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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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February 15, 2013

Pfizer's Covx Closing?

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Posted by Derek

A Friday night blog entry is a rare event around here, but I've had a report that Pfizer has been closing down their Covx unit in San Diego today. It is (or was) the peptide therapeutic part of the company. This makes this part of the Pfizer web site a bit. . .inoperative:

CovX and Rinat are two biotechnology companies acquired by Pfizer that are currently operating as independent units within Worldwide R&D. This operating model allows CovX and Rinat to maintain their unique cultures and scientific approaches while having full access to Pfizer's world-class capabilities and resources.

So much for that. Can anyone confirm the report?

Comments (35) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Carlos Barbas on February 15, 2013 9:27 PM writes...

Yes, as the original founder of CovX this is very sad news.

Permalink to Comment

2. Anonymous on February 16, 2013 12:43 AM writes...

Yes, it is indeed true, unfortunately.

Maybe Carlos can add something about what happened. Did the drug not work in clinical trials, was is Pfizer politics?

I heard that Pfizer sued Scripps sometime back for reasons related to this.

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3. Anonymous on February 16, 2013 12:53 AM writes...

Interestingly, I had dinner with a colleague who mentioned that Carlos's share from Pfizer's buyout of CovX in 07 was close to $ 200 million - can you confirm Carlos?

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4. Inside-Out on February 16, 2013 2:44 AM writes...

There were certainly no law suits between Scripps and Pfizer regarding CovX. CovX was regarded as a model within Pfizer and several drugs are progressing in the the clinic based on the CovX technology and several more are still expected to enter the clinic. It's perhaps more surprising that Pfizer left the company intact for 5 years after the acquisition. Most of the key leaders at CovX had already left. The site closing is strategic like the tragic Sandwich closing. Unfortunately, I don't believe Carlos made anywhere near $200 million. We can only hope that all the employees of CovX strike out to form more successful biotechs in San Diego. We could use them.

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5. Carlos @ LacertaBio on February 16, 2013 7:59 AM writes...

This is exactly why we always cringe when an acquisition is announced. While the "Fierce" press vicariously celebrates the millions made by a few lucky shareholders, the rest are left without a job...in a community that finds itself with a few more unemployed people. Take a look at the MAP deal from a few weeks ago. Is MAP going to remain intact? I have my doubts. What happens then? Where do they go? How many of them can start new companies? Troubling...

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6. SteveM on February 16, 2013 9:32 AM writes...

Gentle advice for double posters. Click the Post button just once and then immediately move to another tab and read something else for 5 minutes. Or get a cup of coffee.

Things that work for me...

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7. entropygain on February 16, 2013 12:04 PM writes...

Confirmed by PFE officials via Fierce.
BTW - Fierce gives Derek credit for breaking the story
http://www.fiercebiotech.com/story/pfizer-shuttering-covx-research-unit-san-diego/2013-02-16

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8. marcello on February 16, 2013 1:39 PM writes...

It's like typhoid... another company I interviewed with (but luckily did not get the job) that is biting the dust

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9. Pfizer Kid on February 16, 2013 2:44 PM writes...

you are going to get PFIRED!

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10. SteveM on February 16, 2013 7:39 PM writes...

Re: #9 Pfizer Kid and "Pfired"

I remember carved into a bathroom stall in the library at college, "Phuque Physics!".

P.S. Parenthetically, below that was carved, "Free Palestine!"

P.P.S. and below that was, "In every specially marked box of Wheaties!"

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11. Ammonite on February 17, 2013 1:40 AM writes...

Sad and surprising. They have been on the road presenting a story of doubling down on peptides at CovX. And hired a new head of research from Ferring with a great background in niche peptide products. Yet another Pfizering casualty. It is unconscionable to screw up people's careers this way - to tempt away from a good position in another company, then dump you within a year, or even just a few weeks (cf siRNA at Cambridge).

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12. Bradley J. Fikes on February 17, 2013 4:58 PM writes...

Kudos to you and Fierce Biotech for this story. As the biotech reporter for U-T San Diego, I've found it pays to read your site closely -- even on Friday evenings or the weekend. Do you ever sleep?

Permalink to Comment

13. Harry on February 18, 2013 11:43 AM writes...

I've actually gotten numbed to this sort of stuff. Over the last ten years or so Pfizer single-handedly eliminated most of my pharma customer list.

For a while there it seemed as if they were actually stalking us, as about the time we'd get into a good working relationship with an R&D group or facility, Pfizer would come along and extinguish it.

I suppose some sort of consolidation was inevitible in the industry, but Pfizer did enormous damage.

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14. Dr. Manhattan on February 18, 2013 4:43 PM writes...

Anyone have an estimate of the total number of Pfizer employees laid off since 2001? I am guessing it is closing in on 75,000+?

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15. Pfired on February 18, 2013 8:04 PM writes...

I work at the CovX site.

I can confirm, yep, everyone got Pfired.

Last friday, Michael Dolstein walked in and said that the site was shutting down. The reason was simple: lots of investment, little return (1 year into projects and expecting return?). Then he walked out. We have 3 weeks before the site is shut down. March 8th is the final day.

Honestly, the group here is fantastic. I will very much miss the culture and people that I have had the honor to work with for years.

On the flip side, I am glad to not be under the thumbnail of the wasteful mess that is Pfizer.

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16. Notyourpfault on February 18, 2013 10:57 PM writes...

It's funny how often we hear about this or that team's pride in their "unique culture," and how it sets them apart from the idiotic blue drones who pay the bills for their cutting edge science. Maybe collective disconnection and pomposity make corporate amputation easier?

His name is Dolsten, not Dolstein.

Just sayin' is all.

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17. FarmaBiz on February 18, 2013 11:01 PM writes...

It looks like the technology/candidates will move on. Perhaps PFE figured out that this was mined out, a money sink and time to put the resources somewhere else. There seems to be this misconception that every research group needs to last in perpetuity or it is a disaster. Drug development is like Oil/Gas & mining. You put some well reasoned test runs in place and then mine out the big hits. Dry holes and mined out areas need to be abandoned and exploratory resources re-assigned.

Permalink to Comment

18. rogi on February 19, 2013 7:43 AM writes...

#17. FarmaBiz
I rarely post and even more rarely flame ignoramuses like yourself. I presume by your moniker that you are in the business end of "Farma". By using the allusion that.... "Oil/Gas and mining. You put some well reasoned test runs in place and then mine out the big hits..." Up until 7 of 8 years ago, Chicken Little's'" like yourself were proclaiming that the US was running out of energy (oil/gas). May I introduce you to the old (but newly rediscovered and technologically improved upon) fracking techniques of horizontal drilling. The oil/gas industry applied their efforts to extract both from tight oil/gas shale regions in Texas, Louisiana, North Dakota and Pennsylvania. Unfortunately, big Pharma and narrow minded twits like yourself (please, don't feel singled out; I have had the misfortune to interacting with many bean counters and MBA's like yourself) do not realize that Covex is a new paradigm and until the tools are refined enough in the biotech end of things, there will be slow and incremental progress in biologics drug development. Companies like Pfizer remind me of the aliens in the movie "Independence Day" where the President of the US, upon personally "mind melding" with one of the captured creatures, understood that they were cosmic locusts, sucking the resources out of planets (other BP and biotech firms). Pfizer needs to be nuked.

Permalink to Comment

19. FarmaBiz on February 19, 2013 12:48 PM writes...

#18. rogi
Flame away. I had Nomex ACU fused to my skin long ago. Comes with the territory I work in. I did say "Perhaps..." and it could be perhaps not. As for fracking, tar sands, and most "green" energy, they are operationally enabled technologies. That is they need a operating environment to support them as in $90/bbl oil. As soon as the price drops, so does the activity. In contrast is ProCellEx® which would be a operationally creating technology (the preferred version, they fundamentally create a better operating environment). The work by Amgen and Genzyme in continuous flow biologics manufacturing (right out of the steel industry playbook) is in the same vein. For CovX, one would swap efficacy for cost in terms of a creating technology. So what is it about their technology/candidates that justifies clinical progress that exceeds the WACC and ROI hurdles? If the answer is, "don't know yet, still refining" then let's just say that. I have advocated that a certain R&D spend go for just such a situation as a rule - think of it as internal corporate "NIH" matching funds - so no "accounting" person can push a closure based on the lack of financial metrics. But only a certain number of programs can be supported this way, so there needs to be some evaluation metrics. As for nuking Pfizer, it would be better to agree that the CovX buy was a mistake, and they should have done a licensing deal to support the work for what it is (a longer term project) and not get it caught up in the "what has your headline pipeline progress/spend done for Wall Street lately" trap.

Permalink to Comment

20. Hap on February 19, 2013 1:35 PM writes...

"Rational allocation of resources" would be a reasonable explanation if the "buy, eat the heart of, take IP, either deliver drug or (mostly) fail, wonder what is next" routine hadn't happened rather often and done little for anyone (Pfizer, its shareholders, its employees, employees of the bought firms, patients, doctors..) other than VCs and firms in charge of buyouts (and perhaps, the upper executives of the bought firms) and the unemployment rate. Also, rational resource allocation would imply that you have a reasonable guess at where to spend money (or how much to spend) on research and that eventually you will produce your own drugs more efficiently. If that were the case, Pfizer probably wouldn't be buying as many companies as it does, or laying off employees from companies that did find drugs.

Permalink to Comment

21. bbooooooya on February 19, 2013 5:08 PM writes...

"do not realize that Covex is a new paradigm "

1) It was CovX......

2) Was it really a "new paradigm", or just a clever way to attached small molecules to antibodies?

I actually think the fossil fuel/drug discovery analogy is apt. Of course, my mind (weak as it always has been) has likely suffered ill of acquiring an MBA. You should see the pie charts I make, though!

Permalink to Comment

22. Anonymous on February 19, 2013 6:10 PM writes...

Wait a second. The CovX "new paradigm" is to attach a bioactive peptide (oxytocin, growth hormone, leptin, insulin, etc) to some antibody and hope it does the same job but becomes more stable, active, bioavailabe etc.
So for me the real scandal here is not why Pfizer shut it down but why did it buy in the first place ? Sirtris ordeal looks very sane in comparison. What am I missing here?

Permalink to Comment

23. Anonymous on February 19, 2013 8:11 PM writes...

It is no surprise to me. The shutdown is a sure thing when Pfizer bought another company. It is just about the time when the shoutdown happened. Sorry for those impacted, but that's the reality

Permalink to Comment

24. Drughunter100 on February 19, 2013 9:01 PM writes...

#17: FarmaBiz
It sounds like that biotech executives shall just give pharma managers a hope of finding hit rather than give hit itself? This strategy may just work out fine if pharma management changes every 2-3 years...

Permalink to Comment

25. Anon on February 20, 2013 12:43 AM writes...

Fierce has it right"Over the past few years Pfizer has been slashing deep into its R&D budget. Overall research spending dropped from $9.4 billion in 2010 (after the Wyeth acquisition) to $7.8 billion in 2012, ending the year at an adjusted $7 billion annual burn rate. Pfizer estimates that it will spend $6.5 billion to $7 billion on R&D this year. In addition to laying off thousands of investigators in the U.K. and Connecticut over that period, Pfizer has also been applying the ax to smaller operations. Just days ago the company announced plans to close a research center in Singapore. But a spokesperson for the company emphasizes that any new cuts occurring in R&D aren't aimed at reducing the overall amount spent on the research division, which will now operate with a stable budget."

As for the CovX technology, several drugs show favorable signs in the clinic. And more will enter the clinic after the site closure. Far more promising than RNAi to date and Sirtris never got that far and may have been fraudulent- but time will tell.

It was only in the last year when CovX strayed from its original technology (and focused on traditional peptide drug approaches) that it fell behind in delivering clinical candidates. The original CovX technology is already established in Pfizer at large.


Permalink to Comment

26. reality on February 20, 2013 8:37 AM writes...

@25 If by established, you mean still exploratory and not at all established, I agree completely.

Any technology with that high a COG has no chance in today's environment. ADC are bad enough.

Permalink to Comment

27. Doug Steinman on February 20, 2013 10:23 AM writes...

Another example of THE SUITS (the MBA's) running amok and ruining people's lives. And, it will not change until management at Big Pharma gains at least some understanding of what doing drug research is all about. I found, during my 40 years in the pharma industry, that management generally was clueless when it came to understanding the science behind drug research and they couldn't care less. All they understand and care about is the bottom line of making money for themselves and for the company. They don't care about patients or advancing medical care. As for the scientists who do the research, they view them as nothing more than highly trained and expensive monkeys who are eminently disposable. I would compare the pharma industry of today with the steel industry of the late 20th Century. They didn't properly adapt to changing markets and conditions and tried to survive by cutting jobs and shuttering plants but, in the end, they basically died. I don't think that the pharmaceutical industry is going to die but I do think that the days of seeing major medical advances coming from Big Pharma are over. Bruce Springsteen wrote, "These jobs are going boys, and they ain't coming back." Sad but true, even though he was not referring to the pharma industry.

Permalink to Comment

28. Face reality on February 20, 2013 10:33 AM writes...

As a healthcare investor who reads this blog and others out intellectual curiousity I find the whole 'whoa are we, big company X bought us/our scientific brothers and is now destroying the culture, they have no understanding of science' mantra kind of old. This is the biopharma industry's standard play book and it has been for at the last decade. It's the same in med tech or even real tech. You can't pretend like this is some new phenomenon that you didn't know about or understand and constantly whine about it. It's tired. Accept the reality of the business world, this is the industry you work in or go back to academia and fight for tenure and grants. Or better yet - become an entrepeneur, start your own company, sell out and never work again.

Permalink to Comment

29. bbooooooya on February 20, 2013 11:19 AM writes...

"Another example of THE SUITS (the MBA's) running amok and ruining people's lives."

So why don't scientists run pharma companies? If they're smarter that THE SUITS, wouldn't that make sense for investors?

FWIW, with the experience of both a PhD and an MBA, I do think scientists are smarter than MBAs, I'm just not convinced that they could run a business.

Permalink to Comment

30. Doug Steinman on February 20, 2013 11:51 AM writes...

@29
I agree with you that the scientists probably could not effectively run the business. However, if the people who do run the business respect and listen to the advice of their scientists maybe the pharma industry would be in better shape. It's not necessarily a matter of being smarter or dumber, it is a matter of seeking out the best advice, admitting that you don't know the answer to everything and then acting on that advice.

Permalink to Comment

31. Anonymous on February 20, 2013 12:07 PM writes...

I also find this continual 'THE MBAs RUINED MY LIFE WAH WAH WAH' guff tiring and pointless. There are plenty of incredibly useless (and staggeringly well-paid) mid-career scientists milking the cow of pharma and producing zilch along the way.

Permalink to Comment

32. Former Med Chemist on February 20, 2013 2:35 PM writes...

Anon 31,

The first blockbuster drug was nearly derailed by people who did not believe you could make money if surgery was an option. Only turning the the program into a black op (forgive me, Sir James) saved it from the MBA's.

In 25 years in the industry, I only had the good fortune of 1 compound go all the way through to commericialization. Sorry for being so useless.

How many therapies have the MBA's discovered?

Permalink to Comment

33. entropyGain on February 20, 2013 2:53 PM writes...

@29
Ummm... When scientists ran pharma companies they worked. Think Merck under Vagelos; Genentech under Levinson.

What's the difference between pharma and high tech?
High tech had Jobs; has Brin & Zuckerberg-- technocrat CEO's.

Why are programmers/engineer's heavily recruited and viewed as competitive necessities in high tech, while med chemists have become the migrant laborers of Pharma?

I think the root of pharma's woes are in these questions.

Permalink to Comment

34. Dr. Manhattan on February 20, 2013 7:19 PM writes...

"So why don't scientists run pharma companies? If they're smarter that THE SUITS, wouldn't that make sense for investors?

FWIW, with the experience of both a PhD and an MBA, I do think scientists are smarter than MBAs, I'm just not convinced that they could run a business."

P. Roy Vagelos, Daniel Vasella....

Permalink to Comment

35. Dr. Sciensuit on February 21, 2013 7:37 PM writes...

Re: scientists running companies; mostly because the people who own the companies (investment funds & analysts) predominantly employ MBAs and finance degrees and everyone likes to be around other people most like themselves so they demand company management (the people with whom they most often interact) be MBA/finance-types as well.

To some degree I can't blame them. After working in both science and finance, I can confidently say that scientists often don't understand the reality of shipping product to pay for their salaries. Right now I'm trying to convince a graduate student to just write his dissertation and stop doing experiments that don't change his thesis and I'm not winning the debate. You can always argue for "more research and more funding" but it's hard to argue for less research and more sales to a scientist.

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