billion dollars in to acquire Esperion and their Apo-A1 Milano lipoprotein. If you've been following the cardiovascular field for a few years, you'll remember the big press that this got. The Milan variant of the protein seemed to be quite effective at reverse cholesterol transport - just typing that phrase takes me back a few years, to be honest. The hope was that periodic treatments might flush the arteries out and avert atherosclerosis.
And there things seemed to stay, hung up in that "promising therapy" zone. At the time, Pfizer was going to be the biggest thing ever in cardiovascular, what with Lipitor, with their CETP inhibitor torcetrapib, and with Apo-A1 Milano coming along at the same time. That dream is a pile of wreckage now, of course - Pfizer has de-emphasized the whole area. Esperion itself was spun back out in 2008 as a much smaller operation, minus the lipoprotein it came in with, and now Apo-A1 Milano itself has been sold off to The Medicines Company. For $10 million up front.
Yep, Pfizer gets $0.01 billion back from its $1.25 billion investment - well, more if things work out, but you'd have to think that most of that money is just gone. But I can't really say that this is just Pfizer's own problem, or just their own folly. This sort of thing can happen to any organization, and the larger it is, the more likely it is to make some sort of Big Move which then sends it falling down the stairs. After all, if you're trying to affect the future of a huge company, you have to do huge things, right? And these huge things take on a momentum of their own - witness another Pfizer disaster, Exubera. That inhaled insulin was going to be a billion-dollar drug, no question about it, and no one could tell the company any different. Well, except their customers.
But again, I don't see these things as coming from some particularly Pfizery mindset. Any other drug company of that size would probably have done things equally catastrophic, and as they get larger, the others surely will find their own open manholes to step confidently into. Since this is the first post of the new year, here's a resolution I wish the industry would consider: no big mergers in 2010. No gigantic sense-of-urgency do-this-deal-now productions, please. Let's try to do what we do better, rather than just do more of it.
1. RB Woodweird on January 4, 2010 10:19 AM writes...
Were there individuals in Pfizer who were rewarded for engineering this merger?
Were they punished for its failure?
If yes and no, what makes us think that anything will change?
Permalink to Comment2. NJBiologist on January 4, 2010 12:42 PM writes...
When he left PDWL to form Esperion, I remember hearing that he was complaining loudly about how he had to start Esperion because PDWL executive management was so incredibly risk-averse. There's some irony for you....
Permalink to Comment3. anon the II on January 4, 2010 1:02 PM writes...
I'm thinking the GSK purchase of Sirtris should get one of those Bad Deal statues.
Permalink to Comment4. hammerhead on January 4, 2010 1:30 PM writes...
Permalink to CommentI am not sure about this but does anyone knows the fate of Merck's deal with SiRNA? I mean did anything meaningful came out of it? If it did not then this must be the biggest bad deal.
5. Sili on January 4, 2010 1:56 PM writes...
Sounds like another argument for smaller businesses: you don't need to bet quite as much to make a significant profit relative to your size.
Of course, that leaves out the presumably pretty much level cost of trials irrespective of drug. It would be nice if there was a cheaper way of testing drugs for 'rare/unprofitable' conditions.
Permalink to Comment6. Barry on January 4, 2010 2:25 PM writes...
Alas, the proposed moratorium on mergers was stillborn. Novartis has bought Alcon: http://tinyurl.com/yz3kew2
Permalink to Comment7. Hap on January 4, 2010 3:42 PM writes...
I think it's RBW in one. If you keep getting rich by costing your company billions of dollars and it costs you nothing to do so, why are you going to stop? By the time you've bankrupted your company, you'll "be on a beach, earning 20%".
This may be stupid/uninformed, but has the "buying your way out of trouble" method of revenue generation had much success yet (has it managed to generate more revenue for companies than it cost them in cash)?
Permalink to Comment8. RTW on January 4, 2010 4:17 PM writes...
2. NjBiologist -
At the time Roger left WL/PD (WL was the parent company BTW) Lipitor was just starting to show promise. PD management at that time had no idea that it would become what it is today (in fact didn't even think it could compete with Zocor), and in the few years leading up to the deal with Pfizer to co market it, tried every thing they could to discourage Roger's research at PD. In the end for all intensive purposes he was forced out prior to the takeover of WL by Pfizer.
So today Roger is laughing all the way to the bank. He has lots of money a smaller version of Esperion that I have no doubt he will be able to build up sell again.. And is a leader in Biotech circles in the Ann Arbor area. Talk about a Pheonix rising from the ashes!
Permalink to Comment9. Jose on January 4, 2010 5:21 PM writes...
"And is a leader in Biotech circles in the Ann Arbor area."
I'm the KING of this here shrinking rain puddle and don't you forget it!!!!!
(apologies to all involved. Couldn't resist.)
Permalink to Comment10. Advocatus Diaboli on January 4, 2010 5:54 PM writes...
So is the 'cholesterol' hypothesis of atherosclerosis still good? LOL..
Permalink to Comment11. S Silverstein on January 4, 2010 9:06 PM writes...
One cannot fault Pfizer for taking a chance. If, lacking a retrospectoscope, it was a reasonable gamble, all things considered (i.e., good due diligence, critical evaluation, etc.) then that's the way it goes. You win sometimes, but most of the time you lose in the business.
What concerns me is the talent mismanagement and organizational pathologies that reduce the number of excellent (metaphorical) chess players in the game of drug acquisition and discovery.
Permalink to Comment12. LFreeh on January 4, 2010 11:20 PM writes...
I see your new year's resolution and psychology is to come at and hit Pfizer harder and frequently. Great forward movement indeed, eh.
Permalink to Comment13. Chrispy on January 5, 2010 12:02 AM writes...
Anyone in this business long enough has seen the same thing happen again and again: small, innovative shops are purchased by larger ones which (for whatever reason) have stifled creativity. The small ones dissolve or become dysfunctional, and the great idea turns out not to be so great.
We've also seen a lot of in-licensed drugs which went really well. Churn in this industry is a healthy sign, even if super bad buys (Sirtuis gets my vote, too) pollute it a bit. It is what makes the small shops worth starting.
Permalink to Comment14. Ted on February 12, 2010 10:35 AM writes...
Considering what Pfizer made on Lipitor by keeping Apo-A1 Milano off the market for these years, I'd say it was a pretty good deal for them. And had it succeeded with Torcetrapib succeeded, it's a pretty good bet they'd still own Apo-A1. As it now stands, if Apo-A1 performs as early tests indicate it will, Pfizer stands to recoup this investment as well.
Permalink to Comment15. gsehgal on June 4, 2010 12:34 PM writes...
I am a patient with premature coronary artery disease, came upon your site searching for Apo A1, could anyone tell me the future of this drug and if there is any clinical trial underway?
Permalink to CommentThanks in advance.
16. Butch on September 9, 2010 9:52 PM writes...
How telling to read comments that focus primarily on the business, rather than the potential of the drug to do enormous good for those facing the number one killer - atherosclerosis. That's the problem in giving corporations control over development of critical drugs.
Permalink to Comment17. ItsAcrime on April 17, 2011 8:20 AM writes...
I am in Butch's camp completely, and am saddened by the financial bias of this report. I was upset with the Esperion purchase, and my gut told me then that this drug had no chance of ever seeing the light of day. Just another "lock and key" of a promising discovery more beneficial to people than to big business.
Permalink to CommentIf we could de-fund the FDA, and eliminate patent squatting...I feel more alternatives would be available, at dosages in line with the bodies needs... not this tax payer funded jury that approves over-dosing to meet benchmarks.
Currently travel is the only way to obtain treatment choice for some, and there are even legal blocks to out of country medicine purchase...even it it's the same medicine you are currently on. So much for free markets.
The health industry has made some strides, there's no question about it...but there are instances where it appears we are victims to road blocks toward marketing cures. Is it possible that todays current "treatments" are just too profitable?
18. bob on June 29, 2011 1:45 PM writes...
actually they paid 48 million to protect their 5 billion a year lipitor profit. It works and another canadian company is now making in from gm safflower and also was tested by cedar-sinai group with the same results…only thing ever to show lumen opening.
Permalink to Comment19. bob on June 29, 2011 1:54 PM writes...
link
http://www.sembiosys.com/Docs/ACC.10_Abstract.pdf
Permalink to Comment20. FS on October 23, 2011 7:41 AM writes...
It sounds like Pfizer is killing people by not making A1 Milano available to all. They bought it to squash it, leaving people to die of heart disease. When this drug could literally "wash away" build up in the arteries.
Permalink to Comment21. Eric on February 4, 2012 7:22 PM writes...
There is a bit of work going on in the apoa-1 world whether its wild type or the Milano mutation.
In terms of apao-1 Milano, I am only aware of the
Medicines Company and Cardigant Medical working with Milano. Sembiosys is producing the protein but I am not aware of them actually using it clinically although they did just sign a deal with a Chinese pharmaceutical company.
As far other forms of apoa-1, the farthest along in development is a private company known as Cerenis. They are in phase II trials using the wild type sequence of apoa-1.
CSL a large Australian pharmaceutical company is in phase I for plasma derived HDL.
Resverlogix is a small molecule compound that increases the endogenous expression of apoa-1, currently in phase II.
I would say that there is decent activity in the HDL based therapeutics world, but like anything in the pharma/biotech arena, takes time... and money.
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