About this Author
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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Category Archives
November 20, 2009
Posted by Derek
So, according to this report, Merck is scouting out locations for a UK facility. No word if it's supposed to have a research component, but. . .as a correspondent points out, if only there were a large research campus that they could somehow get their hands on, convenient to both Cambridge and London, with all the facilities they might need. . .hmmm. . .
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November 11, 2009
Posted by Derek
Or perhaps one should wait until spring - it's the wrong season for high-nitrogen mixtures to be applied:
Speaking at the Reuters Health Summit on Wednesday, Kindler said Pfizer has melded and reshaped its research and development facilities within 20 days of buying Wyeth on October 15. With previous huge mergers, he said, that process had taken "literally years."
. . .Swift reorganization of the two companies' research operations stands in contrast to "the distractions, the disruptions and the delays that have plagued mergers of our company and others in the past," Kindler said.
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Posted by Derek
With the waves of layoffs going on, and all the nasty structural changes we're seeing in this business, it's easy to start feeling a toxic combination of fear and despair. And while I understand that, I'm going to try to briefly argue against it.
(1) I think that, in the years to come, that people are most definitely going to need medicines. And by that, I mean new ones, because there are a lot of conditions out there that we can't treat very well. As the world gets (on the average) older and wealthier, this need will do nothing but increase. In many cases, pharmaceutical treatment is cheaper than waiting and having surgery or the like, so there's a large scale cost-saving aspect to this, too.
(2) I also think that many of these medicines are still going to be small molecules. Now, biological products can be very powerful, and can do things that we can't (as yet) do with small molecules - mind you, the reverse is true, too. And I think that biologics will gradually increase their share of the pharma world as we find out more about how to make and administer them. But it is very hard to beat an orally administered small molecule for convenience, cost, and patient compliance, and those are three very big factors.
(3) What we're witnessing now is a huge argument about how we're going to make those small molecule drugs, where we're going to make them, and who will do all those things. And it's driven by money, naturally. We don't have enough new products on the market, which means that we have to sell the ones we have like crazy (which leads to all sorts of other problems, legal and otherwise). At the same time, we're having to spend more and more money to try to get what drugs we can through the whole process. These trends appear unsustainable, especially when running at the same time.
(4) But as Herbert Stein used to say, if something can't go on, then it won't. Right now, the only way out that companies can see is to cut costs as hard as possible (and market as hard as possible). Those both bring in short-term results that you can point at. Long-term, well. . .probably not so good. But in that same long term, we're going to have to find better ways of discovering and developing drugs. If we can improve that process, the fix can come from that direction rather than from the budget-cutting one.
(5) And those improvements don't have to be incredible to make a big difference. We have a 90% failure rate in the clinic as it stands. If we could just work it to where we only lose 8 out of 10 drug candidates, that would double the number of new drugs coming to the market, which would cheer everyone up immensely.
(6) The questions are: can we improve R&D in time? Can we improve it with the resources we have? I think that the demand (and thus the potential rewards) is too great for a solution not to be found, if there's one out there. And we still know so little about what we do that I can't imagine that answers aren't out there somewhere. Who's going to find them? How long will it take? Where are they? I've no clue. But that looks like the way out to me.
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Posted by Derek
In an attempt to get the story out to a wider audience, I have a piece up at The Atlantic's Business site on the Pfizer layoffs, the J&J layoffs, and what's happening to the traditional expectations for the way research is done. This is going to be a long process, though, and I keep wondering if we're still just in the early parts of it. . .
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Posted by Derek
A reader who's (unfortunately) in a position to know the details sends along some numbers on Pfizer's chemistry shakeout. According to his figures, Pfizer (pre-Wyeth merger) had about 900 chemists. The Wyeth deal brought in about 350, but no one expected the merged department to stay at 1250 - instead, the guess was that the new chemistry staff would be in the 1000 range, which is what I would have guessed, too.
But the chemistry head count is now apparently headed to about 850: smaller than it was before the merger. I have to assume that outsourced chemistry isn't included in this total, and that that's where the deficit is being made up. It is being made up, right? Pfizer isn't actually trying to become a bigger company with a smaller research staff - right? Posters and coffee mugs about working smarter and doing more with less can only take you so far, you know.
As I say, these are numbers from the inside, and I'll be glad to listen to (and post) corrections to them. But from what I'm hearing, this is accurate - and no one (especially at Wyeth) saw this coming on as hard as it has. . .
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November 10, 2009
Posted by Derek
Pharmaconduct.org has another look at Pfizer's announcement yesterday, and tries to address some of the many unanswered questions left open by the company's press release. One thing that struck me (and many others) is that the company talked about "moving a number of functions" from sites like St. Louis and Collegeville, but did not come right out and say that they were closing. I understand that there's more than R&D that goes on in these places, but it still seems as if these moves will leave a lot of empty hallways, which you wouldn't think is the optimum solution.
A topic of local discussion has been the two Cambridge sites the new company has, and you can argue that one either way, too. "They do different things, and both of them should stay" goes up against "Why would you have two research sites in the same town if you didn't need to?" Yesterday's release was silent on this question, too.
Eric at Pharmaconduct has gone so far as to put together a database of Pfizer's moves over the last few years, in an attempt to figure out what they're up to. I wish him luck, and I'll follow the success of this effort with interest. I'm not sure if the company's behavior is subject to this kind of field-zoologist approach, but perhaps it is. At any rate, people with information to contribute can help him find out.
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November 9, 2009
Posted by Derek
The company has issued a press release detailed which sites are staying, and which are leaving:
Pfizer will have five main research sites that will serve as central hubs for research activities in BioTherapeutics, PharmaTherapeutics and Vaccines. These sites are: Cambridge, Mass.; Groton, Conn.; Pearl River, N.Y.; La Jolla, Calif.; and Sandwich, U.K. These research-oriented laboratories will be supplemented by specialized research capabilities, such as monoclonal antibody discovery in San Francisco, regenerative medicine work in Cambridge, U.K., and research and development activities in Shanghai, China. . .
. . .As part of the consolidation of research sites, Pfizer will significantly reduce R&D activities at some of its sites. The company will move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations and will discontinue R&D operations in Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and Gosport, Slough/Taplow, U.K. In addition, Pfizer will consolidate R&D functions from its New London, Conn., site to its nearby research facility in Groton, Conn.
What we don't know (yet) is how many people will be let go from these sites, and how many will be offered a moving package. Of course, last time around, some people moved and were let go in yet another round, but the future is unwritten. . .more on this as more details emerge.
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Posted by Derek
There's a long, detailed article up over at Bloomberg on the recent run of huge fines for off-label promotion of drugs. Pfizer, Lilly, Bristol-Meyers Squibb, and Schering-Plough all get mentioned in great detail.
And there's a key point from the whole depressing thing: the reason that marketing departments do this kind of thing is that it makes money. Even after you pay a billion dollars in fines, you can still come out ahead, and you might not even have to pay the fines. It's just being put down as a cost of doing business - it's a speeding ticket, and it's being weighed against the cost of driving under the legal limit.
But there's no way that our industry will gain - or regain - respect as long as we operate this way. Have the people involved priced that out as well?
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+ TrackBacks (0) | Category: Business and Markets | The Dark Side | Why Everyone Loves Us
November 6, 2009
Posted by Derek
So what are we up to now, Day Three of Greater Merck? The merger with Schering-Plough went through earlier this week, and you won't get any more numbers by searching the stock tickers for SGP.
I find that weird, since I started my career there in the late 1980s/early 1990s. But while I was there, it seemed like there were mergers and rumors of mergers every few weeks. That's no doubt a hindsight-enhanced picture I have, but it's safe to say that I heard about S-P merging (or being purchased by) every single major player in the business during my years there. And it didn't happen (not then, at any rate).
My favorite moment came in about 1992 when a colleague came to my office one afternoon saying "It's us and Upjohn. Announced after the close of business on Friday. All of CNS is going to Kalamazoo". I hardly even looked up, uttering a one-word reply that compared this news flash to bovine waste.
"Why do you say that?", he replied. "You don't think it could happen?" "Of course I thing it could happen", I said. "But I'll bet against any specific prediction of when and who. Got any money on you?" "Why don't you think this is the real thing?" he asked again, to which I replied "Because I don't think that any deal this size, set to be announced on Friday, could be so screwed up that you and I would know about it on Tuesday afternoon".
"Well, I kind of see your point there. . .", he began. And of course that particular deal never happened. But I'm sure that there were others that nearly did. That's one of the things that goes on in the background of this industry - there are a lot of tentative discussions and what-if ideas that get looked at briefly (or sometimes not so briefly) which people outside of upper management never hear about. This stuff generally starts to leak (if it does) once it gets closer to really happening, and for every one that happens, there are several that get thought about but never quite work.
Of course, I'm using "work" in the sense of "get completed", not in the sense of "works out in the long run to the benefit of everyone involved". I'm not convinced that many drug company mergers fall into that latter category at all, and that goes for the Merck/Schering-Plough one, too. There don't seem to be any dramatic announcements coming out of the deal so far, and that probably means that the changes (which are, and have to be, coming) will just be delayed while the company takes stock of what it now has, and what it now is.
But, as someone from another company was saying to me last night, the bigger you are, the harder it is to do that. It takes longer before you feel that there's enough information to make a good decision, which is probably why Pfizer's current rearrangements are taking so agonizingly long to make themselves clear. That same decision-making extends, I think, to drug discovery and development issues, which is one reason I don't like the whole mega-company idea to start with.
There's also the groupthink problem. Pfizer, for example, was able to convince itself that inhaled insulin was going to be a big winner, even as people outside the company wondered if that could be quite right. (And not only was it not a big seller, it was an unprecedented disaster). I don't believe that people get any smarter in large groups. Quite the contrary. All that "wisdom of crowds" stuff, as I understand it, is about consulting large numbers of individual thinkers, not getting them all into one room and having them agree on something. Especially if some of the people in the room can decide the salaries and promotions of the rest of the crowd.
I wish both the Merck people and the Schering-Plough people well, and the combined company good fortune, and that's not just because I find myself a stockholder of it. But I wish it hadn't come to this, and I wish it wouldn't keep coming to this, either.
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November 3, 2009
Posted by Derek
Johnson & Johnson says that it could be cutting up to 8,000 jobs. This has been in the wind for a while, but I haven't had any reports yet of what it's doing on the ground to the research sites. Any news from the readers affected, or is that yet to come?
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November 2, 2009
Posted by Derek
There's a constant running battle in the drug industry between the two kinds of pharmaceutical companies: the ones who discover the drugs first, and the ones who sell the drugs cheaply after the patents have expired. It surprises me still how many people I run into (outside my work) who don't make that distinction, or who don't even realize that there is one.
But the generic industry is a very different place. Their research budgets are far smaller than the ones at the discovery companies, since they're only dealing with drugs that everyone knows to already work. Their own research is directed toward satisfying the regulatory requirements that they're making the equivalent substance, and to finding ways to make it as cheaply as possible. And some of them are very good at it - some ingenious syntheses of marketed drugs have come out of the better generic shops. Of course, some real head-shaking hack work has, too, but that you can find everywhere.
The tension between the two types of company is particularly acute when a big-selling drug is nearing its patent expiration. It's very much in the interest of the generic companies to hurry that process along, so often they challenge the existing patents on whatever grounds they can come up with, figuring that the chances of success jutify the legal expenses. Since the 1984 Hatch-Waxman act, there's been an even greater incentive, the so-called "Paragraph IV" challenge. A recent piece in Science now makes the case that this process has gotten out of control.
After four years of a drug's patent life, a generic company can file an Abbreviated New Drug Application (ANDA) and challenge existing patents on the grounds that they're either invalid or that the ANDA doesn't infringe them. (This, for example, is what happened when Teva broke into Merck's Fosamax patent, taking the drug generic about four years early). If the challenge is successful, which can take two or three years to be resolved, the generic company gets an extra bonus of 180 days of exclusivity. The authors of the Science piece say that this process is tipped too far toward the generic side, and it's cutting too deeply into the research-based companies. (As noted here, that's rather ironic, considering the current debate about such provisions for biologic drugs, where some parties have been citing the Hatch-Waxman regime as a wonderful success story in small molecules).
This all took a while to get rolling, but the big successes (such as the Fosamax example) have bred plenty of new activity. There are now five times as many Paragraph IV challenges as there were at the beginning of the decade. Teva, for example, which is one of the big hitters in the generic world, had 160 pending ANDAs in 2007, of which 92 were running under Paragraph IV. Here's a look at some recent litigation in the area, which has certainly enriched various attorneys, no matter what else it's done.
Under Hatch-Waxman, a new drug starts off with five years of "data exclusivity" during which a generic version can't be marketed. The Science authors argue that the losses from Paragraph IV now well outweigh the gains from this provision, and that the term should be extended (which would put it closer to those found in Europe, Canada, and Japan. They also bring up the possibility of selectively extending data exclusivity case-by-case or for certain therapeutic areas, but I have to say, this makes me nervous. There are too many opportunities for gamesmanship in that sort of system, and I think that one goal of a regulatory regime should be to make it resistant to that sort of thing.
But I do support the article's main point, which is that the whole generic industry depends on someone doing to the work to discover new drugs in the first place, and we want to make sure that this engine continues to run. Politically, though, anything like this will be a very hard sell, since it'll be easy to paint it as a Cynical Giveaway to the Rapacious and Hugely Profitable Drug Companies. But speaking as someone working for the RHPDCs, I can tell you that we are indeed having a tougher time coming up with the new products with which to exploit the helpless masses. . .
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October 30, 2009
Posted by Derek
Here's a most interesting graph from the latest issue of Nature Reviews Drug Discovery. It's from an article on trying to discern trends from broad-scale literature analysis, and it's worth a separate blog post of its own (coming shortly). But after yesterday's discussion of whether there are too many graduates in science and engineering, this looked useful.

Note, for example, the ramp up in NIH funding in the late 1950s/ early 1960s (a very large change in percentage terms), which was followed by a similar surge in doctorates granted. The late-1990s funding increases seem to be having a similar effect near the end of the chart.
Note also the well-publicized drug drought - but the historical perspective is interesting. We've clearly fallen off the 1970-2000 trend line of increasing drug approvals, but we seem to be stabilizing at roughly a 1980s level. The argument is whether that's where we should be or not. We have all these new tools, but all these new worries. Lots of new targets, but fewer good ones like the old days. Many new tools, but plenty of difficult-to-interpret data generated from them. And so on. But 1985 is apparently about where the balance of all these things is putting us.
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October 29, 2009
Posted by Derek
Here's one to get your attention: there's been a lot of arguing (on this blog and others) about the continual talk of shortages of scientists and engineers. That's a little hard to take for the number of people who've been laid off from this industry over the last two or three years and who often are having trouble finding a new position.
A study from Rutgers and Georgetown now says, though, that there is no such shortage. Here's the PDF, so you can check it out for yourself. The intro:
A decline in both the quantity and quality of students pursuing careers in science, technology, engineering, and mathematics (STEM) is widely noted in policy reports, the popular press, and by policymakers. Fears of increasing global competition compound the perception that there has been a drop in the supply of high-quality students moving up through the STEM pipeline in the United States. Yet, is there evidence of a long-term decline in the proportion of American students with the relevant training and qualifications to pursue STEM jobs?
In a previous paper, we found that universities in the United States actually graduate many more STEM students than are hired each year, and produce large numbers of top- performing science and math students. In this paper, we explore three major questions: (1) What is the “flow” or attrition rate of STEM students along the high school to career pathway? (2) How does this flow and this attrition rate change from earlier cohorts to current cohorts? (3) What are the changes in quality of STEM students who persist through the STEM pathway?
What they're finding is (again) that there's no shortage of graduates - in fact, quite th opposite, unfortunately for wages and employment. One worrisome thing, though, is that at some point in the mid-to-late 1990s the top-performing students at both the high school and college level began to jump ship from the science/engineering fields. There are several possible explanations, but the one that comes to mind is that students are looking ahead a bit and don't like the prospects that they see and/or are lured by other fields that seem more attractive.
More on this later - for now, here's some commentary over at Science which shows that the arguing has already begun.
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+ TrackBacks (0) | Category: Business and Markets | Who Discovers and Why
October 28, 2009
Posted by Derek
Johnson & Johnson's CEO has given an interview to the Financial Times explaining his company's strategy with acquisitions. And right now, that strategy is. . .not to make acquisitions. They see partnerships as making a lot more sense:
“The cost of developing compounds has become so high and become so risky that we are looking to share the risks and opportunities and find more and more partnerships.”
J&J has been putting this into practice recently, taking equity stakes in several different companies. In the case of Elan and Crucell, interestingly, the company has agreed to standstill provisions, in order to make it clear that they're not just on the first step to an outright acquisition any time soon. It's interesting that this would be coming from Johnson & Johnson, since in many cases they've been one of the less destructive acquirers in the business already. (Well, with some exceptions, like when they took over Scios).
The temptation to compare this policy with Pfizer's is almost overwhelming, but the two companies are in very different positions. For one thing, J&J has their medical devices and diagnostics businesses, which are both profitable and run on different rhythms than their pharma side. Even more importantly, they also aren't locked into a grow-or-die situation, needing larger and larger infusions of revenue to meet the expenses which get larger every time they go out and buy those revenue streams, which mean that they need to go buy some more and then. . .
The article says that J&J has no deals under consideration right now, but that this style of deal-making is definitely how the company plans to operate. There's definitely enough risk to be spread around - I just hope that there's enough reward for everyone, too.
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October 22, 2009
Posted by Derek
Xconomy has a useful two-part interview with Christopher Henney, who helped to found Icos, Dendreon, and Immunex. The part I found most interesting, naturally, was the section entitled "Five Red Flags of Biotech". (Note to the Xconony folks - the article actually has six of them). Here are his warning signs if you're thinking of investing in (or, I should add, working for!) a new company and you're checking them out. Beware of. . .
1. Top management without a scientific background. If the CEO isn't a scientist, Henney says, there had better be some good ones very close to him, and he's not talking about the scientific advisory board, either.
2. Saying that they have no worries. Any small company in this game has plenty to worry about - heck, the huge companies have plenty to worry about. So if they try to tell you otherwise, then you're the one who should be worrying.
3. Hard-to-understand science. Henney says to look out if they can only tell you that it's really hard to explain. I'd agree with that, but I'd also add that you can go too far in the other direction. If they spout a bunch of advertising copy under the impression that they're giving you the science, then you should also flee. (That might be a consequence of Red Flag #1). I honestly think that any concept in this industry can be explained to any reasonably intelligent person. So if someone tells you that they can't do that, you have to worry that they don't understand it very well themselves.
4. Geographic remoteness. This is an interesting one, because ideas can come from all over. But for a viable company, Henney maintains, you need to be somewhere that you can recruit talented and experienced people. That doesn't mean that every company has to be in Cambridge or South San Francisco, because there are plenty of other possibilities. But trying to get a great biotech idea off the ground will definitely be a lot harder in Winnipeg, El Paso, Chattanooga, or Scranton. There are smart people there, but most of the ones who know this business or have a real interest in it will have gone somewhere else. And it'll be tougher to persuade others to move somewhere that could leave them without options if the company doesn't work out.
5. Too many VCs. This goes for just about any industry. A board that's full of venture capital people shows a lack of imagination at the very least, and it makes you wonder why the VCs will even stick around when all they see are their own kind.
6. Family members in key roles. My take is that you can get away with one sibling or the like, preferably as long as they're not like a CEO and CFO team or something. But I agree with Henney's take that if you see a board dominated by a family, you should hit the exits. This stuff hasn't been around long enough to be a family tradition.
I would add a couple of others to be wary of:
7. Breathless hype. Sure, all press releases have some of this. But if a small company is unable to speak in any other terms than "breakthrough, unprecedented, game-changing paradigm shifts" or the like, you should be worried. Either they don't really believe this stuff (in which case they may not be very trustworthy), or they do (in which case they may be delusional). Real breakthroughs in this business don't need all the glitter and spray paint.
8. Too much emphasis on the SAB. Henney addresses this partly in Red Flag #1. But it's worth remembering that a wonderful blue-ribbon scientific advisory board stacked with Nobel Prize winners is also stacked with very busy people who will only be able to give this little company a small portion of their time. These aren't the folks who will be driving the projects forward. If a small company relentlessly promotes the big-name advisors they've signed up, you have to wonder if there's anything else to promote.
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October 21, 2009
Posted by Derek
I wanted to highlight a comment that showed up recently in the latest Pfizer post:
I would just like to point out that there is often mention of Pfizer as being a poorly productive R&D outfit on this blog, but there is rarely any mention of the scientists themselves. Having worked as a chemist at both Merck and also at Pfizer, I would just like to point out that in my experience, the chemists at both are highly productive, extremely hardworking, and passionate individuals. It's a shame that the discussions here do not distinguish between those carrying out the research and the direction of the company overall.
That's true, and although I've put in disclaimers like that in the past, I haven't recently. There should be some sort of default blanket statement for cases like this. I know a lot of people at Pfizer, and they know their stuff. Pfizer's problems are not due to a shortage of smart, competent, hardworking people. Everyone in the industry is having a hard time keeping a good pipeline of drug candidates going these days, no matter how good they are.
But I think that the course that Pfizer has put itself on is making its problems worse, and doing damage to the entire industry at the same time. That actually makes it even more of a tragedy, the fact that they have so many good people there trying to make things work.
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Posted by Derek
Steve Usdin at BioCentury sent along a reprint of the newsletter's annual "Back to School" issue from last month (available for open access here) in response to my note about "micropharma" the other day. And it's clear that he's been thinking along the same lines. Whether or not this model is going to work is another question, but that looks like something that we're going to be finding out.
As the issue notes, in a pithy quote from Mike Powell of Sofinnova, the key problem is "how to restructure an industry where it costs $100 million to answer a question but people are only willing to pay you $50 million for the answer." Since the amount of money being handed out is probably not going to increase any time soon, the only way out of that dilemma is to find some way for that first figure to go down.
One of the groups that won't be happy about that process are academic centers that are used to seeing their intellectual property as a potentially lucrative source of funds. The strike-it-rich days do not look to be coming back any time soon. Instead, BioCentury advises universities to get ready to adopt a "non-ROI" approach to developing their ideas, by use of grants, public-private consortia, and help from foundations and other nonprofits. (Perhaps a name like "delayed ROI" or, if you're being especially weasely about it, "enhanced ROI", might help that concept go down a bit smoother).
CRO firms are almost certainly going to have to be part of that process, since there are plenty of skills needed to push a drug target or molecule along that are not found in most universities. That, to me, would indicate a real market for a low-cost CRO outfit targeting academia. I'm not sure if anyone is serving that market, or trying to, but it would seem to have some potential in it. Anyone who can help to run should-we-kill-this experiments, without spending too much money getting the answer, will have something that looks to be in demand.
In general, this landscape would mean that ideas will go longer before companies are formed around them, with the idea that they can be tested out a bit without having to build new corporations to do it. (As another quote from the article had it, "The unmet need in the industry is drugs, not companies".) Payoffs will be slower, and they won't be as large when they come, either. Venture capital investors will be asked to have more patience under this model, and that's not something that they're necessarily noted for. And someone's going to have to have the money (and nerve) to form mid-sized organizations that will pick up the best of the things coming out of academia, since many of them still won't be quite ready to go right into a big organization. The non-humungous companies that have survived to this point might step up and fill this role, and BioCentury also suggests that Japanese and Indian companies might fill this space as well.
The big question is: will people be able to put up with this, or not? After all, no one's envisioning failure rates going down, they're just hoping that the failures will happen sooner and cost less money. Will they? It's not like "fail quickly" hasn't been a goal of companies in the business for years now. But sometimes it's hard to fail any other way than slowly (and expensively).
Well, the common theme to all this (and to most of the other crystal-ball reading going on these days) is that the industry isn't going to be able to go on in the way it's been accustomed to. If you ask a hundred people in this business what it's going to look like ten or fifteen years from now, the only thing you could probably get them to agree on is "Not like it does today". We'll just have to wait to see if they're all playing "Cheat the Prophet" or not. . .
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History
October 20, 2009
Posted by Derek
The Wall Street Journal's Health Blog got a chance to ask the higher-ups at Pfizer what their R&D will look like a year from now. Their (understandably) not too-in-depth answers are here: Decentralized research units, with some functions run company-wide, and this quote: "There are elements of drug discovery and development where you just need scale".
Well played! I wouldn't expect anything less. But are there elements of drug discovery and development where scale - massive, ponderous, hundreds-of-vice-presidents scale - actually hurts? I don't think you're going to hear that topic brought up very much at Pfizer, at least not out in the open. And let's not lump those two functions together: drug development benefits from a company's size a lot more than drug discovery does. Once you've gotten to a critical-mass level, sheer size (as far as I can see) does nothing to help productivity in drug discovery, and actually seems to damage it. As evidence for that statement, let me point to Pfizer's internal research record, as opposed to the stuff they've gone out and bought.
And what might be refreshing is an admission that big mergers - drag-on-for-months am-I-going-to-still-be-here mergers - come with an acute productivity penalty no matter what. I may have missed it, but I don't recall hearing anyone from Pfizer say anything like "Although we know that this is going to be a huge disruption, we think that in the end it'll be worth it". No, it always seems to be the Day One, hit-the-ground-running, now-the-synergy-starts stuff, which is just not in sync with reality.
Well, we can come back in a year and see what Pfizer's R&D operation really looks like. But I'll venture a guess: huge. Unwieldy. Not as productive as you'd think it should be. Still rearranging and getting smaller as the company tries to figure out how to make it all work. And looking over its shoulder for the next big acquisition. Anyone want to bet against any of those?
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October 19, 2009
Posted by Derek
(1) Bnet Pharma on "How Not to Write a Pharma Press Release". Privately held Epeius is sending out bulletins loaded with phrases like "more stunning results" and "Epeius Biotechnologies draws the sword of targeted gene delivery from the stone of chemistry and physics". If they were publicly traded, this would be fun to watch. . .
(2) The rise of Micropharma? We'll come back to this subject:
The drug discovery pipelines of the major pharmaceutical companies have become shockingly depleted, foreshadowing a potential crisis in the ability of Big Pharma to meet the pharmaceutical demands created by the ever-changing spectrum of human disease. However, from this major crisis is emerging a major opportunity, namely micropharma – academia-originated biotech start-up companies that are efficient, innovative, product-focused, and small. In this Feature, we discuss a “new ecosystem” for drug development, with high-risk innovation in micropharma leading to Big Pharma clinical trials. . .
(3) Cleaving amyloid precursor protein into beta-amyloid has long been thought (by many) to be the key pathological event in Alzheimer's. But what about the piece of APP that's left inside the cell?
(4) A favorite post around here for some time has been "Sand Won't Save You This Time", about the wonderfulness of chlorine trifluoride. Well, here's a method to produce very interesting-looking compounds that uses. . .bromine trifluoride. How much do you want these products, that's what you have to ask yourself. To be sure, the authors do mention that "Although commercial, bromine trifluoride is not a common reagent in every organic laboratory, and many chemists do not feel at ease with it because of its high reactivity. . .". You have to go to the Supporting Information file before you start hearing about freshly preparing the stuff from elemental fluorine.
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+ TrackBacks (0) | Category: Academia (vs. Industry) | Alzheimer's Disease | Business and Markets
October 16, 2009
Posted by Derek
I've heard from several sources that today is what they're calling "Day One" at Pfizer. The merger with Wyeth is now official, and word is going to start going out on which sites will stay, which will close, and who will be moved or let go during the entire process.
Problem is, I'm also hearing that (for research, anyway) it could take as long as another sixty days for all the news to come out. We'll see what the real timetable is, but that's enough to make me wonder if there's any way they could have found to make the whole business more excruciating.
But it's a sad day. I think the Pfizer-Wyeth merger is a bad idea which will do bad things. I wish it hadn't happened, just like I wish many of the other mergers on this scale had not happened, and I wish that I could have some hope that this sort of thing won't happen again. But the lessons are taking a long time to be learned.
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September 28, 2009
Posted by Derek
I have no solid information on this question myself, but Eric Milgram over at Pharmaconduct is trying a wisdom-of-crowds approach. He's got a survey up of which sites people think will close, and it'll be interested to see how well this matches up with the eventual reality.
At the bottom of the list, naturally, is Pfizer's site at Groton. I think we can safely predict that this one will stay open, but the New London site, right across the river, doesn't fare so well in the voting. In fact, it's the second-highest-ranking Pfizer site on the list, outdone only by St. Louis (the former Monsanto). The rest of the top contenders are all Wyeth, led by Madison and Princeton.
The "wisdom of crowds" method doesn't produce wisdom out of thin air, of course - it's supposed to be a more efficient way of getting to information that's already out there. In this case, though, I don't think that the information is out there, so this should be taken as more of a poll of sentiment, which is certainly how it's presented. To that aspect of it, one thing that Milgram's already noticed is that people who are currently employed at either Pfizer or Wyeth tend to believe that it's those other guys who are most likely to have to close some facilities. We shall see. . .
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September 17, 2009
Posted by Derek
One of this blog's regular correspondents has just been attending a chemistry outsourcing conference (program here), and heard a very interesting talk from Stefan Loren of a Baltimore investment advisory firm, Westwicke Partners. Loren's a product of the Sharpless lab, who went on to Abbott, then Wall Street (Legg Mason and into the hedge fund business), and had some very provocative things to say about our industry:
His talk, "The Pharma Titanic: It's Time to Root for the Iceberg" presented a sobering view of the challenges that big pharma will have to deal with if it wants to survive.
Loren opened with an overview of the US national health care debate. Regardless of the ultimate form that a national system takes, he believes we'll see mandatory insurance; this will be good for big pharma. He also believes that there will be strong pressure for mandatory comparative effectiveness testing...probably not good for big pharma. Who will pay for this and what resources this would require is another matter. Wearing his investment advisor glasses, he sees global pharma sales declining, led by North America, with future growth coming in Asia and Latin America. He also sees evidence of healthcare avoidance in the US: unfilled prescriptions, unfinished courses of prescriptions, and people just not visiting medical and dental practitioners - not a good trend.
The coming wave of patent expirations of the top 10 drugs will hit big pharma hard. Generics will grow: In 5 to 10 years, he predicts that 80 percent of ALL prescriptions will be generic. When coupled with the meager investments in bow wave research over the past 15+ years, as measured by IPOs, there's trouble ahead. Global biotech IPOs are in the toilet and the US is no longer viewed by the investment community as the global leader in biotech. There have been an unprecedented number of bankruptcies in biotech. There is going to be a huge oversupply of production capacity for small molecule manufacturing. ROIs for pharma and biotech are largely negative...it gets worse. He calls this the "death spiral."
Pharma pipelines are seen as very poorly run and wasteful. Poor projects linger far longer than they should. Too much emphasis is placed on me-too and line extensions. Too much emphasis is placed on acquisitions and licensing rather than innovation. Here it comes: he says "I have NEVER seen a merger that worked" We were then entertained by a chart showing Pfizer's stock market performance over the period of time from pre-WLA, through Pharmacia-Upjohn, and now Wyeth...you would not be a happy camper if you had put your retirement account in Pfizer management's hands and their merger mania. Wall Street has a saying "Two dogs don't make a kennel." Of course, what we hear is "this time it's different" along with the usual happy talk about synergies. Loren does believe that mergers can work and can be synergistic if the two companies merging are small...large mergers just don't work and large companies get paralyzed by bureaucratic inertia.
His solution? Break up large pharma into therapeutic areas and build shared networks between distinct entities. Small organizations can operate far more efficiently in decision making about research directions - use the network to maintain manufacturing efficiencies. Small focused companies will revitalize the industry and offer opportunities for scientists coming out of academia. In response to a question from the audience regarding Merck's ambitions to adopt this networked architecture, he doesn't believe they can make it work.
He does see light at the end of the tunnel with respect to supply chain assurance driving a return to sanity. The heparin, glycerin, and melamine disasters have awakened people and the cost of securing global supply chains is going to make US industry much more competitive. It also will focus serious scrutiny on big pharma. The "next heparin" case will have serious personal consequences for big pharma managers. . ."
Well, a good amount of this I agree with, but some of it I'm not sure about. Taking things in order, I don't know about a decline in US sales, but Asia is most definitely where a lot of companies are expecting growth. (And for "Asia", you could substitute "China" and be within margin of error). And his generic prescription figures may not be right on target, but the trend surely is. We've discovered a lot of useful drugs over the years, and anything new we find has to compete against them. The only way to break out of that situation is to find drugs in new categories entirely, and we all know how easy that is.
But as for the US not being the global leader in biotech - well, if we aren't, then who is? You could possibly make a case for "no clear leader at all, for now", but I think that's as far as I can go. And that coming oversupply of manufacturing for small molecule drugs, which may well be real, will be bad news for the companies that have already invested in that area, of course, but good news for up-and-comers, who will be able to pick up capacity more cheaply.
But Loren's comments about mergers I can endorse without reservation. I've been saying nasty things about big pharma mergers since this blog began, and nothing in the last seven years has changed my mind. And I certainly hope that his idea of smaller companies coming along to revitalize the industry is on target, because it's sure not going to be revitalized by (for example) Pfizer buying more people. I've made that Pfizer stock-chart point of his here, as well - like the rest of the industry, PFE stock had a wonderful time of it in the 1990s, but this entire decade it's been an awful place to have your money.
I expect these comments to bring in a lot of comments of their own - so, how much of this future are you buying?
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Regulatory Affairs
September 15, 2009
Posted by Derek
The latest re-org announcement is from Eli Lilly. The company is getting braced for the Zyprexa patent expiration (and the possibility that Prasugrel and others won't be able to make up for as much lost revenue as they thought). Their target is a 14% head count reduction by the end of 2011.
For everyone's sake there, if they're really going to do that, I hope they do it quickly. Having that sort of thing hanging around over everyone's head is, to put it mildly, not good for anyone's quality of life (whether they're being let go or not). I haven't heard how these cuts will be distributed (across research, sales, administrative, etc.), but I suspect that details will start leaking out soon. . .
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September 4, 2009
Posted by Derek
Here's more detail on the case that led to Pfizer's 2.3 billion dollar fine/settlement, courtesy of Bloomberg. Here's how things got started, apparently:
Pfizer Inc. sales folks had one tough customer in psychiatrist Stefan Kruszewski. He didn’t buy their pitch to prescribe the anti-psychotic drug Geodon to children, a use that hadn’t been approved by federal regulators.
Nor did he go for the so-called off-label uses they suggested, such as treating dementia in the elderly.
Kruszewski didn’t just say no. He went and checked the research and saw Geodon could have serious cardiac side effects not mentioned by the salesmen, who boasted of its relative safety, according to his lawyer, Brian Kenney. And he noticed that Pfizer was paying his peers to promote the drug to other psychiatrists.
But the worst for Pfizer was that Kruszewski didn’t keep it to himself. He found a lawyer, Kenney, who specializes in whistleblower cases, and they took what they had to the government.
So did John Kopchinski, who sold Pfizer’s arthritis drug Bextra but not as aggressively as the bosses wanted. They told the sales force to pitch it for post-surgical pain, acute pain, migraines and a host of other conditions for which the drug had been rejected by the U.S. Food and Drug Administration, says Kopchinski’s lawyer, Erika Kelton.
The six whistleblowers in the case are getting anywhere from $2.3 million to $51 million now that the settlement has been announced (that upper figure is Kopchinski, who seems to have provided the most serious evidence). As I mentioned the other day, I think this is a good thing. It takes a lot of nerve to step up when your employer is doing something outside the limits of the law (and asking you to do it as well). A chance to make up for the certain loss of your job (and the near-certain loss of any future prospects in the field) goes a long way.
And there's an interesting perspective on why a settlement was reached:
. . .Pfizer is the pharmaceutical equivalent of insurance giant American International Group Inc., which was too interwoven into the global economy to be allowed to fail. Likewise, if Pfizer were convicted of a crime, it would face debarment from federal programs. And that would mean that Medicaid and Medicare patients would have to either somehow pay pocket for vital medicines the company produces or go without.
Hadn't thought of that one. I wonder if any company will have the nerve to use this as a negotiating tactic? Perhaps Pfizer already did, come to think of it. . .
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+ TrackBacks (0) | Category: Business and Markets | The Dark Side
Posted by Derek
Well, I didn't see this one coming. Dainippon Sumitomo has announced that they're buying Sepracor. My first thought on reading this was "Are they sure they want to do that?"
I say that because the ostensible reason that the Japanese company is pulling out their wallet is that they're looking to replace declining revenues at home. In that case, why are they buying declining revenues over here? Their flagship product (Lunesta) is going to be going off patent in the not-too-distant future, and they don't have a gigantic pipeline of stuff behind it.
The answer seems to be a deficiency that many Japanese firms have felt: a lack of boots-on-the-ground sales staff over here. The US is the biggest single profit center for the worldwide drug industry, and it's impossible for a big company to ignore that. But realizing all those potential profits isn't easy, if you're coming in from a standing start. (It's not like Dainippon Sumitomo has a big profile over here). Says the Boston Globe:
In a note to investors on the sale, Credit Suisse analyst Scott Hirsch said the deal made sense for Sepracor. He noted that the company is generating $300 million to $400 million in cash a year but has a limited pipeline of new drugs in development and its existing products will face competition from generic drugs in coming years. Hirsch also doubted another suitor would step forward with a better bid.
“In our view, if a US firm wanted Sepracor, that likely would’ve happened already, as there have been plenty of lookers over the years,’’ said Hirsch, who has a neutral rating on the stock. “We think Dainippon Sumitomo is more interested in the sales platform and operating leverage than the revenue stream.’’
So where does that leave Sepracor's research operations? It's true that Takeda has apparently been very kind to Millennium's research staff, but that was a more research-driven deal than this one seems to be. I'm sure the folks at Sepracor are looking for a little more clarity on that question. The problem is, the company's revenues have come almost entirely from clever (albeit irritating) patent-busting moves (active metabolites, pure enantiomers, and so on), but these strategies ran out of gas some time ago as the rest of the industry tightened up its IP protection. Rightly or not, Sepracor doesn't have a reputation as an outfit with a lot of great in-house research ideas. Outside of a ready-made sales force, what exactly do they have to offer?
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
September 3, 2009
Posted by Derek
No sooner do I write another post about pharma marketing than Pfizer finds itself paying 3.2 2.3 billion dollars in fines for doing it improperly. 1.2 billion of that is a criminal penalty, and needless to say, they've set the current record.
The issues were off-label promotion of Bexxtra, Geodon, Zyvox, and Lyrica, with the largest penalties coming from the first two. Pfizer's had three other settlements of this kind in the last few years, and that record was definitely a factor this time, as the Justice Department looked for a figure that might get the company's attention. Also supposed to get the company's attention is a five-year "integrity agreement" with the Department of Health and Human Services, but it's worth noting that the company was already supposedly operating under an earlier such agreement when it was promoting Bexxtra. I think the money has a better chance of being noticed, myself.
I think that these kinds of penalties should be levied, in case anyone's wondering. Our current system almost makes sure that it will happen over and over, but that's because we're splitting the difference between two competing principles. The first one is that physicians should have the freedom to practice medicine as they best see fit, which means that they can write prescriptions for drug uses that have not (yet) been approved by the FDA. The second principle, though, is that drug companies should not be free to promote such uses. And I agree with both of those, but sticking to both of them simultaneously leaves open a constant temptation to break the law.
But there are a lot of industries that operate under such conditions, and in each case, they're supposed to control themselves (and get hammered on when they don't). Perhaps this latest fine will be enough of an example to keep the marketing people thinking ahead a bit. If that won't do it, then the way this whole case came up might - it's another example of whistleblower laws at work. John Kopchinski, a sales rep who left Pfizer in 2003, looks to get around $50 million of the settlement for bringing key information to the government's attention, and others are involved as well. I think that's a good thing, too, a useful counterbalance to the financial incentives on the other side.
But for now, we're left with another huge black mark on the industry's reputation. Thank you, Pfizer.
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September 2, 2009
Posted by Derek
Forest Labs has done very, very well with Lexapro (escitalopram) over the years. They're a comparatively small company, and their collaboration with Lundbeck (also a comparatively small company) in the antidepressant field has been the biggest event in their history.
Lexapro is the pure enantiomer of the earlier Lundbeck drug Celexa (citalopram), and it's been a very successful follow-on. (For a nasty spat over generic production of citalopram, see here). I'm generally not too keen on the follow-up-with-the-single-enantiomer strategy, I have to say. In general, I think it's slowly disappearing from the world as regulatory agencies look down on racemic mixtures. (I've never worked on a program myself where we seriously considered taking a racemate to the clinic - we always assumed that we'd end up developing a single enantiomer).
The New York Times has an article out detailing some of Forest's marketing plans, as revealed in documents before a Senate committee. Some of what the article has to say I agree with, and some of it I have to raise an eyebrow at, and we'll get to both of those. First off, in an area as large and competitive as antidepressants, I don't think that anyone should be surprised at what was in Forest's plan: lots and lots of lunches for physicians' offices, plenty of continuing medical education lectures (with plenty of food), and so on. One line shows that the company budgeted $34.7 million dollars to pay 2,000 physicians to deliver about 15,000 talks on the drug to their colleagues.
The Senate seems to be shocked at all this - well, pretending to be shocked, because no national politician can ever really be surprised at any way that money is used to influence anyone's decisions. But I'm not shocked, either. Leaving aside (just for a moment) the question of whether drugs should be promoted this way, the fact is that they are promoted this way, and have been for a very long time. And breaking down that lecture figure, that means a bit over $2,000 per lecture, and we don't know if that figure is supposed to cover just the honoraria for the speakers, or the whole cost of the lectures. Even if we assume the former, that comes to nearly eight lectures per physician per year, giving each of them about $17,000, pre-tax. Compared to the cost of advertising in the medical journals, general-interest magazines, or especially on television, that probably represents an excellent return for the money.
And Forest has been spending plenty of it. The article mentions that Vermont, for example, found that Forest (despite their size) was outspent in that state only by Lilly, Pfizer, Novartis, and Merck. Considering that those companies have many more drugs to sell than Forest does, that's an impressive figure. Of course, the only reason you spend money on marketing is to make even more of it back in sales, and they've certainly been doing that, too.
There are several questions here, and perhaps it's best to take them one by one. First off, is Lexapro worth what people (and insurance companies) are paying for it? The snappy economic answer is that of course it is, since that's the price that's willingly being paid, but let's talk utility instead. It does seem to be a good drug, arguably better than many of the others. It's been run head-to-head with Cymbalta (duloxetine), which is no poor performer itself, and shown to be superior And earlier this year, a Lancet article analyzed 117 controlled trials and found that there were clear clinical differences between the various antidepressants, and that Lexapro and Zoloft (sertraline) stood out as better than the rest.
The article recommended starting with the latter in new patients, I should note, and sertraline's now generic. I think that Forest's battle in the market is both against their similarly expensive competitors (where I think that they can claim to have an edge) and against cheap sertraline, where they may well not. (Update: and against their own (now generic) racemate - I'm digging into that comparison, and it'll be the subject of a follow-up post.) That said, depression is a famously heterogeneous field, and patients often have to try several drugs before somethings works, for reasons that are unclear. So yes, overall, I think that Lexapro is a useful drug, and that patients are getting benefit for their money.
The New York Times article is rather disingenuous on this point, by the way - you'd never know from it that there were differences between antidepressants, since they treat Lexapro and Prozac as interchangable, and you'd never know that there was evidence that Forest's drug might well be near the top of the list.
Next question: is Lexapro worth what Forest is spending to promote it? That question also splits into two, economically, depending on what we mean by "worth". As in the price question, from a strictly accounting perspective, we have to presume that Forest is seeing a financial benefit from their marketing activities; marketing does not run at a loss, not for long, it doesn't. And from a utility/societal benefit perspective, if Lexapro really is superior to most of their competitors, then I think the company is justified in making that case as loudly as they can.
Now we get to the tough one: are Forest's marketing activities appropriate or ethical? The arguing can now commence, because this is where we try to figure out what "as loudly as they can" actually means. I think the industry would be better off if there were less of an arms race in the marketing area. (Update: just to pick one benefit, it would make us look, in general, less sleazy, which is not to be underestimated). Even though marketing doesn't run at a loss, the return from it could be still higher if it were less expensive to do. Huge sales forces are expensive, and one of the reasons the sales forces are so big is that the competition's sales forces are so big, and so on. It's hard for any one company to climb down from its position, just from a game-theory point of view, so the most likely way for this to happen is through across-the-board restrictions on marketing, as enforced by the FDA, the FTC, or by physicians themselves. (I should mention, though, that there has been a voluntary retreat in the area of brand-covered swag). We're already seeing this pendulum swing back in the last few years, and it's fine with me if the process continues for a while longer. Doctors are perfectly free to close their doors in the faces of drug reps, and if I were in their position, I'd be tempted to do just that in many cases.
So if we come back around to that Times headine, it reads "Document Details Plan to Promote Costly Drug". And to that, I can say yes, it's a costly drug, set as high as the company thinks that people will pay for it, and to a level that they think they can make the most money with before its patent expires. And yes, Forest has a plan to maximize those profits, and if I were a shareholder (I'm not), I'd be righteously steamed if they didn't. And they did indeed write that plan down, so there are plenty of documents. I'd rather, myself, that the plan looked different than it does, and that's the way the world seems to be heading. But no matter what regulations come into force, there will always be plans to promote things that cost money.
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+ TrackBacks (0) | Category: Business and Markets | Drug Prices | Press Coverage | The Central Nervous System | Why Everyone Loves Us
August 19, 2009
Posted by Derek
There's an interesting article up over at InVivoBlog, and I wanted to see what the readership here thought of its main premise. Subtracting out the cute ecological analogies (Big Pharma as polar bears, for example), you get to this:
. . .For example, AstraZeneca, Novartis, and Bristol-Myers, all operate in the fields of neuroscience, oncology, and cardiovascular health. While some pharmas involve themselves in nutritionals, animal health, infectious disease, and other fields, all of these companies also engage with a mixing pot of therapeutic areas.
The relative strategic uniformity isn’t generally the case with the leading companies in other industries. In the high-tech industry, for example, there is a much higher level of specialization. Google is mainly in the advertising business; Microsoft, software; Research in Motion, in wireless solutions. You aren’t likely to see Facebook manufacturing semiconductors any time soon. (Yes we are aware of Microsoft’s Bing search engine and the new Google Chrome OS, but still.)
It is likely that health care businesses will evolve in a similar fashion. The leaders of the future will be those with unique and complex models which sub-speciate into differentiated forms. Companies will focus nearly all of their efforts on a single therapeutic area, becoming “immunology companies” or “cancer companies”. These companies will also become more integrated across sectors. A cardiology company will sell diagnostics, devices, and therapeutics pertaining to cardiovascular health.
I'm not so sure, myself. I can see reasons for this to happen, but I can also see forces that will pull in other directions. For one thing, I'm not sure if there are enough targets in some of these therapeutic areas to keep even a medium-sized company running. The host-of-smaller-companies model, each of them trying to hit it big, seems like a better fit, as long as they can share an ecosystem (there I go, too) with the larger deep-pocketed multi-area players.
Another problem is that I think the barriers to, say, a cardiovascular drug company becoming also a cardiovascular device company are higher than the ones to it becoming a cardiovascular-and-diabetes drug company. Moving into another drug discovery area at least lets you use some of your existing staff and resources, while heading out into diagnostics or devices will probably take you into territory that you don't know so well.
And besides, I think that the analogy with other industries doesn't hold up very well. The authors list off a few software and hardware companies, but don't Google and Microsoft have their hands in a lot of different areas? And have car makers (domestic or foreign) settled down into making only SUVs, only pickup trucks, or only sedans? Not that I've seen. Know of any movie studios making nothing but adventures or romantic comedies? Or any grocery chains that only sell vegetables, but not fruit?
In all those cases, the existing infrastructure lets such companies expand, at relatively lower cost, into related areas that will diversify their customer base. Medical devices and diagnostics may look like a similar situation, but I really don't think it is.
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
August 10, 2009
Posted by Derek
There's a recent article in Nature Reviews Drug Discovery that has some alarming figures in it. This is yet another look at the industry from McKinsey, and we'll get to their McKinseyish solutions in a moment. But first, some numbers:
They calculate that the return on investment (ROI) from small-molecule drug research was nearly 12% during the late 1990s, but since 2001 it's been more like 7.5%. If true, that's not a very nice number at all, because their data indicate that most companies assume a capitalization rate of between 8.5 and 11% - in other words, internal industry estimates of what it costs to develop a drug over time now run higher, on average, than the actual returns from developing one.
Another alarming bit of news is their analysis of Phase III failures. From 1990 to 2007 there were 106 of those nasty, expensive events. But the McKinsey figures are that 45% of those failures were due to insufficient efficacy versus placebo - which, in theory, is the sort of thing you're supposed to be rather more sure about by that point, what with having run Phase II trials for efficacy and all. (I'd like to know how many Phase III trials succeeded over that time period as well - what's the overall percentage of failure at that point?) Another 24% of the failures were due to insufficient efficacy versus the standard of care, which is at least a bit more understandable. But together, nearly 70% of all Phase III failures aren't due to tox, they're because the drugs just didn't work as well as their developers thought.
Back to those ROI figures, though. Either those numbers are wrong, or we're in quite a fix. (Of course, since the authors are consultants, their viewpoint is likely that those numbers are the best available, that all of us are indeed in a fix, and that if we pay them money they'll help us out of it). The paper does have some recommendations, to wit:
1. Cut costs, but not the obvious stuff that companies have been doing. Instead, they suggest broader strategies such as considering whether a company's clinical trials are consistently over-powered, and to not do quite as much "planning for success", since most development programs fail. That is, don't automatically gear up for a full overlapping development workup for every compound in the pipeline, but consider staging things so you won't waste as much effort if (or when) they crash out. And naturally, they also suggest outsourcing whatever "non-core" functions there are available.
2. Work faster. I have to say, though, that if I got paid every time I heard this one, I wouldn't have to work. The authors point out, correctly, that delays in getting a compound to market are indeed hideously costly, but on-the-other-hand it by saying that "Of course, gains in speed cannot come from short cuts: the key to capturing value from programme acceleration is choosing the right programmes to accelerate". And that leads into their third category, which is. . .
3. Make better decisions. This isn't quite a much of an eye-roller as it might seem, because this is where they bring in those Phase III numbers above. Such failures suggest some deeper problems:
"In our experience, many organizations still advance compounds for the wrong reasons: because of momentum, 'numbers-focused' incentive systems or through waiting too long to have tough conversations about the required level of product differentiation."
And I have to say, they have a point. People who've been in the industry for some years will have seen all of those mistakes made. for sure. But figuring how to stop those things from happening is the tough part, and presumably that's one of the things that McKinsey is selling.
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August 6, 2009
Posted by Derek
As much as I defend the industry I work in, I have to talk about things that we do that I don't think are so defensible. Another one of those has come up thanks to the New York Times and PLoS Medicine, who obtained a pile of records from a current court case.
This article has the details. Wyeth seems to have contracted with a medical writing outfit (DesignWrite) to produce and place a number of review articles covering hormone therapy for menopausal women. (Wyeth, of course, was the main player in that market). The articles seem to have been entirely written by the staff at DesignWrite - authors are listed as "TBD", and then academics were recruited to serve as lead authors and to submit the papers to journals.
No mention was ever made in the published papers of the medical writing group's role, nor of Wyeth's (who were paying them for this service). As far as the readers could see, these were the standard sorts of review articles that show up in the medical literature all the time. And that's the part that bothers me. For all I know, these articles were reasonable reviews of the field - I'm no great expert in the field, so I can't judge if they're truly fair summaries. But even if they are, the readership of a journal is entitled to know that a drug company was the impetus behind them, and they're also most certainly entitled to know the actual authors (as opposed to the people who would appear to have been the authors, but just signed off on the stuff).
I think that drug companies are entitled to promote their products. But full disclosure should be the the standard to try to reach in any market: put it all out on the table, and let physicians make their own decisions. It doesn't help, not one bit, to get papers into the journals this way - because when a company goes to such lengths to hide its participation, it almost looks as if it has something to hide. . .
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August 3, 2009
Posted by Derek
Well, here's a nasty surprise for you: your new drug gets a 14 to 1 "Yes" vote from an FDA advisory committee, but the agency turns you down, anyway. That's what's just happened to Savient and their new biologic product for gout, Krystexxa (pegloticase).
The FDA isn't required to say why they do such things, at least not to anyone else other than the company that submitted the drug. And they're aren't talking this time, either, but it looks like there's a manufacturing issue involved. The process for making Krystexxa seems to have changed a bit since the clinical trial batches, and the agency apparently wants to make sure that this hasn't altered anything. If all goes well, then, you'd expect the company to get things straightened out sometime next year, but for Savient, that's an awful long time to wait.
People who follow the company (and the gout market) have been arguing for the last few years about its prospects. Krystexxa is a pegylated form form of an enzyme called uricase (urate oxidase) that clears out uric acid (crystals of which are the proximate source of trouble in gout). Interestingly, this is one of those enzymes that's found all over the various phyla, and in mammals up to primates - but it stops there. We have the gene for the enzyme, but it appears to have been mutated to an inactive form at some point (rather like our gene for the last step in endogenous Vitamin C synthesis - I always wonder what the Intelligent Design people have to say about such things, although I'm pretty sure that it's some variant of "Because it was Designed that way for some good reason that's not immediately clear to us right now").
Bringing in this enzyme, then, isn't a case of replacing something that we already have. This is adding a function that we lost back in the early primate days, so we're talking "foreign protein" here. The pegylation is partly there to help with that, and partly just to give the protein a chance to survive the usual metabolic processes. For those who don't know the term, "Peg" is short for "polyethylene glycol", so a pegylated protein has long polymer chains of this hanging off it at various points. The total effect is rather like spraying the thing down with a coat of clear varnish - it changes the solubility, slows down metabolism and clearance, and changes the immune response to the protein. Pegylation is useful indeed, but something of a black art, since it's difficult to predict just what'll happen each time you try it.
Well, I wish Savient luck in getting things straightened out. And I wish their shareholders luck today. The company's stock has not been a place for the easily alarmed over the last year or two, and I'll bet that a lot of people thought that the fear had been cleared by that 14-1 advisory committee meeting. But that's the thing about this whole industry: you can never quite breath easy. . .
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July 31, 2009
Posted by Derek
I linked yesterday to a post by Megan McArdle about health care reform. And while I realize that everyone got into a shouting match in the comments to my own post on the subject - and people sure did in the comments to hers; it's endemic - I wanted to quote a section from her on drug discovery:
Advocates of this policy have a number of rejoinders to this, notably that NIH funding is responsible for a lot of innovation. This is true, but theoretical innovation is not the same thing as product innovation. We tend to think of innovation as a matter of a mad scientist somewhere making a Brilliant Discovery!!! but in fact, innovation is more often a matter of small steps towards perfection. Wal-Mart’s revolution in supply chain management has been one of the most powerful factors influencing American productivity in recent decades. Yes, it was enabled by the computer revolution–but computers, by themselves, did not give Wal-Mart the idea of treating trucks like mobile warehouses, much less the expertise to do it.
In the case of pharma, what an NIH or academic researcher does is very, very different from what a pharma researcher does. They are no more interchangeable than theoretical physicists and civil engineers. An academic identifies targets. A pharma researcher finds out whether those targets can be activated with a molecule. Then he finds out whether that molecule can be made to reach the target. Is it small enough to be orally dosed? (Unless the disease you’re after is fairly fatal, inability to orally dose is pretty much a drug-killer). Can it be made reliably? Can it be made cost-effectively? Can you scale production? It’s not a viable drug if it takes one guy three weeks with a bunsen burner to knock out 3 doses.
I don't think a lot of readers here will have a problem with that description, because it seems pretty accurate. True, we do a lot more inhibiting drug targets than we do activating them, because it's easier to toss a spanner in the works, but that's mostly just a matter of definitions. And this does pass by the people doing some drug discovery work in academia (and the people doing more blue-sky stuff in industry), but overall, it's basically how things are, plus or minus a good ol' Bunsen burner or two.
But not everyone's buying it. Take this response by Ben Domenech over at The New Ledger. We'd better hope that this isn't a representative view, and that the people who are trying to overhaul all of health care as quickly as possible have a better handle on how our end of the system works:
. . .But needless to say, this passage and the ones following it surprised me a great deal. Working at the Department of Health and Human Services provided me the opportunity to learn a good deal about the workings of the NIH, and I happen to have multiple friends who still work there — and their shocked reaction to McArdle’s description was stronger than mine, to say the least.
“McArdle clearly doesn’t understand what she’s writing about,” one former NIH colleague said today. “Where does she think Nobel prize winners in biomedical research originate, academic researchers or in Pharma? Our academic researchers run clinical trials and develop drugs. I’m not trying to talk down Pharma, which I’m a big fan of, but I don’t think anyone in the field could read what she wrote without laughing.”
Well, I certainly could make it through without a chuckle, and I'll have been doing drug discovery for twenty years this fall. So how does the guy from HHS think things go over here?
To understand how research is divided overall, consider it as three tranches: basic, translational, and clinical. Basic is research at the molecular level to understand how things work; translational research takes basic findings and tries to find applications for those findings in a clinical setting; and clinical research takes the translational findings and produces procedures, drugs, and equipment for use by and on patients. . .
. . .The truth, as anyone knowledgeable within the system will tell you, is that private companies just don’t do basic research. They do productization research, and only for well-known medical conditions that have a lot of commercial value to solve. The government funds nearly everything else, whether it’s done by government scientists or by academic scientists whose work is funded overwhelmingly by government grants.
Hmm. Well-known with a lot of commercial value. Now it's true that we tend to go after things with commercial value - it is a business, after all - but how well-known is Gaucher disease? Or Fabry disease? Mucopolysaccharidosis I? People who actually know something about the drug industry will be nodding their heads, though, because they'll have caught on that I'm listing off Genzyme's product portfolio (part of it, anyway), which is largely made up of treatments for such things. There ar many other examples. Believe me, if we can make money going after a disease, we'll give it a try, and there are a lot of diseases. (The biggest breakdown occurs not when a disease affects a smaller number of people, but when almost no one who has it can possibly pay for the cost of developing the treatment, as in many tropical diseases).
But even taking Domenech's three research divisions as given - and they're not bad - don't we in industry even get to do a little bit of translational research? Even sometimes some basic stuff? After all, in the great majority times when we start attacking some new target, there is no drug for it, you know. We have to express the protein in an active form, work up a reliable assay using it, screen our compound collections looking for a lead structure, then work on it for a few years to make new compounds that are potent, selective, nontoxic, practical to produce, and capable of being dosed in humans. (Oh, and they really should be chemical structures that no one's ever made or even speculated about before). All of that is "productization" research? Even when we're the first people to actually take a given target idea into the clinic at all?
That happens all the time, you know. The first project I ever worked on in this industry was a selective dopamine antagonist targeted for schizophrenia. We were the first company to take this particular subtype into the clinic, and boy, did we bomb big. No activity at all. It was almost as if we'd discovered something basic about schizophrenia, but apparently that can't be the case. Then I worked on Alzheimer's therapies, namely protease inhibitors targeting beta-amyloid production, and if I'm not mistaken, the only real human data on such things has come from industry. I could go on, and I will, given half a chance. But I hope that the point has been made. If it hasn't, then consider this quote, from here:
“. . .translational research requires skills and a culture that universities typically lack, says Victoria Hale, chief executive of the non-profit drug company the Institute for OneWorld Health in San Francisco, California, which is developing drugs for visceral leishmaniasis, malaria and Chagas' disease. Academic institutions are often naive about what it takes to develop a drug, she says, and much basic research is therefore unusable. That's because few universities are willing to support the medicinal chemistry research needed to verify from the outset that a compound will not be a dead end in terms of drug development."
The persistent confusion over what's done in industry and what's done in academia has been one of my biggest lessons from running this blog. The topic just will not die. A few years ago, I ended up writing a long post on what exactly drug companies do in response to the "NIH discovers all the drugs" crowd, with several follow-ups (here, here, and here). But overall, Hercules had an easier time with the Hydra.
Now, there is drug discovery in academia (ask Dennis Liotta!), although not enough of it to run an industry. Lyrica is an example of a compound that came right out of the university labs, although it certainly had an interesting road to the market. And the topic of academic drug research has come up around here many times over the last few years. So I don't want to act as if there's no contribution at all past basic research in academia, because that's not true at all. But neither is it the case that pharma just swoops in, picks up the wonder drugs, and decides what color the package should be.
But what really burns my toast is this part:
So Pharma is interested in making money as their primary goal — that should surprise no one. But they’re also interested in avoiding litigation. Suppose for a moment that Pharma produces a drug to treat one non-life threatening condition, and it’s a monetary success, earning profits measured in billions of dollars. But then one of their researchers discovers it might have other applications, including life-saving ones. Instead of starting on research, Pharma will stand pat. Why? Because it doesn’t make any business sense to go through an entire FDA approval process and a round of clinical trials all over again, and at the end of the day, they could just be needlessly jeopardizing the success of a multi-billion dollar drug. It makes business sense to just stand with what works perfectly fine for the larger population, not try to cure a more focused and more deadly condition.
Ummm. . .isn't this exactly what happened with Vioxx? Merck was trying to see if Cox-2 inhibitors could be useful for colon cancer, which is certainly deadly, and certainly a lot less common than joint and muscle pains. Why didn't Merck "stand pat"? Because they wanted to make even more money of course. They'd already spent some of the cash that would have to have been spent on developing Vioxx, and cancer trials aren't as long and costly as they are in some other therapeutic areas. So it was actually a reasonable thing to look into. If you're staying in the same dosing range, you're not likely to turn up tox problems that you didn't already see in your earlier trials. (That's where Merck got into real trouble, actually - the accusation was that they'd seen signs of Vioxx's cardiovascular problems before the colon cancer trial, but breezed past them). But you just might come up with a benefit that allows you to sell your drug to a whole new market.
And that might also explain why, in general, drug companies look for new therapeutic opportunities like this all the time with their existing drugs. In fact, sometimes we look for them so aggressively that we get nailed for off-label promotion. No, instead of standing pat, we get in trouble for just the opposite. Your patented drug is a wasting asset, remember, and your job is to make the absolute most of it while it's still yours. Closing your eyes to new opportunities is not the way to do that.
The thing is, Domenech's heart seems to be mostly in the right place. He just doesn't understand the drug industry, and neither do his NIH sources. Talking to someone who works in it would have helped a bit.
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July 17, 2009
Posted by Derek
I seem to have been putting a lot of graphics up this week, so here's another one. This is borrowed from a recent Science paper on the future of natural-products based drug discovery. It's interesting both from that viewpoint, and because of the general approval numbers:

And there you have it. Outside of anomalies like 2005, we can say, I think, that the 1980s were a comparative Golden Age of Drug Approvals, that the 1990s held their own but did not reach the earlier heights, and that since 2000 the trend has been dire. If you want some numbers to confirm your intuitions, you can just refer back to this.
As far as natural products go, from what I can see, the percentage of drugs derived from them has remained roughly constant: about half. Looking at the current clinical trial environment, though, the authors see this as likely to decline, and wonder if this is justified or not. They blame two broad factors, one of them being the prevailing drug discovery culture:
The double-digit yearly sales growth that drug companies typically enjoyed until about 10 years ago has led to unrealistically high expectations by their shareholders and great pressure to produce "blockbuster drugs" with more than $1 billion in annual sales (3). In the blockbuster model, a few drugs make the bulk of the profit. For example, eight products accounted for 58% of Pfizer’s annual worldwide sales of $44 billion in 2007.
As an aside, I understand the problems with swinging for the fences all the time, but I don't see the Pfizer situation above as anything anomalous. That's a power-law distribution, and sales figures are exactly where you'd expect to see such a thing. A large drug company with its revenues evenly divided out among a group of compounds would be the exception, wouldn't it?
The other factor that they say has been holding things back is the difficulty of screening and working with many natural products, especially now that we've found many of the obvious candidates. A lot of hits from cultures and extracts are due to compounds that you already know about. The authors suggest that new screening approaches could get around this problem, as well as extending the hunt to organisms that don't respond well to traditional culture techniques.
None of these sound like they're going to fix things in the near term, but I don't think that the industry as a whole has any near-term fixes. But since the same techniques used to isolate and work with tricky natural product structures will be able to help out in other areas, too, I wish the people working on them luck.
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July 13, 2009
Posted by Derek
The world may or may not have been waiting for this, but there's now some theoretical support for the Peter Principle. What relevance does this have to the pharma-biotech industry, you ask? Well, actually, you probably don't ask, because you know just the sort of thing I'm talking about. If you've spent any time in any sort of large organization, you've seen what looks like empirical proof of the Peter Principle already - actually, you may already be picturing specific examples and muttering to yourself.
The classic R&D form of the phenomenon is someone who's capable of doing good research, but just terrible at managing people. You don't have to go very far up the hierarchy to see this one. Sad to say, there are quite a few scientists who reach their "level of incompetence" (to put it in Peterian terms) as soon as they get their first direct report under them. People skills are often not necessary to get through graduate school - in some research groups, they might actually be a handicap - so not every fresh PhD is equipped with managerial skills, to put it mildly. (This topic came up around here a few months ago, in a discussion of whether you want a scientist as a CEO in this business or not).
And the problem, in research as in everywhere else. is that educating a bad manager out of being bad is difficult at best, and impossible at worst. For one thing, a substantial number of poor managers have no idea, no idea at all, that anything might be amiss on their end. And the very deficiencies that keep them from realizing this also help to make them more impervious to attempts to change it. There's empirical support for this, too - often, the first thing that incompetent people are bad at is estimating their own competence.
Now that theorists are reproducing the Peter effects in model systems, that brings up the logical next question: can this help us do anything about the problem? The authors have some suggestions, but I don't see them being implemented any time soon. That's because the Peter Principle, if it's really true, necessarily implies that you should resist the temptation to always promote your best people:
We summarize in Table 1 the percentages of gain or loss obtained for the different strategies applied. These results confirm that, within a game theory-like approach, if one does not know what way of competence transmission is acting in a given organization, as usually one has in the majority of the typical situations, the best promotion strategies seem to be that of choosing a member at random or, at least, that of choosing alternatively, in a random sequence, the best or the worst members. This result is quite unexpected and counterintuitive, since the common sense tendency would be that of promoting always the best member, a choice that, if the Peter hypothesis holds, turns out to be completely wrong.
Try getting that one past the HR department!
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July 9, 2009
Posted by Derek
Let's open up again that contentious subject of scientific jobs. In my entire memory, I have never once heard anyone editorialize that we are turning out too many scientists and engineers. A looming shortage has always been, well, looming. And these days, it's easy to wonder how much of a shortage there can possibly be. This USA Today article (link thanks to a longtime reader of this site) rounds up a lot of quotes from people in the game, and wonders about the same thing:
While there have been warnings for more than 50 years, a renewed push over the past four years has earned the attention of both the Bush and Obama administrations.
Speaking to the National Academy of Sciences in April, Obama announced "a renewed commitment to education in mathematics and science," fulfilling a campaign promise to train 100,000 scientists and engineers during his presidency.
Only problem: We may not have jobs for them all.
As the push to train more young people in STEM — science, technology, engineering and math — careers gains steam, a few prominent skeptics are warning that it may be misguided — and that rhetoric about the USA losing its world pre-eminence in science, math and technology may be a stretch.
I think that one muddying factor (as the article mentions later on) is that lumping all scientists, mathematicians, and engineers together isn't very useful. Civil engineering is very different from optimizing computational algorithms, which is quite different from medicinal chemistry, which is quite different from semiconductor research. When I hear people talk as if all these were part of a coherent whole, I sometimes get the impression that, because of the speaker's own educational background, they must seem to be one somehow. But it doesn't make sense to me.
That said, I know that employment prospects in our own field of drug research are very much on everyone's mind. The last year or two have been the worst I've ever seen for hiring in the industry. I go back only to 1989, but longer-serving colleagues report the same feelings. Looking over the ads that appear in the likes of C&E News certainly doesn't make a person think differently.
The unimpressive rate of successful new drug introductions, coupled with the rising costs of R&D (especially clinical trials), was already squeezing us before this whole economic downturn hit. Outsourcing was one big response to that (again, pre-downturn), and we've hashed over that issue around here several times. (The downturn's effect on the outsourcing business has been mixed, by the way, as far as I can see. Some companies may have increased their offshore work, but others have cut back on it as one form of discretionary spending).
But back to the big questions, which are pretty damned hard to answer: are there technical/scientific fields where the US has too many people for the jobs available? If so, are these situations part of various cyclical trends, or are they full secular downturns, or what? Did we get there by training too many people for a job market that was otherwise in reasonable shape, or did the number of positions start to fall and not hold up that end of the process, or both? And where are all these variables going in the future?
I don't know, and I'm willing to bet that no one else does, either. When you're listening to someone talk about these issues, though, I think that there are several things to look out for that might indicate that the person you're hearing has not thought things through well enough. First off, there's that everything-in-one-category problem that I mentioned above. Anyone who seriously wants to address the issue in that fashion hasn't, I'd say, worked on the problem long enough. Secondly, I think it's fair to say that anyone who seems to uncritically accept the idea of a severe shortage of manpower across the whole technical/scientific area is not arguing from a position of strength. Unfortunately, that category has, in the past few years, included people like Bill Gates, various cabinet secretaries, heads of the National Science Foundation, and other such riff-raff. This isn't helping to clear the air.
Next, anyone who brings up the numbers of Chinese and Indian graduates in these areas, especially anyone who just quotes numbers of "engineers" without breaking things down more, needs to think harder. It's true that impressively huge numbers can be quoted, but (sad to say) they're not all they're cracked up to be, at least not yet:
Even Asia's much-touted numerical advantage is less than it seems. China supposedly graduates 600,000 engineering majors each year, India another 350,000. The United States trails with only 70,000 engineering graduates annually. Although these numbers suggest an Asian edge in generating brainpower, they are thoroughly misleading. Half of China's engineering graduates and two thirds of India's have associate degrees. Once quality is factored in, Asia's lead disappears altogether. A much-cited 2005 McKinsey Global Institute study reports that human resource managers in multinational companies consider only 10 percent of Chinese engineers and 25 percent of Indian engineers as even "employable," compared with 81 percent of American engineers.
So there's that to consider. And we haven't even talked about the various solutions proposed, even stipulated what the problems are. Pour money into education? Industrial policy? Retraining? Tax incentives? It's a mess. I guess my main message is to beware of anyone who tries to tell you that it's a reasonably understandable one.
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July 8, 2009
Posted by Derek
Anyone who defends the pharmaceutical industry has to be ready to hear, over and over and over, about how much it spends on sales and marketing versus R&D. This is thought to be a telling point about where the priorities really are. I've addressed this one several times, and my best response is to point out that sales and marketing are actually supposed to bring in more money than you spend on them, and do so more reliably than R&D in the short term.
There's now a very useful paper in Nature Reviews Drug Discovery looking at just this issue. The authors (from three universities in the US and Israel) are looking into the general question of which is the better use of money: put it into R&D for the long term, or promote existing products for the short term? I should make clear at the outset that those two options do line up in that way. R&D expenditures take years to pay off, if ever, given the amount of time that drug development takes. And marketing of a current product had better start paying off in a shorter time frame, because every patented drug is a wasting asset, constantly being eaten into by competition and by its time to patent expiration.
So which makes more financial sense? The authors numbers from the Wharton databases on publicly traded drug companies, looking at those with more than $50 million in sales. Using the company stock prices as a measure of value (J. Finance LVI(6), 2431–2456 (2001), I'm giving you references here), they found, in general, that R&D investments have a net positive effect, while increased promotion has a negative effect. (See also Rev. Account Stud. 7, 355–382 (2002), another journal I don't reference much). Both effects are larger for smaller companies, as you might expect, but they held up across the industry. The effect also holds up if you factor out the compensation packages of the top five executives of each company (which is a nice control to run, I have to say). And yes, since you ask, there is a negative effect on stock price that correlates to higher executive compensation, and I'm willing to bet that this effect holds for more than just the drug industry.
Since we're talking about stock prices, which are generally forward-looking, the way to interpret these results is probably that investors expect R&D expenditures to pay off in the long term, but actually expect sales and marketing expenditures to reduce long-term value. If that's so, then why spend money on marketing? The reason the authors propose is just what I'd been talking about: short-term reliability. Drug discovery and development is inherently risky, and promotion of existing products is (at least comparatively) more of a sure thing. Companies engage in a mix of the two to try to even the cash flow out. (And as the authors note, if executive compensation is tied more to short-term performance, then there's an incentive to go with the short-term gains).

In general, though, you'd figure that companies should invest more in R&D. And here's the real kicker: that's exactly what's been happening. As this graph from the paper shows, over the last thirty years expenditures in the Sales, General, and Administrative area have risen only slightly as a per cent of sales. The Cost of Goods Sold category (materials, physical plant, manufacturing facilities, etc.) has gone proportionally down, with an interesting excursion in the mid-1990s. (Note also that this used to be the leading category). And R&D expenditures (again, as a per cent of sales) rose in the 1980s, were flat in the 1990s, and have risen since then. Overall, since 1975, the proportion of money spent on R&D has more than tripled, from 5% to 17%.
This, I hardly need point out, does not fit the narrative of some of the e-mails and comments I get. Some perceptions of the drug industry have us, Back In the Old Days, as spending our money on R&D, only to slimily slide into becoming pure marketing businesses as time has passed, with our recent years being especially disgusting and rapacious. According to these figures, this is at the very least not accurate, and comes close to being the opposite of the truth. Comments are welcome - most welcome, indeed.
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July 1, 2009
Posted by Derek
I wrote last summer about Vanda Pharmaceuticals and their difficulty getting a new antipsychotic Fanapt (iloperidone) through the FDA. At the time, they'd received one of those wonderful requests for more information from the agency, of the kind that spread cheer whenever they appear. I couldn't see how the company could clear this up without (probably) having to spend a lot of money that it didn't have, and I was very pessimistic about their survival.
And I was wrong. Big-time. Vanda received approval for iloperidone, in what is a major surprise not just for me, but for the company's hardy shareholders and for the few analysts left covering them. After congratulating the company, I feel like asking them "So, how did you do that, anyway?" To the best of my knowledge, the company didn't go back into the clinic - and it's hard to see how they even could have. Less than a year just isn't feasible from a standing start in an antipsychotic trial just on logistic grounds, let alone the fact that Vanda doesn't seem to have had the funds to even try.
So was this all just a regrettable misunderstanding? And if so, on whose part? Did the FDA misinterpret something, only to be argued back by the company? Or did Vanda mess something up in the original regulatory package? We may never know.
The question now that the dog has caught the mail truck is what to do with it. No deal has been announced yet to market the compound, and Vanda still doesn't seem to have the funds to sell it by itself. (Moreover, they don't seem to be recruiting a sales force). Some observers think that the company may have had time selling itself off, and that the run in the stock was overdone just for that reason.
In the meantime, though, the company should enjoy its good fortune (as should anyone who was holding its stock when the news hit). And readers of this blog should make a note that, in case there was any doubt, I can be completely, totally wrong about the field I work in. . .
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June 30, 2009
Posted by Derek
Sanofi is saying "no layoffs" in their announcement today, but is instead counting on "voluntary staff departures". Here's the press release, courtesy of Fierce Biotech, notable for its relentless insistence on not capitalizing the name of the company.
I'm not sure how those voluntary departures are supposed to work - I can tell you it would take a lot to get anyone in R&D to volunteer to leave their job in this climate. So, generous - very generous - buyouts are one way, and sheer attrition is another (although turnover must not be so high these days either, with fewer places to go). The press release is rather short on details. Don't believe me? Chew on this:
"To implement this new R&D model, sanofi-aventis will group researchers in more productive structures and engage in recruiting and training to adapt the profiles and skills of its collaborators to the demands of these mutations. The model also includes strengthening 'exploratory structures' that work in close collaboration with outside entities and deploying reactive 'entrepreneurial units' to encourage the emergence of innovation and accelerate the marketing of innovative products."
Well, OK, then! I guess we'll have to wait some more for this fog to condense into something recognizable.
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June 24, 2009
Posted by Derek
There's a lot of talk that something big is going to happen at Sanofi-Aventis next week. What we don't know is whether this is a sales-and-marketing change, a mostly-European change, or what. The company's been through layoffs already, but hey, in this climate, who hasn't? More on this as something reliable emerges. . .
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Posted by Derek
There are some interesting statements from GlaxoSmithKline CEO Andrew Witty here at Reuters. He admits that morale was completely in the scupper around the place a few months ago, which certainly seems to be true, but says that they're turning things around. To that point, remember all that stuff a few years ago about how GSK's research structure exemplified pretty much everything that a drug company needed to have? Well. . .
"We've really thrown into reverse much of the trend of research organisation that had developed over the last 15 years," Witty said.
Over that time, the drugs industry was a big commercial success but it took a "wrong turn" by deciding that drug discovery was an industrial process based on large-scale application of technologies like genomics, proteomics and combinatorial chemistry.
"These were all supposed to transform productivity yet none of them did. It turns out, in my view, that research is much more of an art than a science," Witty said.
Several thoughts come to mind. First off, I take the point about art versus science, but it's hard to do art on an industrial scale. That, to my mind, has been one of the major problems in all of drug R&D. He's right that the industry keeps seizing on things that promise to take some of the craziness out of the process - but it's not like the temptation isn't still around. We just haven't seen the latest brainwave yet.
But still, over time, some of the random element has decreased. We actually do understand a lot of things better than we used to. We know to look for hERG, to pick one example, and there are others. But these things don't (yet) add to enough of a transformation. Adding more and more knowledge to the pile has to help - I'm certainly not enough of a nihilist to deny that - but it's fair to say that it hasn't helped as quickly and as thoroughly as we might have hoped.
You can find opinions all up and down that spectrum: at one end are the nihilists themselves, who hold that the problems we're trying to solve are (at present) too hard, and what's more, they're likely to remain too hard for the foreseeable future, so you'd better get lucky - and design your research structure to improve your chances of doing that. Moving up from there, you have a lot of people in the middle who see incremental progress, but (with Goethe) worry that "Where there is much light, there is much darkness". Every new advance untangles a few things, but also ends up illustrating how much more we need to know. Opinions in this crowd vary, from pessimists who come close to the first nihilist group, all the way up to optimists who hold out hope that things will start making more sense soon. And past them, you come to the super-optimists, the Kurzweilians who are waiting for the Singularity.
But finally, reading the Witty article, I can't help but imagine an interview in around 2020, with whoever's in charge then talking about how they had to get rid of all that musty old research structure that the previous management team had put in. . .
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
June 23, 2009
Posted by Derek
The In Vivo Blog has a piece that everyone who follows small-company press releases should read. "When Is a Billion Dollars Not a Billion Dollars?", they ask. And the answer is, of course, when someone's press-releasing it. Read the whole thing, but here's the short form: when someone says "We just signed a deal worth a billion dollars!", too often they're leaving out the rest of the sentence. It's supposed to continue like this: ". . .if every single thing goes perfectly and all our drugs work and become the biggest successes they possibly can." And since that happens, like, all the flippin' time, well. . .
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+ TrackBacks (0) | Category: Business and Markets | Drug Development
June 4, 2009
Posted by Derek
A colleague of mine read the "Perpetual Patent" item below, and had a thought of his own. "If I were the head of a company that just discovered something like Lipitor", he said, using the example that the Xconomy piece used as well, "I'm probably going to fire all the early stage research people. Who needs 'em? We've got a never-ending patent on a huge drug".
And you know, I hate to say it, but I can't completely rule that one out myself. Not every management team would do this, but some would indeed transform the place from "Company That Looks For New Drugs" to "Company That Found One And Will Now Live Off It For As Long As Possible". After all, the R&D part of the operation is, most of the time, a huge drag on the bottom line. You only keep it around because you need it to come up with something that'll bring in the revenue eventually. So what happens if you decide that your current level of revenue is pretty good - and would look even better if you got rid of that big cost center?
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+ TrackBacks (0) | Category: Business and Markets | Patents and IP | The Dark Side
Posted by Derek
Here's an interesting situation for you: according to IguanaBio, a shareholder lawsuit over the failed Vytorin ENHANCE clinical trial (that's caused Schering-Plough and Merck so much grief) is going to use posts on CafePharma as evidence.
That will be worth watching. CafePharma's message boards have been described (accurately, I'd say) as often being the electronic equivalent of a bathroom wall. There's good information in there, but the signal/noise ratio is abysmal due to the number of ticked-off people who go there to vent. There do appear to have been some posts suggesting strongly that the ENHANCE data were grim, and who knows? They could have been speaking from real knowledge. But there's no way to be sure - and for every post that turns out to be prophetic, there are ten that are totally wrong.
So I'm surprised that these are going to be considered admissable. Anyone investing on the basis of CafePharma board chatter deserves to lose their money - which will go out in brokerage commission fees, if nothing else. Let's see how this plays in court. . .
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+ TrackBacks (0) | Category: Business and Markets | Cardiovascular Disease | Clinical Trials | Drug Industry History
June 3, 2009
Posted by Derek
A few blocks from where I'm sitting, Biogen is having its shareholders meeting today. And since Carl Icahn is still trying very hard to gain leverage in the company's board, it seems to be turning into quite a spectacle over there. (More details).
They're supposed to reconvene at 2 PM for more voting. But from the sound of it, people are adjourning to go out and buy machetes and tire irons. We'll how things come out. . .
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June 2, 2009
Posted by Derek
Well, there's someone who certainly believes in the deuterated-drug idea! GlaxoSmithKline has announced today that they've signed a deal with Concert Pharmaceuticals to develop these. There's a $35 million payment upfront, which I'm sure will be welcome in this climate, and various milestone and royalty arrangements from there on out. I know that the press story says that it's a "potential billion dollar deal", but you have to make a useless number of assumptions to arrive at that figure. Let's just say that the amount will be somewhere between that billion-dollar figure and. . .well, the $35 million that Glaxo's just put up.
Where things will eventually land inside that rather wide range is impossible to say. No one's taken such a compound all the way through development, and every one of them is going to be different. (Deuterium might be a good idea, but it ain't magic.) It looks like the first compound up for evaluation will be an HIV protease inhibitor, CTP-518, which is a deuterated version of someone's existing compound - Concert has filed paten applications on deuterated versions of both darunavir (WO2009055006) and atazanavir (WO2008156632). The hope is that CTP-518 will have an improved enough metabolic profile to eliminate the need to add ritonavir into the drug cocktail.
The company is also providing deuterated versions of three of GSK's own pipeline compounds for evaluation, which is interesting, since that's the sort of thing that Glaxo could do itself. In fact, that's one of the key points to the whole deuterated-compound idea: the window of opportunity. Deuteration isn't difficult chemistry, and the applications for it in improving PK and tox profiles are pretty obvious (see below). It's a good bet that drug company patent applications will hencrforth include claims (and exemplified compounds) to make sure that deuterated versions of drug candidates can't be poached away by someone else. This strategy has a limited shelf life, but it's long enough to be potentially very profitable indeed.
One more note about that word "obvious". Now that people are raising all kinds of money and interest with the idea, sure, it looks obvious. And I'm sure that it's a thought that many people have had before - and then said "Nah, that's too funny-sounding. Might not work. And besides, you might not be able to patent it. And besides, if it were that good an idea, someone else would have already done it. There must be a good reason why no one's done it, you know". Getting up the nerve to try these things, that's the hard part. Roger Tung and Concert (and the other players in this field) deserve congratulations for not being afraid of the obvious.
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Infectious Diseases | Pharmacokinetics | Who Discovers and Why
June 1, 2009
Posted by Derek
Well, the ASCO meeting has been roaring along, with dozens of press releases coming out. (Go to Google News and type that acronym in if you want to get the full experience). They range from the pretty-interesting to the despair-inducing, but one bit of news struck me as particularly worth noting. That's the early-stage deal between Merck and AstraZeneca to combine two of their development candidates in a Phase I trial.
That's Merck's AKT inhibitor MK-2206 and AZ's Mek inhibitor AZD6244, and there's room to think that combining those two mechanisms could be beneficial. But as that In Vivo Blog link details, this deal wasn't initiated through any official contact between the two companies. Rather, someone from Merck and someone from AZ got to talking while they were going through airport security in Dublin, and recognized each other's names. A mere year and a half later, the deal was born.
There's a lot to learn from that story. For one, big drug companies are not, for the most part, looking to do early-stage deals with other big drug companies. Perhaps we'll see more of these in the future, but in general, it's about the least likely form of partnership. Another thing to note is how long it took for this idea to bear fruit. Eighteen months is about right for companies of this size to make up their minds about something like this - and you can decide that (since the oncology field is so complicated) that this is a reasonable period of evaluation, or you can decide, equally objectively, that delays of that magnitude remind you of a sauropod turning around in puzzlement three hours after something bit its tail.
I'm impressed that the deal was made at all. The usual path for new ideas of this sort is to the graveyard, especially in very large organizations, so I have to assume that some people within each company must have really pushed things along to make it happen. It's part of the general bias toward inaction: it's harder to get beaten up for decisions that you didn't make, compared to decisions that you did. Missed opportunities are often invisible.
So, no matter how long it took, or even whether it works out, I still have to congratulate the people involved on getting this agreement to happen. It's worthwhile, I think, just because it's the sort of thing that doesn't happen very often. And I have the feeling that (in the coming years) we're going to have to explore a lot of things in this industry that haven't happened very often. We'll need the practice!
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+ TrackBacks (0) | Category: Business and Markets | Cancer | Clinical Trials | Drug Development | Drug Industry History
May 22, 2009
Posted by Derek
I’ve been getting a lot of objections to my opinion on Arena’s obesity candidate lorcaserin. Specifically, the first level of the dispute seems to be whether or not the recent clinical trial results met the FDA’s criteria for efficacy or not. So, let’s look at the details. Here’s how Arena press-released the results of the trial:
The hierarchically ordered endpoints were the proportion of patients achieving 5% or greater weight loss after 12 months, the difference in mean weight loss compared to placebo after 12 months, and the proportion of patients achieving 10% or greater weight loss after 12 months. Compared to placebo, using an intent-to-treat last observation carried forward (ITT-LOCF) analysis, treatment with lorcaserin was associated with highly statistically significant (p<0.0001) categorical and average weight loss from baseline after 12 months:
-- 47.5% of lorcaserin patients lost greater than or equal to 5% of their
body weight from baseline compared to 20.3% in the placebo group. This
result satisfies the efficacy benchmark in the most recent FDA draft
guidance.
-- Average weight loss of 5.8% of body weight, or 12.7 pounds, was achieved
in the lorcaserin group, compared to 2.2% of body weight, or 4.7 pounds,
in the placebo group. Statistical separation from placebo was observed
by Week 2, the first post-baseline measurement.
-- 22.6% of lorcaserin patients lost greater than or equal to 10% of their
body weight from baseline, compared to 7.7% in the placebo group.
Lorcaserin patients who completed 52 weeks of treatment according to the protocol lost an average of 8.2% of body weight, or 17.9 pounds, compared to 3.4%, or 7.3 pounds, in the placebo group (p<0.0001).
Now let’s go to the FDA’s 2007 draft guidance for weight management therapies. Regarding the primary efficacy endpoint in a Phase III trial of such a new agent, the agency says:
The efficacy of a weight-management product should be assessed by analyses of both mean and categorical changes in body weight.
• Mean: The difference in mean percent loss of baseline body weight in the active-product versus placebo-treated group.
• Categorical: The proportion of subjects who lose at least 5 percent of baseline body weight in the active-product versus placebo-treated group.
And here’s the part that people keep wanting me to highlight:
In general, a product can be considered effective for weight management if after 1 year of treatment either of the following occurs:
• The difference in mean weight loss between the active-product and placebo-treated groups is at least 5 percent and the difference is statistically significant
• The proportion of subjects who lose greater than or equal to 5 percent of baseline body weight in the active-product group is at least 35 percent, is approximately double the proportion in the placebo-treated group, and the difference between groups is statistically significant
So lorcaserin showed 47.5% of patients losing at least 5% of their body weight, versus 20.3 for placebo. And yes, that does appear to meet what the FDA's looking for in terms of categorical efficacy, which is why the company highlighted that result in their press release. And yes (here it comes, Arena fans), the FDA does say ("in general") that an agent can be considered efficacious if a compound meets either the mean or the categorical standards.
But (and you knew that this paragraph was going to start with that word). . .but the FDA does not say "efficacious enough for approval". In general, to use their phrase, the agency does approve things that are efficacious and show safety. But they do that on their own terms, and they are (for better or worse) completely within their rights to turn around and ask for more details - for example, how well a compound like this performs as a combination therapy (which is how many physicians would likely wish to prescribe it).
Then we have the issue of "efficacious to interest a partner". Arena is surely looking to do that, since (as noted the other day) it does not appear that they have the resources to push the product through on their own. Given the potential size of the market for an effective obesity drug, we can be sure that a number of potential partners have been approached, and have taken a meaningful look at the data. So far, no one has taken them up on it. And whatever one thinks about the press coverage that lorcaserin has received (or the reaction from analysts who follow the stock, which has also not been good), it's for sure that these opinions don't count for much when it comes time for two companies to do a deal. Put more directly, if Arena sits down with Merck or Pfizer, what I say on this blog means nothing at all once the door closes. Heck, what they say at JP Morgan means nothing at all, either, because we're all outsiders. Potential partners are getting a chance to look over Arena's prospects, and if the numbers look convincing, someone will bite. If no one bites, we can assume that no one was convinced.
Or perhaps they're waiting for Arena to get even more cash-strapped and desperate. That isn't a very nice way to do business, but isn't unheard of, either, and I can tell you that these aren't very nice times in the drug business. At any rate, for those Arena fans who have been waiting for me to say something about all this, well, here you are. This is as good as you'll get from me - but really, you're wasting your time. You need to be hoping to persuade the people who can initiate nine-figure wire transfers.
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+ TrackBacks (0) | Category: Business and Markets | Clinical Trials | Diabetes and Obesity | Regulatory Affairs
May 21, 2009
Posted by Derek
As predicted here (and everywhere else that's looked at this deal), Johnson & Johnson is not sitting back and letting Schering-Plough "take over" Merck - not when that would mean billions of dollars of lost revenue, they're not. Today the company has filed a notice of intention to arbitrate.
"As the public statements make clear, Merck is acquiring Schering-Plough", the company says, and that triggers an arbitration hearing under their agreement with them for sales of Remicade (and the newer agent, Simponi). Merck continues to insist that their strategy is bulletproof, and I guess we'll find out who's right. It could take months, unless Merck is willing to walk away from that revenue stream (and they're probably not).
Interestingly, that Wall Street Journal link quotes a "person familiar with the matter" as saying that Schering-Plough turned to J&J after Merck made its initial overtures. J&J passed on the chance to acquire the whole company, though, leaving Schering-Plough no choice but to act as if an offer from Merck was the answer to one of their most longstanding prayers.
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May 18, 2009
Posted by Derek
I wrote in March about lorcaserin, Arena Pharmaceutical's serotonin ligand for obesity. Their clinical data had come out, and things (at least to me) didn't look good. They didn't quite make the minimum threshold for efficacy, and the FDA isn't in a mood to take a flyer on on things that don't quite work.
Well, according to Ruthanne Roussel at Obesity Investor, the company looks like it could be running out of cash. So far, at any rate, no partner is appearing. Obesity has always been a tough area to work in, and this economic environment isn't making it any easier for the smaller companies to survive. Arena's done some interesting work over the years, and I'd hate to see them collapse. But it sure looks like a possible outcome at this point. . .
Update: note that not everyone agrees with my take here. On the other hand, others are even more harsh. . .we'll see what comes out in the end. And as always, since I've said nothing about having a position in Arena's stock, that means that I have none.
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+ TrackBacks (0) | Category: Business and Markets | Diabetes and Obesity
Posted by Derek
I've got a piece coming up today at The Atlantic Monthly's business site on the state of the biotech industry out in the Bay Area. Since the Genentech takeover fight broke out, a persistent theme in the comments here (and in e-mail that I've received) has been how well the industry is holding up out there. Opinions range from "basically fine" (a minority, to be sure), to "incipient disaster" (also a minority, but a loud one). The consensus view is that there may well be room to worry.
So let's start the discussion explicitly (here as well as over at The Atlantic. How healthy is the original biotech cluster? And how many of its current problems are due to secular reasons (the general economy, the general state of the drug industry), and how many are home-grown? I'd be very interested to hear from people out there, although I guess it'll be mostly us Eastern types for the next few hours here. . .
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
May 14, 2009
Posted by Derek
Late last year, I wrote about a possible new way to fund drug discovery, a private-equity model that seemed to be in the works at Goldman Sachs. The driving force behind the idea seemed to be Jon Symonds, former CFO at AstraZeneca.
Well, as the InVivoBlog noted yesterday, Symonds has suddenly decamped to Novartis. He’s press-released as their new CFO (after the current one retires), which makes you wonder what’s happened to that drug funding plan. Given the current environment for new financing schemes, and for banking in general (not to mention the current environment at Goldman Sachs), has the whole idea just been shelved?
As the In Vivo folks go on to say, financing clinical candidates in this way isn’t necessarily a bad idea – it just might be a bad time to try it out. There are a lot of issues to be worked out, but it’s looking more and more like no one’s going to be working them out any time soon. . .
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+ TrackBacks (0) | Category: Business and Markets | Clinical Trials | Drug Development
May 12, 2009
Posted by Derek
Time, regrettably, for some politics. In case anyone’s wondering, my take on yesterday’s health care announcement by the Obama administration is perfectly stated here. I could not agree more.
In other words, I see the “historic announcement” as nothing more than political theater. Everyone got together, held hands, and pledged to voluntarily do some not-all-that-painful things to reduce costs, some of which (cost savings through better record keeping?) have already been underway for years. Even so, the chances of all of these being followed through are still low. And even if they were, the amount of money being saved is only a small fraction of what would be needed to pay for the administration’s stated health care goals.
None of this would bother me all that much, under normal circumstances. A lot of what goes on in Washington, at least in front of the cameras, is an elaborately choreographed dance. It’s related to real political dealing in the same way that a synchronized swimming exhibition compares to the 1956 Olympic water polo match between the Hungarians and the Soviet Union. But (like Megan McArdle in the Atlantic link above), I worry that the administration will now pretend that these savings are real. When they turn out to be (gasp!) insufficient, a crisis will be declared (you should never waste one, you know), and more persuasive measures will be used. You know, just as in the recent Chrysler “bailout”, a term I can only put in quotes. (Mickey Kaus perfectly sums up my feelings about that one, in that link and here).
Why should I care? After all, my industry should be more or less in the clear, since prescription drug spending is only about ten per cent of the nation’s health care costs, right? Well, my worry is that we’re a very visible (and often disliked) ten per cent, a nail that sticks up and that may well get hammered down pour encourager les autres. I hope I'm wrong. But I think that the Chrysler deal was just a curtain-raiser for an even bigger one in the same style for General Motors, and I hope I'm wrong about that one, too.
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+ TrackBacks (0) | Category: Business and Markets | Current Events | Drug Prices
May 11, 2009
Posted by Derek
I've been meaning to write about the latest advance in salesmanship, pioneered by Merck and Elsevier. As most of you will have heard, the two collaborated to produce something called "The Australasian Journal of Bone and Joint Medicine". This appears to have looked like a real journal, complete with the Elsevier logo and a board of review editors, but it apparently featured nothing but articles (complimentary article, needless to say) about Merck products.
Update: It appears that Merck and Elsevier actually set up a whole publishing division, Excerpta Medica, to handle these things. More here and many more details here.
The news broke about a month ago in The Australian, and the story has been rolling downhill ever since, getting larger all the way. Now Elsevier has issued a public apology for their part in the whole affair, as well they should.
As Orac points out, there are a lot of "throwaway" journals out there, particularly in the medical field. These are sort of once-over-lightly review journals, condensing the literature down into short reads. And that's not all bad, although you wouldn't want a physician to be getting all his or her news that way. But this latest venture was designed to look like a real journal, and was, in fact, full of real articles which had been reprinted from other Elsevier journals. That's well over the line.
I'm not sure who to be more mad at here: Merck or Elsevier. This one really looks like a team effort. If Merck wants to assemble a bunch of previously peer-reviewed studies and put them out under some banner to show how wonderful their drugs were, well, that's fine by me. But that banner shouldn't be something that's deliberately designed to look like a peer-reviewed journal itself. And the collection should have a disclaimer on the cover that it's being paid for by Merck, and the first page of every article should have another box: "As originally reported in (journal citation) - brought to you as a service by Merck". I wouldn't have a problem with that at all.
But that (completely above-board) style seems to be just what the company wanted to avoid, and they got Elsevier, a large and (apparently spottily) respectable scientific publisher to say "Yes, indeed!". Merck's marketing people should be ashamed of themselves, but they should be ashamed for doing what they're paid to do too vigorously. Elsevier, on the other hand, shouldn't be doing this sort of thing at all.
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+ TrackBacks (0) | Category: Business and Markets | The Dark Side | The Scientific Literature
May 1, 2009
Posted by Derek
Science has a short interview with Richard Scheller, who will be running R&D now at Genentech. A highlight:
Q: How do you plan to maintain the famous Genentech culture?
R.S.: By making sure that scientists continue to have time to work on their own projects that aren't translational, that aren't governed in any specific way, and that scientists have time to think and imagine and invent, not just do routine things.
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+ TrackBacks (0) | Category: Business and Markets | Who Discovers and Why
April 30, 2009
Posted by Derek
We now have more data on Dendreon’s results for their prostate cancer therapy Provenge, and the numbers do, in fact, look good. This isn't a cure for refractory prostate cancer, but there seems to be a real statistical improvement in survival, with side effects no worse than the placebo group, and that should be enough for the FDA. In oncology you have to take what you can get.
What’s bizarre is the trading that went on in the company’s stock just before they started presenting on Tuesday. For reasons that are still unclear, a horrendous wave of selling hit within the space of a few minutes, and the stock went down as if hit with a club. Having risen to nearly $25 by about 1 PM, trading was halted in the stock at 1:27, with it now going for $11.81. As the company’s shareholders raved and cursed in utter consternation, the company was detailing exactly the results they’d been hoping to hear.
Wednesday, the stock shot straight back up to its former levels, but that doesn’t help the many people who (prudently, they thought) had put stop-loss orders in and had thus already been sold out. This Bloomberg story has a fellow who was cashed out at $9.31, which must make him wonder (1) just what the hell was going on, anyway, and (2) just what it means to halt trading in a stock, if you’re going to find yourself traded out of it at an even lower price.
I can’t help out with question (1) – I have to say, I’d like to know the answer to that one myself. But as for (2), that’s the problem with stop-loss orders, particularly in a stock that doesn’t have much of a float. Movements, especially downward ones, come suddenly and discontinuously, and the stock doesn't hit all the grace notes on the way down (as Fred Schwed
used to say).
So good luck to Dendreon, and to the patients who will use Provenge. Dendreon's investors, on the other hand, have probably been through the power-wash and spin cycle so many times that they hardly know what's hit them.
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April 14, 2009
Posted by Derek
Post updated below - DBL Dendreon is a company that's really been through it, as have their investors. Many will remember the upheaval back in 2007, when the company showed what they felt were impressive results for their autologous prostate cancer immunotherapy Provenge, got a favorable reception from the FDA's advisory panel, but were then hit with an "approvable" letter asking for more data. (Here are three posts on that: before, during, and after).
Well, the company is back with more data, in 512 patients. And initial reports are that the numbers look good. They're doing a conference call as I write, so we'll know more shortly, and I'll update this post as things become more clear.
Update: Hmmm. On the conference call, the company has declined to present any numbers, saying that it's bound by a blackout requirement for its presentation at the American Urological Association on April 28th. Their main statement seems to have been that the drug met its primary endpoint, reducing the risk of death compared to a placebo. There are a lot of other questions about Provenge - whether it slows the progression of prostate cancer or not, for example - but survival is presumably the bottom line. That was the main focus of the whole trial (as opposed to the cancer-progression endpoint of their smaller, earlier one).
So we'll see at the end of the month how impressive the statistics look. The market's reacting well to the news, although you could argue that the stock has pulled back a bit. It closed yesterday at 7 and change, traded over 21 during the morning, and is around 17 now. (Of course, some of that pullback could be from people giddily selling their shares on the news, just as some of the spike could well have been some people rather less giddily covering their short positions).
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+ TrackBacks (0) | Category: Business and Markets | Cancer | Regulatory Affairs
April 8, 2009
Posted by Derek
So Pfizer's announced its post-Wyeth structure, and on the face of it, the plan makes as much sense as you can make of such a massive organization. The big divide is between small molecules and biologics, which makes sense - the two of them have different R&D, manufacturing, and regulatory issues in many ways. Besides, that's how most companies already divide things up internally if they do both.
There's a lot of brave talk in the press releases about how Pfizer has learned from its past mergers, how this organization will be ready to take wing just as soon as the last signature is put on the last form. I'm not buying it. It's good to hear that the company realizes that the previous mergers led to so much disruption and lost time, but I don't see how good intentions will help that much. There is no way, as far as I can imagine, to integrate ten billion dollars worth of R&D in an orderly fashion. The best that they can hope for is "not as hideous as the last couple of times", but I suppose the lawyers wouldn't sign off on that language as appropriate. And even that's a fairly ambitious goal.
We won't know for years if they've succeeded, either. The final measure is the productivity of the new organization, and for some time they'll be running on what was already in the works at both companies before. That, as I've said before, is one of the hardest things about the drug business: the lag time before you see results. You can change the early R&D, and see in a year or two if you've started more projects than you used to. But you won't know if they were good projects (or better ones, anyway) until they've run for a while. Maybe you just lowered your standards and initiated a bunch of stuff with a higher failure rate?
For that to resolve itself, you have to see how many of these new-regime projects make it all the way to the clinic. But then you'll have to wonder if you've just thrown some exhausted, just-barely-there stuff over the wall to declare victory - everyone who's worked in a big pharma organization has seen that one. The real measure of success in this industry is how many things come out of the clinic alive, and that's so dependent on luck (since we don't understand enough about toxicology and drug mechanisms), that those numbers may not reflect anything you're doing particularly right or wrong. No one at Pfizer saw torcetrapib's horrible failure coming, for example.
But hold on - another real measure of success in this industry, when you get right down to it, is money. Did those projects you started, took to the clinic, got through human trials, took to the FDA, and got out onto the market ever pay for themselves? There's always the possibility of an Exubera, to pick another example from Pfizer's recent past. And now we're up to ten or twelve years since you overhauled basic R&D. How many overhauls have you done since? Who's to say what thing had which effect and how? Pfizer can tell you about that, too - the dust hadn't settled from the Warner-Lambert deal when the Pharmacia one went through.
So, yes, we'll see about all this. But we won't see for a while, and when we finally do see, it'll probably be impossible to say just what we're looking at.
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April 7, 2009
Posted by Derek
Biogen Idec has continued to fight off Carl Icahn, opposing his nominees to the company's board and setting up a fight at the annual meeting later this year.
But this morning (as a correspondent has just pointed out to me) the company's stock has been taking off. It's up about 7%, with the broad market down, and all of this rise seems to have been since 11 AM. Someone's stepping up and buying a good amount of BIIB, for some reason. But who, and why?
Update: ah, here we go - rumors of Sanofi-Aventis or some other non-Ichan entity stepping in. We'll see if there's anything to it. . .
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+ TrackBacks (0) | Category: Business and Markets | Current Events
March 27, 2009
Posted by Derek
I’ve been hearing for a little while about impending layoffs at Merck. I decided, though, that this isn’t the environment to be putting up posts about rumors of job cuts – everyone’s jumpy enough already. But unfortunately, they aren’t rumors any more.
What I’m hearing about, in person and via e-mail, is what sounds like across the board R&D shrinkage For what it’s worth, the damage seems heavier (on a percentage basis) at West Point and in Montreal, but I haven’t heard of any R&D area yet that’s completely missed out. More details are welcome from those closer to the sites affected.
You’d have to think that these cuts have been in the works for a while, but that the Merck/Schering-Plough merger is what’s turned them into reality right now. Still, that’s a bit unusual – most of the time, with these mergers, the job cuts come from the new organization after the merger goes through. With one partner in the deal swinging the ax before that even happens, you wonder what’s going to go on once the two companies merge. Fewer cuts overall than people were estimating (or fewer on the Schering-Plough end? That would be a switch.) Or is this just a head start on something that needed deeper cuts for it to make any financial sense at all?
Either way, if anyone out there knows of some organizations that are in a hiring mood, please feel free to post those details in the comments section. One thing’s for sure – anyone who is trying to fill positions these days will see some good candidates.
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March 13, 2009
Posted by Derek
I’d heard of Neose Pharmaceuticals on and off over the years. They’d been trying to make a go of it in carbohydrate-based drug discovery, an underappreciated and underserved niche. But late last year the company announced that it had run out of money and out of time. And if you really want to see what the end of the line looks like, well, this is it.
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March 12, 2009
Posted by Derek
So Roche and Genentech have come to terms: $95 per share. They'd offered more last fall, but, well, it isn't last fall any more. And this was still well above Roche's recent offers, although they'd come up to $93 in public before this was announced this morning. Genentech shares had been climbing up to much closer to Roche's revised offer, so the deal was starting to become clearer in the last couple of days.
What's this going to mean? The main encouraging thing I can take out of it is that Roche is saying that they want to keep Genentech's R&D operation separate, and to keep their talent and their approach to discovery. It's nice to at least hear lip service to that idea - it's a start - but now we'll have to see if they follow through.
Overall, though, I don't like big mergers, as has been a repeating theme around here. And now we've had three whoppers in just the last few months: Pfizer/Wyeth, Merck/Schering-Plough (I know, I know, I'm supposed to have those names the other way around, but come on), and now Roche/Genentech. So I can't say that the industry is moving in a way that makes me really happy. But at the same time, I can see why all this is happening, so perhaps it's the underlying trends which lead to these things that should be making me unhappy - I should be upset about the causes, not the symptoms. (Mind you, I think that the decreased research productivity that accompanies some of these mergers tends to blend the whole cause and effect relationship up a bit).
And it's important not to confuse these moves with the current financial mess. The drug industry has problems totally outside the turmoil in the credit and equity markets. If anything, some of these conditions are making it harder to do the deals that the companies themselves feel like they have to do (look, for example, at how Pfizer had to work to get the financing together for the Wyeth takeover). No, if the markets were in better shape, we'd be seeing the same sort of thing - maybe a bit faster, or a bit slower, but different only in degree, not in kind.
We aren't producing enough good new drugs quickly enough. Collateralized debt obligations and credit default swaps have nothing to do with that. And we're either going to have to find ways to increase our research productivity, or batten down the industry for survival under the conditions we have now. Mergers, right- or wrong-headed, are part of the latter process. If we could find a way to do the former one, we wouldn't be in the shape we're in now.
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March 10, 2009
Posted by Derek
One issue in the Merck/Schering Plough deal that's come up since it was announced is Johnson & Johnson's role in it. They have a deal on Remicade ( ) and its follow-up golimumab, which provides significant revenue to S-P (who have the non-US rights). J&J is no doubt weighing their options today, because Merck and Schering-Plough structured their deal, by all appearances, specifically to avoid triggering some provisions that would make these rights revert to J&J.
Over at the S-P watchdog site Shearlings Got Plowed, we find this, referring to this partnership agreement which you can find at the SEC. Scrolling down to section 8.2, one finds (emphasis added):
(c) Change in Control. If either party is acquired by a third
party or otherwise comes under Control (as defined in Section 1.4 above) of a
third party, it will promptly notify the other party not subject to such change
of control. The party not subject to such change of control will have the right,
however not later than thirty (30) days from such notification, to notify in
writing the party subject to the change of Control of the termination of the
Agreement taking effect immediately. As used herein "Change of Control" shall
mean (i) any merger, reorganization, consolidation or combination in which a
party to this Agreement is not the surviving corporation; or (ii) any "person"
(within the meaning of Section 13(d) and Section 14(d)(2) of the Securities
Exchange Act of 1934), excluding a party's Affiliates, is or becomes the
beneficial owner, directly or indirectly, of securities of the party
representing more than fifty percent (50%) of either (A) the then-outstanding
shares of common stock of the party or (B) the combined voting power of the
party's then-outstanding voting securities; or (iii) if individuals who as of
the Effective Date constitute the Board of Directors of the party (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors of the party; provided, however, that any individual becoming
a director subsequent to the Effective Date whose election, or nomination for
election by the party's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board; or (iv) approval by the shareholders of a party of a complete liquidation
or the complete dissolution of such party.
That's why the deal is, on paper, Schering-Plough acquiring Merck (of all things). S-P will be the "surviving corporation", you see, so J&J can just go away and keep splitting all that anti-TNF antibody revenue. Somehow I don't think that this is going to go that smoothly. Like "Condor" over at the Shearlings site, I don't see how that language about the board of directors can apply to the new board of the merged company, since Merck was clearly not a party to this agreement. It has to apply, I'd think, to the current Schering-Plough board, which will cease to exist in its present form. No, we're surely going to see some response from J&J, and very soon. They won't walk away from this one.
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March 9, 2009
Posted by Derek
And I thought that I was kidding, at least a bit, in my post where I warned some of the folks buying into Schering-Plough last week that they might be hearing from the SEC. Well, maybe not - whenever a deal like this goes through, the first place they look is in the options market:
Some lucky option players appeared to have reaped a windfall with Schering-Plough call options rocketing after Merck on Monday announced a proposed $41.1 billion takeover of the drugmaker.
. . .a burst of activity in the stock's call options last Tuesday and again on Friday may be too much of a coincidence to overlook and prompted some option traders to ask if inside word of the pending deal reached some investors.
"Our examination of the data suggests a high degree of likelihood that someone did indeed place what I will be politically correct and call nicely timed trades," said Jon Najarian, a founder of Web information site optionmonster.com, in an email to Reuters.
Good luck explaining these, is all I can say. Telling them how lucky you felt that day won't make the folks from the enforcement division go away. As a lawyer in this business once said to me at a meeting, "I have to make sure that no one in this company trades our stock on material information. And material information is defined as something that makes you think about trading the stock."
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+ TrackBacks (0) | Category: Business and Markets | The Dark Side
Posted by Derek
So Merck wasn’t kidding about making a large deal, were they? When I used to work for Schering-Plough back in the 1990s, there were constant rumors, the whole eight years I spent there, about the company merging or being taken over. And as far as I know, those have never really ceased – until now, that is. And Merck has always resisted the big merger route – until now.
This deal would seem to have made more sense a few years ago, when Vytorin looked ready to make huge amounts of money. (Of course, Schering-Plough was more expensive then, and perhaps Merck may have had a bit more confidence in its own pipeline back then, too). But it’s the deal we have today, so does it make sense now?
Well, up to a point. Like many of these, it works the best on paper when you talk about shedding head count and realizing all those cost savings that are supposed to be hiding in the numbers. We’ll have to see how that actually shakes out – the main research sites for the two companies are actually very close to each other in New Jersey, and I’m not sure if that’s a bug or a feature here. One interesting question is what happens to Fred Hassan, Schering-Plough’s wily and ambitious CEO. Back when the two companies first partnered up, the rumor was that Hassan was trying to use this as a springboard into Merck’s upper management, so we’ll see if that’s coming true.
As for the portfolio fit, S-P has been very upbeat about its drug pipeline, and they seem to have convinced them in Rahway. The biggest attraction seems to be the thrombin receptor antagonist program, which I wrote about here from slight personal experience. But there have been stories over the years that Pfizer was never very happy about what they ended up buying when they purchased Pharmacia / Upjohn, Hassan’s previous company. (They were primarily buying Celebrex, of course, and we all know how well that worked out, but the story is that Pfizer believed that they were getting rather more besides).
In a way, though, this deal saddens me, and that’s not because I used to work for Schering-Plough. It’s not like I’m worried about the fate of its corporate culture – to be honest, I can’t say that I much cared for a lot of that culture while I was there. But what strikes me is that Merck has been a symbol of a company that’s done well by going it alone, ruling out these kinds of deals for many years. It’s as if they’re breaking down and giving in, and since I’ve never cared much for mergers in this business anyway, seeing them do one is doubly disturbing.
And for those folks who drove Schering-Plough's stock price up 10% last Friday - hey, nice work. The SEC will be in touch with some of you shortly, I should think.
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February 25, 2009
Posted by Derek
I wanted to link to this excellent article by Felix Salmon over at Wired. He's talking about the mathematical formula that convinced many people on Wall Street that they'd figured out how to price out correlated risks in debt securities. As we all now know, they'd done no such thing, even though trillions of dollars ended up riding on the whole idea.
The article's well worth reading just on those terms. But it's also worth thinking about for what it says about other fields where the risks - and the correlations between different risks - can't be well measured. Such as drug discovery and development! Many examples in Salmon's article can be extended directly to our own industry: what are the risks of each compound in Company X's pipeline failing? If a compound with a similar mechanism wipes out over at Company Y, how have the odds now changed? What about patent risks - if a Supreme Court decision makes everyone rethink issues of infringement or obviousness, how correlated are the patent-busting exposure around the industry? And so on. . .
The difference is that we haven't (quite) convinced ourselves over here that we've got it all figured out, and we haven't issued billions of dollars in derivative securities on top of our individual drug development programs. Not yet, anyway. But if you come away from a study of the current situation with a mistrust of any formula that people try to use to quantify complex systems down to one easy-to-use number, well, you've come out ahead.
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February 23, 2009
Posted by Derek
This article from the San Jose Mercury News has gotten a lot of attention for its take on the Roche-Genentech struggle. The reporter, Steve Johnson, is asking if all the concerns about Genentech's fate are overdone.
It's true that the precious-unique-culture stuff can be overemphasized. Roche has indeed been insisting that they want to preserve Genentech's entrepreneurial spirit (although, to be honest, they'd say that no matter what they were really thinking - what are they going to do, say that they really just want all the Avastin revenue and whatever else is high up in the pipeline?) And, as the article correctly points out, there have been any number of good-sized biotech outfits taken over by Big Pharma over the years.
But what worries me a bit is what's happened to some of those biotechs. It really is rare, from what I can see, for a company's culture to stay the same after something like this happens. It's a bit like those singers who make it big from obscurity; you read these articles saying that they're just the same small-town person that they always were. Right - that would be the least likely outcome of them all.
The thing is, the atmosphere of the acquiring company is going to seep in, no matter what. The new projects are going to be approved using the processes of the larger company, aren't they? They'll be expected to fit into a new, larger picture, and to find their place. And the compounds that advance will advance against the larger company's criteria, not the ones in place under the old regime.
Those are just the direct effects on research. What might be a larger difference is a psychological one. As a stand-alone company, even one the size of Genentech, you live by your own wits, but that changes. As part of a larger company, you know that there are other projects out there, other divisions, and that some of these will be expected to pick up the slack now and then. It's a big company, after all. It'll keep going, even if you don't deliver this year. Right? That's actually one of the trickier parts about running a company with a lot of sites and research areas - the inevitable frictions when one group or another feels (sometimes correctly) that they're being leaned on more than those lazy bums over in XYZ, who haven't delivered a clinical candidate since (fill in the year).
At more than one of my previous jobs, I've heard a lot about a "sense of urgency", and how desirable that is. (That's mostly true, although too much of it can perhaps cause you to do something stupid under time pressure). Overall, it really does help to know that you really do have to deliver, that there's no net down there, no one waiting to cushion the blow. It doesn't make things fun, not necessarily, but it does make them more productive. Remember Samuel Johnson's remark about the minister-turned-forger William Dodd: "Depend upon it, Sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."
Unfortunately, I think the key line in the Mercury News piece is this one:
Besides, Genentech scientists don't have a lot of other employment options these days, according to Rodman & Renshaw analyst Christopher James. "There would be more of a concern in a market where there were a lot of opportunities for people to leave," he said.
There's the rub, all right. . .
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+ TrackBacks (0) | Category: Business and Markets | Who Discovers and Why
February 18, 2009
Posted by Derek
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February 10, 2009
Posted by Derek
The Wall Street Journal recently asked a whole list of CEOs , including Daniel Vasella of Novartis, for business book recommendations, and on the whole, it’s a saner selection than one might have feared (Peter Drucker, etc.)
Over at the Atlantic’s Business Channel (where I’m also contributing some occasional entries), a fellow blogger who operates under the name of “Harvey Wallbanger” noted that article and is in turn soliciting nominations for the worst business book. And yes, he opens with the grievously awful “Who Moved My Cheese”, which I was careful to stay ten feet away from at all times. (On a totally different note, I wonder how many readers I’d have by now if I’d started writing under the name of Harvey Wallbanger? Maybe I don’t want to know the answer.)
To be honest, I’ve always had a bit of a nervous feeling about anyone in the sciences who really seems to enjoy pop business books. Most of the big sellers seem to be full of post hoc reasoning, sweeping statements that are backed up by weak or nonexistent evidence, and plenty of blatant padding. (Other than that, I like ‘em just fine, I guess). I think that a good scientist should always be asking “Hmm. . .I wonder if that’s true?” about every assertion, particularly when someone’s trying to sell you something or claims to be imparting some vital information. And it’s hard for me to reconcile that worldview with this sort of stuff:
(Gary) Hamel specializes in identifying a handful of currently sexy companies, drawing hasty conclusions about the reasons for their success, and then writing books with advice like "go non-linear," "listen to the periphery," and make your company "an opportunity-seeking missile." Later, when some of those companies fail, see their executives carted off to jail, or both, it's no skin off Hamel's back, because he's already penning his next breathless tome.
It's good work if you can get it, I suppose, though not perhaps if you care about where your soul goes after you die. (And if Dante was right about hell holding particular punishments for particular fiends, then there's a whole mess of Harvard Business Press authors who are likely to find themselves sitting on uncomfortable metal chairs for an eternity-long PowerPoint presentation on The New Economy 2.0.)
Now, I like that idea. In fact, I like it so much that I’m going to do something that I’ll probably regret: nominations are open in the comments for new slots in a Dante-style Inferno for various scientific and pharmaceutical sinners. At the moment, I’m picturing the Circle of the Clueless, wandering around for eternity trying to find their rear ends with both hands, but I’ll let the readership take it from there. . .
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Posted by Derek
Well, so much for that "no deadline" statement from Roche the other day. It turns out that the tender offer for Genentech shares expires on March 12 - and if you want to read the whole thing, you can find it here. That link is thanks to the Wall Street Journal's Health Blog, where it's pointed out that the two companies seem to be disagreeing over Genentech's value (no surprise!) and on the financial assumptions that have been made along the way.
Genentech says that they'll make a recommendation within a few days - odds are that they'll tell their shareholders to sit tight, and in that case, the race is on. Will Roche raise their offer? The market certainly thinks so, with DNA closing yesterday below 83. . .
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February 9, 2009
Posted by Derek
So, here’s a question for you: just how long is Roche going to keep their offer open for Genentech? They left their friendly-in-retrospect offer on the table for quite a while, until it was clear that nothing was going to happen. So how long are they prepared to wait? They say that there's no set date, which is a bit odd.
These tender offers generally have some sort of deadline on them, to spur shareholders into action. People have to sit down and think about it: well, is this a fair deal or not? Should I take the offer, turn it down, hold out for a better price as the deadline gets closer? And there’s also the moving-target problem. Stock prices are nothing if not fluid (“The market, sir, will fluctuate!” as J. P. Morgan put it), and that $86.50 price may well look a bit silly (in either direction) after it’s hung out there on the clothesline for a few weeks.
And the longer things go, the more expensive a deal could be. As the Wall Street Journal points out, Roche could end up issuing bonds to pay for a deal that it hasn't even done yet. What happened to those careful, cautious Swiss?
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February 6, 2009
Posted by Derek
AstraZeneca's CEO bets on China, and says that company isn't in the market or a big merger or acquisition. (The same comments that came up when GSK said this the other day can be assumed to have been made, if readers want to save time. . .)
Carl Icahn is making another run at Biogen, nominating his own candidates for the company's board of directors. This will doubtless be an ongoing soap opera for some time.
From another board of directors' meeting, a change at the top at Vertex.
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February 5, 2009
Posted by Derek
GlaxoSmithKline says that they're going to cut yet more staff - this follows up on those reports in the UK press the other day. Interestingly, they're also declining to give any guidance on their 2009 earnings. (Personally, I'd be just as happy if everyone declined to give guidance at all times, but I realize that this would affect the capital markets a bit). And, to the company's credit, they say that they're not in the market for a big merger. Their CEO told the press that "There is no way we are going to be distracted by large-scale M&A within the pharmaceutical sector -- that's not for GlaxoSmithKline."
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Posted by Derek
Today I can recommend this interview with Sir James Black, discoverer of propranolol, cimetidine, and more. He's 83 and has a lot to say about the current state of the drug industry:
He becomes agitated when discussing a Harvard Business Review article from 2008 by Jean-Pierre Garnier, the former chief executive of GlaxoSmithKline, on the future of drug development. He agrees with the prognosis, but is fundamentally at odds over the prescription for change. . . He has no time for classic industry clichés such as "blockbuster" medicines; no truck with the modern approach to peer review; and no patience with any re-writing of history to suggest a more complex contemporary era of drug discovery has replaced one of "lowhanging fruit" in the past. . .He raises his eyes skywards when he discusses last week's $68bn (£48bn) takeover by Pfizer, the world's largest pharmaceutical group, of Wyeth, and says the restructuring to come will sap both teams. "Will they never learn? They will completely exhaust each others' energies for two years."
A lot of people sent that Gautier article along to me, and I meant to blog about it all last fall, but I just couldn't put myself into its worldview enough to do it. And all the talk about Sanofi-Aventis looking to get bigger, Merck saying that they can't rule anything out (Merck! Doing a big merger? Say it isn't true. . .) Well, let's just say that this doesn't look like the kind of future I really want to experience.
So Sir James's viewpoint is refereshing, in a way. He goes on to talk about the general uselessness of marketing forecasts, why you shouldn't let yourself be pulled out of R&D into bureaucratic shuffling, and many other useful things. Read the whole thing, as the blogging phrase goes. . .
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
February 2, 2009
Posted by Derek
The market definitely does not seem to think that Roche's offer for Genentech is going to go through at $86.50. Check out the stock action - note the immediate drop on the announcement of the offer, and the less-than-impressive recovery today. Everyone's waiting on new Avastin data, which (if strong) might allow Genentech to tell Roche to go away - or, at least, come up with a much higher offer, which in the current climate is the next best thing.
The Financial Times says that Sanofi-Aventis is looking to do a big acquisition of their own, not content, it seems, to watch Pfizer go down the chute alone. Thanks to the WSJ Health Blog for catching this one. More as we learn more, and I can't imagine that we're going to like what we hear - although, to be sure, they have managed to leave more research sites open, on the whole.
And GSK seems ready to announce more job cuts, but the UK papers seem to have this happening more in that country than anywhere else. No official word from the company, but it's definitely plausible.
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January 30, 2009
Posted by Derek
An analysis of the offer here, from the Dealbook blog at the New York Times. This one leans toward the idea that the whole thing is an attempt to move Genentech's board to accept a deal, rather than go through with a real tender offer. Either way, someone's clearly been reading Delaware securities law (and the original affiliation agreement between the two companies) very closely indeed.
No matter what the intent, not everyone thinks it's it going to work. And as with the Pfizer / Wyeth deal, the cost of insuring Roche's debt have gone up steeply in response to all this.
Meanwhile, at the WSJ Health Blog, they're wondering how this is all going down with Genentech's "brainy, headstrong" scientific staff. Maybe Roche figures there aren't many other places to go? More on this Monday when some of the dust settles.
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January 29, 2009
Posted by Derek
We’re seeing an example right now of one of the big costs of a drug company acquisition. While the Pfizer / Wyeth deal winds along, with all the regulatory and financial details being slowly worked out, what happens in the R&D organizations?
Well, at Wyeth, I’d imagine that things have slowed down a great deal. No one knows what the future will be like, what parts of the company will stay, and which people will be asked to stay with them. How do you make plans under those conditions? For many people, the project they’re working on is now very much a secondary consideration.
Even outside the personal level, there are a lot of paralyzing influences. The same uncertainties about individual jobs apply to development projects. Some of what Wyeth is working on surely overlaps with what Pfizer’s already doing. So which project goes forward? Not both of a matched set, that’s for sure. There are some projects at both companies that are dead in the water, but no one can be sure which ones, and no one will know for some time to come.
That’s because you can’t really start ironing out these details until the deal goes through. Legally, Pfizer and Wyeth are separate companies, and there are a lot of difficulties involved in sharing information in such depth. Even when that eventually happens, there are going to be plenty of other things to work out. Let’s say that Project Y from Wyeth looks to be in better shape than the corresponding Project Y-Prime from Pfizer, so it goes on through. Fine! But under whose rules does it proceed?
Every company has its own culture about these things – the criteria that are used to recommend a compound to the clinic, the ways those boxes are filled in, the sorts of people who have to sign off on them. A project caught in the middle can stall while all these details are cleared up, losing months (or even a year or two) in the process. You can imagine the disconnects: you guys did check this compound for hERG activity, right? With what assay? And with what cutoff? That’s not the one we use, anyway; we’ll have to run it again, and get that signed off on by. . .hmm, well, by someone, we’ll figure out who’s in charge of that sort of thing soon, about the same time that we figure out who reports to them. Now, about your formulations work. . .you used what, again?
No, all this has a ferocious price, when you measure it in opportunity costs. The people caught up in all this could be doing something much more productive with their time, for sure. This sort of thing doesn’t show up on the books. And the longer the process drags on, the worse it’ll be.
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January 27, 2009
Posted by Derek
You might think that the Pfizer/Wyeth deal means that things are creeping back to normal in the M&A world. But the Wall Street Journal reports that Pfizer is having to pay about 8% for the money it's borrowing, and that the funds are due back in a year. There are also very significant clauses in the deal which make it contingent on Pfizer's bond ratings, etc., and will force the company to shell out if things don't go as planned. There's a 4.5 billion dollar breakup fee, for example, which seems to be about twice the usual contingency.
Meanwhile, Reuters notes that credit default swaps on Pfizer's debt have jumped, reflecting significant uncertainty about whether the whole deal will actually go through. Pfizer's likely to be downgraded even if things go smoothly, so this is going to be expensive from every direction. . .
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January 26, 2009
Posted by Derek
The Pfizer/Wyeth deal is on, and I would really, really prefer to write about something else this morning. The main thing we can hope for is that the company has decided, just possibly, that its previous takeovers didn’t quite work out the way that they were supposed to on paper, and has resolved to run this one differently. The fact that Wyeth doesn’t have One Huge Drug (the way Warner-Lambert had Lipitor, or Pharmacia-Upjohn had Celebrex), gives me at least a little hope. But, as people were pointed out in the comments to Friday's post, there's no way that you can make this deal work without a lot of layoffs.
What’s frustrating about the way Pfizer’s been going is that I don’t think they’ve necessarily been trying to destroy things. It’s just that they’re so massive that it’s hard for them to pick anything up without crushing it. I could be wrong about that – perhaps there’s an official strategy document somewhere that reads:
“Buy company. Strip of immediately valuable pipeline assets and turn over to Marketing Hordes. Fumble with rest of drug discovery pipeline for a few years while trying to figure out where in the massive scheme of things its parts might fit. Realize that the stuff you bought is going off patent – how time flies! Realize that you have too many sites and too many people – close 'em down, lay 'em off. Realize that, for some reason, you have nothing new ready to sell. Go back to step one. Repeat for as long as there's another drug company.”
If this hasn’t been the plan, it might as well have been. Do it differently this time, guys, if you can. The industry can’t take this stuff forever. If people had internal organs that behaved the way Pfizer has the last ten years, we’d be developing drugs to treat them.
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January 23, 2009
Posted by Derek
Well, as most of you will have heard, the news this morning is that Pfizer has been in talks to buy Wyeth for several months now. So they must be serious about it, eh? That's been one of the deals tossed around as a possibility, so it doesn't come as a complete surprise. I guess what does surprise me is that the company really is going to continue their amoeboid lifestyle. But then again, what choice do they have?
I've said so much about Pfizer recently that I think everyone here knows my thoughts (and I was recently quoted in the New London newspaper The Day unburdening myself in similar fashion, which should ensure that I'll never get a job at the company). But what am I saying? Who thinks that Pfizer will be doing anything but shedding head count for several years to come?
Update: I have more comment on this, for a non-industry audience over at The Atlantic's new business site, where I'll be contributing some posts on the drug world.
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January 21, 2009
Posted by Derek
Remember that NitroMed / Archemix deal that I mentioned briefly back in November? Well, it's not going so smoothly. One of the largest NitroMed shareholders, Deerfield Management, objected to the whole idea, and proposed buying the company itself.
Last week the company adjourned its shareholder meeting until yesterday to consider the offer, and yesterday they adjourned again. Deerfield started off at fifty cents per share, and has slowly raised its offer to $0.80. You have to think that that's the sort of behavior that they would have objected to in some other suitor for the company, but hey. . .
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January 16, 2009
Posted by Derek
Well, the researchers at Pfizer have apparently been told that the latest round of layoffs are it, but I get the impression that this reassurance isn’t necessarily widely believed. People there (and at other companies) have been told that everything is rightsized and on track before the ax comes around again. I certainly hope that this time it’s true.
But the sales force doesn’t look to be as lucky, since the latest report is that up to one third of the sales reps might be laid off. That’s always been a volatile part of any company, with a lot of turnover, but man, that’s a lot of turnover. It puts the 8% cut in research into some perspective, but what a nasty perspective it is.
And in the research labs – well, I know that executives are supposed to say these sorts of things. And I know that if you don’t, they’ll find someone who will. But I still have to pass on this quote from Pfizer’s head of research, Martin MacKay, which as far as I can tell was delivered with no grimaces or coughing fits:
"“We haven’t taken any hit on productivity. We haven’t missed any milestones,” MacKay said. “We are keeping the organization fully focused on the work we have to do.”
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January 15, 2009
Posted by Derek
Eli Lilly has been in trouble for some time now regarding off-label promotion of their antipsychotic Zyprexa – specifically, their sales reps seem to have gone around saying that it was useful in treating the dementia of Alzheimer’s patients, although there was no FDA approval for that indication. (Whether it actually is any good for that, or whether much of anything is, I don’t know).
Word is this morning that the company will pay a total of about 1.4 billion dollars to settle the regulatory and civil complaints. That appears to be the new record. The idea is to send a strong message to other companies about aggressive off-label promotion, and a billion dollars should certainly get attention. Lilly will also be operating under a special monitor for five years, which is no joke, either.
But still. . .this is going to happen again, at some point. As we run things in the US, physicians are free to prescribe medications as they see fit (and I have to say, I agree with that principle). Insurance companies can pay for these or not as they wish, but the doctors can write for what they like. Drug companies, on the other hand, can only market for the indications that they’ve been approved for, and in this gap you can lose 1.4 billion dollars.
Despite these problems, I think the lines need to stay about where they are, although this is always going to cause problems. There’s a temptation to try to broaden your market when you have only preliminary data – worse, there’s a temptation to broaden it when you have no data at all. That’s got to be kept in check somehow. If you want to mark the limits of my libertarian leanings, there’s one of them. I worry that if every company were free to market every drug for everything, the resulting free-for-all would drag us all back down to the level of the late-night infomercial hucksters. The potential profits are just too great; they’re a moral hazard, and they’re not commensurate with the benefits for society at large.
The only middle ground I can think of at the moment would be a category of “Some evidence exists for. . .”, which would be in between an approved and unapproved indication. Perhaps then the sales reps could mention it? Maybe not, though, because where would you draw the line for how much promotion you could do? How would we keep this from turning into a battle zone? And there are too many ways that it could be abused: running a few sloppy studies to try to get some arrows pointing the right way, for example, and then turning the marketing department loose. (You know, the sort of thing that critics of the industry figure that we do already). No, again, I think that the temptation would be too great.
So here’s a general principle: we need enough regulation in the industry to keep ourselves from turning into what our worst critics think we are already. Not the most stirring call to arms, but there it is.
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January 13, 2009
Posted by Derek
Pfizer's made an announcement about the dimensions of its research cuts - 5 to 8%, which means about 500 to 800 scientists this year. These are (for the most part, I presume) the "not in our current research areas" people from the company's recent re-work of their therapeutic areas.
What I don't know is if they're finally actually telling these people anything. Now, many biologists with a specialization in an abandoned therapeutic area knew instantly that they had to seek a new job when the earlier news came out. But there are plenty of chemists on the block, too. Chemists are sort of vaguely associated with therapeutic areas, as compared with biologists, so that makes it much harder to guess who's going to go.
So, is Pfizer telling anyone today? Or is this just another bizarre chance to whistle the blade over everyone's heads?
Update: yep, it's today, going on right now.
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January 6, 2009
Posted by Derek
I get occasional comments and e-mails asking why I’m so hard on Pfizer. It’s not that I have anything personal against the company – I’ve never worked there, and they’ve never turned me down for a job. And I have a lot of friends there as well - the company has a lot of good people working for it. No, it’s not Pfizer so much as the way that Pfizer exemplifies for me a lot of things that I think have gone wrong with the industry.
First, of course, is sheer size. As I’ve said numerous times, I think that many things scale as a drug company gets larger, but research productivity isn’t one of them. If anything, it may go in the other direction. Pfizer is an excellent example of just what I’m talking about. If there were any reliable correlation of size to internal research success, this is where you’d expect to see it. But Pfizer has been notoriously unproductive in its own labs. Some of that has been sheer bad luck, but you can’t use that explanation to cover the whole problem.
Put simply, I think that really huge drug companies are a bad thing. A collection of smaller ones carved out of the same resources would probably explore more therapeutic avenues, and in a more nimble and focused manner. I also like competition in this business, because it keeps us moving, and because it leads to a wider variety of approaches being tried out for each problem. Mergers and buyouts have, I feel sure, not been good for the ecology of the industry, and Pfizer is the absolute champion of that style. Large and productive research organizations have disappeared beneath the waves because they had the misfortune of discovering something that Pfizer wanted to buy.
And there’s also the triumph of marketing. That’s one area where Pfizer really excels, but the problem with being a marketing powerhouse is that you might end up thinking that you can sell almost anything. The company’s disastrous experience with Exubera (the inhaled insulin product that missed its sales targets by, what, 98 per cent?) is a sobering example. If you start believing your own press releases, you might convince yourself that you’re going to sell a billion dollars of Exubera, and at a huge company you’ve got the money and the resources to pursue that dream right over the cliff. Groupthink finds a bigger arena in which to work its magic.
So there it is. Other companies have similar problems, but when you go to Pfizer, you find them all together, in concentrated form. So when they announce that they’re going to go out and buy someone else to work their way out of their (massive) coming troubles, it makes me wince. It just seems like the opposite of what we need.
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December 16, 2008
Posted by Derek
I’m told by several people that today Bristol-Myers Squibb is announcing layoffs in research (and perhaps other areas). I don’t know how extensive these are, or how they’re spread across the New Jersey and Connecticut sites. What I do know is that accounting practices make these things especially rough, since a disproportionate number of such cuts take place before year’s end, which doesn’t do much for anyone’s holiday season. (Of course, I suppose it could be even worse – you could be working for Pfizer, and spend the holidays not knowing if your job was going to be there in January or not). In a smaller but deeper cutback, I also note that Entremed, a company that’s been struggling to survive ever since its turn in the spotlight with Judah Folkman’s anti-angiogenic peptides, has announced that sixty per cent of its employees will be let go. Since that includes the CEO and CFO, you have to conclude that the situation there is not good.
Having been through the layoff process myself, I know what the people involved are going through, and I wish them every hope of landing new positions. If anyone out there knows of companies that are hiring now in research, or even planning to, I’d be glad to list such in a separate post in order to provide some leads.
One other related item: I’ve heard from Linda Raber at C&E News who’s working on a "Careers in Pharma" story for them, and wants to write about all the chemistry layoffs this year. She’d like to hear from people who are willing to be quoted on what things have been like. (Update: you don't have to be identified - see the comments section for contact info!) I was quoted in a similar story after the Wonder Drug Factory layoffs, actually; this sort of piece is turning into more of a perennial than anyone would like.
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December 15, 2008
Posted by Derek
With all the financial scandals going on these days (really, a multibillion-dollar Ponzi scheme run by the former head of NASDAQ?), it’s worth asking how often such shady dealing goes on with the stocks of drug companies. From what I can see, it does happen, but it’s certainly not endemic.
The first thing that comes to mind is insider trading. Since many companies see their stock move abruptly on the single news items pertaining to clinical trials results, regulatory actions, adverse events, and so on, front-running is always going to be a problem. And I’m sure that it goes on, but I also know that companies put a lot of effort into trying to keep it from happening. For clinical trial results, that means that such information is strictly need-to-know, and believe me, not that many people need to know. Most companies have a rather short list of people who see such numbers before a public release, which makes tracking down suspicious trades a bit too easy for comfort, if you’re inclined to reach for the easy money. I’m certainly not on any such list myself, and never have been.
There are other kinds of material information, but it’s still rare for anything that goes on in my end of the industry to affect the stock price. We’re just too far from the clinic and from the FDA to make that much of a difference. But in any case, I agree with a definition of “material information” that I once heard: if it makes you think about trading the company’s stock, and it’s not in a press release already, it’s material information. And you act on it at your peril.
But that doesn’t mean that people don’t act. Sam Waksal of Imclone is merely the most famous executive to place a phone call to his broker at an inopportune time. The chief legal counsel over at Biogen Idec got in hot water a couple of years ago about a suspicious options trade around the time of the bad news about the company’s Tysabri. (The case was settled with the SEC, with no language about wrongdoing involved - there was still some reasonable doubt about the timing of the trade, although it would have been far more prudent to not have made it). A few years before that, the chief attorney at Vertex got into trouble with another ill-advised trade of his own company's stock. And there are others, naturally.
Then there's the problem with theoretically-embargoed information from the big clinical meetings like ASCO. In recent years, it's become clear that this stuff is leaking out in one form or another, because interesting trading patterns become evident in the run-up to the meetings themselves. I think that sending out an abstract book while trying to keep the lid on them is probably futile. Of course, in many cases the real stock-moving news in such cases doesn't come from anything in the abstract book, but from the information in the presentations themselves, which is all later-breaking stuff added long after the abstract submission deadline. So you could argue that people trading on the pre-meeting stuff are still kidding themselves. . .
The closest I've ever come to this sort of thing myself was some years ago. A colleague attending a clinically-oriented meeting in a particular medical specialty called some of us back at our company to say that an anticipated series of posters and talks from another company didn't look like it was going to materialize. No one from that organization was putting anything up for the poster session. We guessed that there was some last-minute problem with their compound - and so it proved in a press release the next morning.
It occurred to me during that afternoon that a stock or options trade could well be profitable, but I didn't go through with it. It would have been profitable (especially the options, naturally), but in the end I didn't quite have the nerve. I still don't think that it would have been illegal, but I didn't like the idea of explaining actions of mine in those terms. "Not illegal as far as I know" isn't exactly the rock on which one wishes to make one's stand, you know?
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December 12, 2008
Posted by Derek
I'm pleased to note that Adam Feuerstein over at TheStreet.com has announced his first-ever "Worst Biotech CEO" award. In what was surely a contested field, he's named Elan's Kelly Martin as the winner. I was pulling for Ariad's Harvey Berger, who seems to have come close. Well, there's always next year - and yes, I do need to update the Ariad story soon.
Martin's win is a result of the troubles with the anti-Alzheimer's antibody bapineuzumab this year. When pivotal trial results came out back in July, they weren't too exciting. Investors, though, had been very excited indeed, and Elan's stock took a terrible beating as a result. According to Feuerstein, Martin's cheerleading for the drug was the reason for this unprofitable disconnect from reality.
He certainly wouldn't be the first CEO to beat the drum for his company's drug, but this kind of thing has a big risk of backfiring. How do investors believe you after they've been burned in this fashion? You don't want to have to depend on fresh crops of people who haven't heard your story yet. Alzheimer's is a tremendously difficult field to make headway in, and everyone who wants to buy into something in it needs to understand that. As an investment, such drugs are worth taking a flier on, but with a clear understanding that the odds are long. I think that Elan (and their partner, Wyeth) deserve credit for going after something as unusual as an immune-based therapy for the disease, but there's no excuse for making people think that it's working if it really isn't.
Anyway, be sure to check out Feuerstein's take, along with the comments on Vanda, Medarex, and other favorites. I hope he keeps this up year after year: there will never be any shortage of contenders.
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December 11, 2008
Posted by Derek
So, Pfizer: it seems as if they’ve been going on about cutting their research staff for months now. Well, its has been months, and the whole thing is turning into a rather bitter joke for people in Groton, from what I can tell. This current wave of restructuring has been rumbling along since back in the summer, and they told people about the layoffs in the fall. How long is all this going to take?
The latest announcement from the higher layers is that the company will announce its plans “sometime in January”. Lee Howard, a reporter at the New London paper The Day, has a copy of a letter from Pfizer’s Rod MacKenzie (head of discovery research worldwide) to employees, saying that because the changes in research are so complex, he won’t be able to communicate them by the end of the year. I’m not sure if the letter includes his greetings for a Merry Christmas and a Happy New Year; maybe that one will arrive in time for Valentine’s Day. Here's the article, the comments to which erupt in a lot of vituperative town-vs-gown New London crossfire.
From what I’m hearing, the coming changes are going to be quite profound in chemistry. Pfizer seems to be dividing its chemists up into people who think up molecules, and people who make them, with no real overlap. You’re probably thinking sure, that’s how the Germans and the Swiss tend to do it, the PhDs in the offices and the BS/MS folks out at the hood. But apparently there are PhDs on the “make the molecules” side in Pfizer’s new scheme, although I think the “design the molecules” side will have no one who isn’t. At any rate, the traditional medicinal chemist, someone who has an idea for a new molecule and then goes out to the lab and makes it, will seemingly have no place at Pfizer. You do one, or you do the other.
And I’ve heard from several sources that major outsourcing will be a big part of the new system as well. The “drug designers” will also be resource managers, spending their time figuring out what compounds and series to ship over to China, and what to have the local groups work on. As readers here well know, I think that outsourcing definitely has its place, but Pfizer seems to be going even further down that road than the rest of the industry – how well that’s going to work is an open question. A lot of the outsourcing work I’ve seen over the years has been. . .OK. Used judiciously, that’s fine, but I don’t know if I’d want to base whole programs on it if I didn’t have to.
I think it’s safe to say that morale and productivity in the labs in Groton must be drooping a bit these days. How could it not be, with everyone waiting for months to see who’s going to be let go, and in this economic climate? I understand that it’s a big organization, and that figuring out what to do is a complicated job. I certainly wouldn’t want it. But the way this is being done has not reflected well on the company’s management and how it treats its employees. But we’ll just have to add this one to the existing lists in both categories. . .
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December 9, 2008
Posted by Derek
Now, here’s an odd item from the Financial Times (registration required):
Goldman Sachs is in talks to provide hundreds of millions of dollars of funding to a large pharmaceutical company, in the first evidence of a new business model for the sector that will see financing shifted away from funding companies and towards targeted co-development of specific medicines. . .
. . .(The model involves) a different approach, creating a "research pool" into which pharma companies would place a range of experimental drugs in a single therapeutic area in early-stage phase 1 and 2 trials, where their specialists would work alongside external experts including scientists, chemists and clinical research organizations.
This was announced at a conference run by the newspaper, so they’re really the only source for information on this. I haven’t been able to find anything from Goldman about it, for example, and the minimal press coverage so far has all pointed back to this article. (Ed Silverman picked it up at Pharmalot, for example).
So one wonders what’s up, because the information that’s given raises more questions than it answers. I presume that the assumption is that since only a few early-stage clinical compounds ever make it, that this gives everyone a chance to share the risk. But which therapeutic area are we talking about here? How are things apportioned when one compound makes it through? And what if more than one does? And where are these external experts coming from, and who pays them?
This could be very interesting, because I think that we need to be open to some new research models in the industry. The current one isn’t exactly spewing results these days. But I wish that I knew more about what this proposal involves – anyone out there have any more details that they can share?
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December 3, 2008
Posted by Derek
Remember back earlier this year, when the temperatures were high, the Dow was at 11,000, and Roche announced that they wanted to buy the rest of Genentech. So how’s that working out?
Not all that well, as far as can be told from the outside. This would take around 45 billion dollars, and 45 billion dollars is a sum that’s increasingly hard to borrow these days. According to Reuters, the prospects for Roche putting together a syndicated loan for that amount are “becoming increasingly remote”. I can believe it. That would surely be the largest deal going at the moment, and given the state of the credit markets, the terms would probably curl your hair if they did manage to float such a beast. And who’s willing to, even if they have that kind of capital sitting around?
For its part, Roche has been telling everyone that they’re still committed to buying Genentech, and that they’re completely confident of getting the financing together. Of course, they’ve been saying that since July, basically word for word, and as the months go on those repeated statements of confidence start to have the opposite effect. So if Roche really is committed and so on, what are they going to have to do?
Reach in and dig out more equity and cash, most likely. What else? Apparently the company is trying to avoid doing that, and they’re willing to leave things hanging until the situation improves. But if you can predict when people are going to be in the mood to lend that kind of money, well, you should be out there making a fortune on the Street with such insights. (I would be!) And if anyone tells you that they have the macroeconomic situation figured out for the next few months, ask them if they went short on oil futures back in the summer. You’d think that anyone with any kind of magic touch would have known enough to do that.
One consequence of all this is that people at Genentech have been living in a cloud of uncertainty for months now, and will stay there for the foreseeable future. That can’t be helping morale or productivity. And if there are any places for people to go, it’s also giving them plenty of time to find them. No, Roche’s timing, in retrospect, looks perfectly awful. When (and if) they finally get around to buying Genentech, what, exactly, will they have bought?
Update: a Genentech VP says that all this has had no impact on morale, actually. You can take that as you wish. . .as for me, I'd find that extraordinary, if it were true.
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November 24, 2008
Posted by Derek
Since I was talking about Nitromed on Friday, let me mention another attempt to combine two known drugs into a new therapy. Another Cambridge company whose front doors I walk by once in a while is CombinatoRx. If they'd had that name back in the early 1990s, you'd have assumed that they did combinatorial chemistry, but their plan is to take approved drugs and find greater-than-the-sum-of-their-parts combinations to approve as a single pill.
That's not easy. It's hard enough figuring out just how single drugs behave in the real world, and any physician will tell you all about what fun it is to deal with drug interactions. Finding beneficial drug interactions, especially unknown ones, is a real uphill climb. But CombinatoRx thought they had one in the mixture of low-dose prednisolone and dipyridamole.
Prednisolone is a well-known corticosteroid which is used to suppress inflammation and the immunen response. Dipyridamole is a multi-mechanism drug that increases the free concentration of adenosine, and it's been used to inhibit clotting and lower pulmonary hypertension. Blood pressure problems are common with prednisolone, and the company believed that the prednisolone dose could be taken down to non-side-effect levels in the presence of the other drug. So they formulated a combination pill (Synavive, CRx-102) to test this out in osteoarthritis patients. The stakes were high - here's a writeup from before the results came out last month.
Things did not work out. The Phase IIb study definitively missed its endpoints. Not only did Synavive not compare to prednisolone alone, it didn't reach statistical significance versus the placebo group, either. The stock dropped 72% the next day, and the company has now announced layoffs that total 65% of its workforce.
What I have to wonder, though, is how things would have worked out in the long run even if the trial had succeeded. As Nitromed's experience shows, it's a hard business convincing insurers to pay a premium for two generic drugs just because they're now available in one pill. I know that CombinatoRx was making much out of their proprietary formulation, no doubt anticipating such objections. But I wonder if a company in this space would have to actually run a head-to-head against the two-generic-pill dosing regimen to really convince people that it had something to offer. And that would take nerves of steel, for sure. . .
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November 21, 2008
Posted by Derek
Nitromed has been in trouble for several years now. They're a perfect example of a dog that caught a car: a company that was demolished by actually getting its drug on the market. No one wanted to pay for it, though, and after all that expense the company was left worse off than before.
Their remnants, though, are still listed on the NASDAQ, and that's more than a lot of more promising companies can say. One of those is Archemix, a company that I see every day on my way to work in Cambridge. They're working on aptamer-based therapies, and are at the stage in their life where (under normal conditions) they'd be thinking about an IPO. Well, they were thinking about that, but. . .these aren't exactly normal conditions, and the company recently announced that it was shelving that plan for now.
Enter Nitromed! The two companies have now announced a merger (a 70:30 stock split) which will keep the Archemix name and be listed on the stock exchange like Nitromed. Just add water, and you have an IPO, albeit with some dilution compared to the traditional way. Interestingly, the CEO of Nitromed will be the CEO of the new company, which I gather is coming as a bit of a surprise to the folks in the trenches at Archemix, as you might imagine.
But good luck to them all - in this environment, we all need it. Aptamers are an interesting and risky business, but not as risky as developing cardiovascular drugs that no one wants. . .
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November 3, 2008
Posted by Derek
I shouldn't pick on Jeff Kindler, because I wouldn't want to be CEO of Pfizer, not the least little bit. But he gave an interview recently to the Financial Times, who asked him (naturally) about the Lipitor patent expiration. His answer:
We're facing a very significant loss of exclusivity in Lipitor at the end of 2011. We have a clear plan for positioning the company for strong, profitable growth after that. That plan consists of pursuing significant new opportunities for increased revenues starting with our internal pipeline, getting further growth out of our existing products, growing in the emerging markets, growing our business on off-patent products. We sell billions of dollars of off-patent products and in many parts of the world that's the most important opportunity to meet unmet medical needs and looking for other potential sources of revenues.
I realize that this is the only sort of answer that he could have given, and the only sort that the FT could have expected. But, still. Distill it down, and you have, basically, "We're going to get around losing all that Lipitor revenue by making more money on all our other stuff". Good to hear that, but I'm still not running out to buy any Pfizer stock.
And while we're on the subject of Pfizer, the layoffs there continue to grind on, from what I'm hearing. I don't think that people have quite heard yet if they're staying or going, but I assume that that will happen in time to give everyone a festive Thanksgiving season. In general, it sounds like the company is heading even further down the path of higher associate/PhD ratio that they announced a couple of years ago, with a lot of outsourcing in the mix as well.
But here's a question: how many of the people who will be laid off are people that Pfizer, at great expense, paid to move to Groton from Ann Arbor? Surely there will be a good number in that category, and they've just barely settled down in Connecticut by now. Pfizer's relocation seems to have been pretty generous - picking up property value differences on house sales and the like - and all for this?
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October 30, 2008
Posted by Derek
I honestly didn’t think I’d ever get the chance to write about Imclone again. But never say never! It turns out that a pension fund, the State-Boston Retirement System of Massachusetts, is suing to block the Lilly acquisition – because, hold on to your hot beverages, they think that $70/share is just too cheap an offer. Not in the best interest of shareholders, the deal is. Clearly needs to be bumped up.
We have, in other words, found the only chordates who think that Imclone is worth even more than Carl Icahn thinks it is. I’ll be very interested to hear their reasoning. Surely this is just one of those “worth-a-try” ploys – the investment fund figures that they’ll spend a little on legal fees, and who knows, they might get a bit more money out of it. A lot of mergers attract these sorts of lawsuits, and if you’ve ever wondered how securities lawyers manage to enrich themselves, look no further. But you do have to advance serious arguments if you expect to win these things. And just what are those going to be?
And the problem is, after the acquisition goes through, it’ll be tricky to figure out if Lilly got their money’s worth or not. The Imclone stuff will disappear into Lilly’s accounting system, and odds are we’ll never see it broken out again. There are quite a few deals that never pay for themselves, but you sure don’t see the numbers laid out to show it. The main measures will be Erbitux sales, and whether Bristol Myers-Squibb gets a share of the follow-up antibody – beyond that, Lilly can always argue that they added value to the earlier-stage Imclone projects, making the accounting impossible to clear up.
At least in this case it’s something being added to Lilly’s pipeline – they’re not stopping work on other things, so you don’t have to factor in opportunity cost. That’s a real consideration when a company says “OK, we’re not going to do our own XYZ work – we’ll do a deal for it”. If that deal doesn’t work out, you always wonder how things would have been if they’d just kept the money at home. I’ve seen a couple of major examples of this in my own experience – one of them, at least, worked out OK on paper, since various stock transactions got a lot of the money back. But the time, the time spent working on things that didn’t ever deliver? We never got that back. Once the deal wound down, we went back to working on (to a good approximation) what we would have been doing if it had never happened. No, if the scientific (and clinical) output of the deal is underwhelming, those involved will always wonder What Might Have Been.
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October 29, 2008
Posted by Derek
So Wyeth is cutting back on its therapeutic areas as well. According to that Bloomberg story, they're going to focus on oncology, inflammation, neuroscience, vaccines, metabolic diseases and muscular-skeletal disorders. That's still a pretty wide swath of territory, but note what it leaves out: cardiovascular and infectious diseases, just to pick two big areas. And there are clearly some details to be worked out - for example, neuroscience clearly encompasses Alzheimer's, where the company has a big effort. But are they going to try dementia, too? Antidepressants? Pain? Multiple sclerosis? These are big fields.
At least this one isn't coming along with its own whopping package of R&D cuts. The company says that some of its research staff will lose their jobs, as their specialty areas disappear, but overall, they claim that they're not cutting staff, and that R&D spending will remain constant. I certainly hope that's true; the last thing we need is another big layoff around this industry. Anyone inside Wyeth care to comment?
What these rounds of research concentration might do, in the longer term, is open up a number of areas to smaller companies. There are a number of less-heavily-populated therapeutic fields now: does that create opportunities to be filled? Of course, the reasons some of these are being abandoned still obtain - lack of good targets, lower profit potential, and so on. But smaller outfits may well be able to colonize these environments, and I hope that they do.
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October 23, 2008
Posted by Derek
As everyone knows, Merck announced some big job cuts yesterday – 7,200 positions, around 10% of the work force. It’s worth looking at the details of these, because they differ a bit from what’s been going on at some other companies.
For one thing, the company doesn’t seem to be exiting any one therapeutic area, as Pfizer has, or rearranging their whole R&D structure the way GSK is doing. Merck just seems to be thinning things out across the whole organization. And that includes management, since they’ve announced that they’re eliminating 25% of their middle and senior manager positions. (I should note, in response to some of the more nativist comments that show up to posts like this, that Merck does not appear to be replacing these people with executives from Shanghai and Bangalore).
Overall, 60 per cent of the layoffs are taking place outside the US. That includes the complete closure of research sites in Japan (the Merck Banyu institute in Tsukuba) and Italy, as well as one in Seattle. (I have to say, I didn’t even know that Merck had research in Seattle). So it’s going to be harder to fit this one into the “traitorous execs in expensive suits send jobs to China” template.
That doesn’t mean that Merck isn’t outsourcing research work, though. The company’s press release says that they will “make greater use of outside technology resources” and “expand access to worldwide external science”. You can always make the case that job growth that might otherwise have taken place here will not, and in fact, I think that’s true. And it’s unfortunate – but it’s also true that doing the outsourced work here would be more expensive (otherwise why outsource?), so that job growth would have come at a higher cost to the companies involved.
So that’s where the argument really resides. If you believe that drug company profits are coupled to eventual productivity, then outsourcing makes sense, because it decreases costs. Of course, you then have to cut that estimate back some, because outsourcing (in a great number of cases) is not as effective as doing the work in-house. Does that cancel out the cost savings, or not? I think if you choose your outsourced work judiciously, the savings are real, even after you take efficiency into account. Handled poorly, of course, you could outsource your way into the dumpster. It’s a tool, and tools can be used wisely or well.
Then we get into the second-order arguments – the ones that go beyond money and effectiveness. I realize that there are many people who, although they may argue that outsourcing research is not all it’s cracked up to be, would still be against it even after stipulating its efficacy. For these people, it’s wrong even if it does work. I will not be able to convince anyone in this camp, just as I don’t see them convincing me. If we’re arguing about numbers, there can possibly be an end to the discussion at some point – but if we’re arguing about morals, there can’t. I’m willing to make my own moral arguments, to go along with my utilitarian ones, but the audience for whom those appeals would be crucial is the one least likely to be convinced by them.
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October 6, 2008
Posted by Derek
Well, it looks as if I'll finally be able to stop talking about Imclone: the word came out this morning that they've agreed to a $70/share deal with Lilly. Some thoughts on this:
1. I would still like to know how the uncertainty around the Erbitux follow-up antibody is supposed to be resolved. It's hard for me to make sense of this for Lilly unless they think that they can get substantial revenue from it, and Bristol-Myers Squibb presumably will disagree with their projected figures. None of the news stories so far have addressed this issue, and I presume that it's going to be a matter for negotiations (or for the courts, if it comes to that).
2. It seems that some analysts are seeing this deal as a sign of weakness in Lilly's pipeline, perhaps signaling that Effient (prasugrel) might be delayed more or labeled so restrictively that it has no chance of living up to expectations. We'll see how Lilly's stock performs today, and read the mood of its investors.
3. Well, Carl Icahn really did have something up his sleeve. Considering what Imclone was trading at before all this, he has plenty of reasons to be happy. But now will he turn his attention to Biogen again, and try to do the same thing with (or to) them?
4. I stand corrected! I had trouble believing that someone would come in at this price under these conditions, but, well, here they are. I should keep in mind that a fair number of mergers and acquisitions in this industry seem problematic (or downright senseless) to me, and adjust accordingly.
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October 2, 2008
Posted by Derek
Word leaked out yesterday that Imclone’s secret bidder is Eli Lilly. Well, let’s revise that – so far, Lilly hasn’t made a bid for the company. And that’s the first thought I had about this business: isn’t it taking quite a while? You’ll recall that Carl Icahn told Bristol-Myers Squibb a couple of weeks ago that he’d been in talks with someone else. Then we were going to hear about it over the weekend. Then the name would be revealed Wednesday at midnight (of all times). Now here we are on Thursday with no official announcement.
And the delay probably doesn’t have anything to do with the situation in the credit markets, because Icahn has been sure to emphasize that the deal he’s looking at is not subject to financing. That means all this extra time is probably due to good old caution – and I don’t blame Lilly for mulling things over. There are plenty of reasons to wonder if Imclone is worth the money for an outside company, given its status with BMS. This clearly isn’t the instant-winner operators-are-standing-by deal that Imclone would like to have us believe it is.
Does a Lilly deal make sense? It might, if they could be sure that they were going to get the Erbitux follow-up. But I’m willing to bet that this is exactly the issue that things are stuck on, since BMS believes (with reason) that they have a share of it, and won’t give it up easily.
And I’d be willing to see this go through, even at a ruinous price, if it would get Carl Icahn out of the drug industry. But no such luck, I’m afraid. He’s probably still eyeing Biogen, and who knows who else. I spent some time yesterday going on about how we shouldn’t blame evil MBA types for the problems in our business, but Icahn is the sort of guy I’m nearly willing to make an exception for. A pure dealmaker, I don’t see him as someone who understands scientific research or who has the patience for it. If we’re going to point the finger at managers whose only goals seem to be to make the quarterly numbers and pump up the stock price, he’s as good an example as I can think of. A dose of this stuff is exactly what we don’t need at the moment.
One more consideration: who leaked Lilly’s name, anyway? The Wall Street Journal seems to have been the first with the story, quoting "people familiar with the matter". Well, cui bono? Who has an interest in moving it along and showing that it’s a real possibility, in getting possible bidders to feel some pressure? Who indeed?
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October 1, 2008
Posted by Derek
The more I think about all the research layoffs that have been going on for the last year or two around the industry, the more I think that we really are seeing a change in the way drug discovery is being done.
Most of the jobs have been lost from the large companies. There have, of course, been shutdowns at the smaller ones, but I don’t think that those have been running at any different rate than usual. Startups and other smaller shops are always rearranging as their skills, finances, and luck dictate – that seems to be going on at the usual pace. But what’s different is the wave after wave of job cuts at the Pfizers, GSKs, AstraZenecas, J&Js – the big hitters (and big employers) of the industry. Even the companies that haven’t had major layoffs (Novartis comes to mind) aren’t exactly hiring heavily.
So what’s going on? My take is still that this is a shift – as far as the US end is concerned – from larger research outfits to smaller ones. After all, the drugs are going to have to come from somewhere, and the deal-making for small companies that have something promising has been intense. It just seems that the larger companies don’t think that they can do as much of this discovery work themselves – not, at least, at the prices that make sense.
Now, it’s true that a lot of chemistry has been outsourced to contractors in India and China, and that several firms have opened research divisions of their own overseas. That’s a cost-cutting move, too, certainly – but look at what this says about research here in the US. Everyone knows – including the people in Shanghai and Hyderabad – that the difficult, high-level research is still not being done there. That’ll change, as the human and physical infrastructure improves, but the bulk of the outsourced chemistry is methyl-ethyl-butyl-futile stuff. It’s “Hey, make me a library based on this scaffold structure” or “Hey, make me fifty grams of this intermediate”.
This kind of thing is definitely cheaper to do outside the country. It’s not always as timely as it should be, or as well-done – so it’s not as cheap as it always looks. But overall, on the average, you can bang out compounds for less money by outsourcing. That’s not going to change, either. The countries that furnish the services may change, as time goes on. But until the whole world is a high-wage environment (or, more horribly, until the only countries that aren’t are so benighted that no such work can be done there), ordinary chemistry is going to be done where it can be done for the least money.
So what’s left for us here in the US? The hard stuff. The risky stuff. The science that needs well-paid experienced people hovering over it the whole time. The cheaper, easier research is leaving – a lot of it has left already. We get to take on the stuff that can’t be outsourced.
And that’s why I think that there’s a shift to smaller firms. They’re traditionally the risk-takers in this business, and I think that’s going to be more true than ever. The larger companies, to me, seem to be trying to play it safer than ever. They have huge costs to meet, and don’t seem to think that they can devote as much of their resources to taking chances. We can argue about whether’s that’s wise (after all, you might think that larger companies with more cash might be the ones who could afford more risk). But that’s not how it’s been working – not for quite a while, when you think about it.
Here’s the hard part: the world does not owe any of us a high-paying research job. Neither the world, nor the US government or the US pharma industry owe us jobs of any kind. I wish that that weren’t true, but it most certainly is. Those of us trying to make a living through science and drug discovery are going to have to scramble for it. We’re going to have to prove our worth to those who are in a position to pay for us, and we’re going to have to try to make as many of our own opportunities as we can.
There are some things that can help us out in this period (see below), and there are some others that will do none of us any good at all. I know from some of the comments here that not all of you will agree with this, but as far as I’m concerned, here are some of the no-good-whatsoever moves:
1. Complaining about the Evil Suits Who Are Ruining the Industry. Look, I’ve been unemployed in this business, too. A merger pitched several hundred of us out into the market when our entire site was shut down. But I didn’t think that it was being done because upper management was enjoying it. They were, as far as I can tell, trying to keep the company going while having it make as much money as possible – the same behavior that had been paying my salary, actually. The constant drive to do those things is what’s paid all our salaries. Now, that doesn’t mean that upper management is always right. I didn’t say that they couldn’t be stupid (hey, I’ve sat through some of those presentations, too). I’m just saying that they’re not evil. Ranting about it is a pointless distraction from the business of keeping your job or getting another one. And besides, if they really are making a stupid mistake, that creates opportunities later on (see below).
2. Complaining about All Those Foreigners. I have even less time for this one. As far as outsourcing goes, I don’t see how I can tell chemists in China not to do the same work as American chemists for less money. (We should be making sure that we’re not doing the same work – see below). This is how economies grow, and how the world improves. I’m living in one of the greatest places in the world, and have been making a better living than most of the world’s population: I have no room to tell someone that they can’t try to reach for the same standard of living.
And as for foreign scientists working here, well, I think that one of the reasons I’ve been living in one of the greatest places in the world is that it’s been a haven for all sorts of bright, hard-working people. We’re not going to turn this into an immigration blog – there’s lots of room to argue about our current policies, particularly regarding unskilled laborers. But that’s not what we’re dealing with in the sciences. As far as I can see, we can use all the intelligent, creative, entrepreneurial people we can take, and we need to make sure that our country is the kind of place that people like that aspire to live in.
So if those don’t do any good, what does? Well, look at the situation. This is, as I’ve said before, a terrible time to be an ordinary chemist in this industry. That goes for the ordinary biologists, too. We’ve all got to demonstrate why we’re worth what we want to earn, and doing something that can be done for half the price somewhere else isn’t going to cut it.
So improve your skills. Learn new techniques, especially the ones that are just coming out and haven’t percolated down to the crank-it-out shops in the low-wage countries. Stay on top of the latest stuff, take on tough assignments. Keeping your head down in times like these will move you into the crowd that looks like it can be safely let go.
That’s one thing. Another one is the traditional advice given in all industries: keep in touch with everyone you know around the business. Use networking sites, keep current phone numbers, drop people an e-mail now and then. Getting laid off may well have had nothing to do with what you did – but finding a new job will have everything to do with it. If you don’t have any contacts around the business, large outfits and small, you’re going to have a harder time of it for sure.
And finally, here’s a more macro-scale suggestion. We medicinal chemists need to think more about being the source of startup companies ourselves. That’s harder to do if you’re part of a service group, or if you have that mentality. If your job is to crank out molecules, then you need to find a place that needs someone to do that. But if you’ve got a larger skill set, it may be large enough to get together with some other creative people and try to get some funding for ideas that no one else is doing. People still need medicines, and as long as we can still discover them here, it sure beats waiting for the phone to ring. If the bigger companies are in fact making a mistake by cutting research, what better revenge than to make them wish they hadn’t?
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September 30, 2008
Posted by Derek
Today brings the news of which areas Pfizer has decided to bail out of: obesity, most cardiovascular (it seems), anemia, osteoporosis and some osteoarthritis, liver disease, and muscle. They're concentrating on oncology, pain, Alzheimer's, and diabetes, which the company seems to have identified as the best intersection of their pipeline and the associated profits.
This will probably fuel speculation that the company is Imclone's mystery bidder - that name will supposedly be revealed at midnight on Wednesday, if I'm reading these reports correctly. If so, that makes me want to groan and roll my eyes. I'm waiting for Carl Icahn to tell everyone that they'll have to say the secret password to find out.
That news item linked to above also mentions that Pfizer has shed ten thousand employees since January of last year. Yikes. And on that subject, I hear from several sources that GlaxoSmithKline is cutting preclinical development hard today. People seem to have known that it was coming today, and roughly how bad it would be, but today is supposedly the day that names are read off the list. Good luck to people there. The contractions continue.
There's no longer any doubt, in case anyone was wondering, that this is the worst stretch for research employment at the big pharmaceutical companies in at least twenty years (to my certain knowledge) and very likely much longer than that, from what longer-serving colleagues tell me. Frankly, I'm not sure we've ever seen anything quite like this - which makes further prediction impossible. . .
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September 26, 2008
Posted by Derek
So it seems that Bristol-Myers Squibb took my advice (yeah, sure) and made an insultingly incremental counteroffer for Imclone, raising their $60/share all the way to. . .$62. I was hoping for something more like $60.25 myself, but you can’t have everything. (I should send them a bill for consulting services and see how far that gets me).
Carl Icahn has replied in yet another public letter, saying that there must be more productive ways for BMS to enrich its lawyers. I notice that the folks at the Wall Street Journal’s Health Blog are getting tired of the extended correspondence between Icahn and BMS’s Jim Cornelius. Although I’m still enjoying the show, I can see where it will eventually pall.
Icahn claims that his mystery $70/share bidder is doing due diligence, which should be completed this weekend. You’d think that any due diligence worth the name would tell someone not to pay $70/share for Imclone while Erbitux is still tied up with Bristol-Myers Squibb and its successor’s status is still very much in doubt. Wouldn’t you? Just how long does it take to run those numbers, anyway? Especially in this financial market, with credit tightening and the investment banking community in chaos? Or is the whole thing just a load of. . .no, no, Carl Icahn wouldn’t stoop to tactics like that. And I am Marie of Rumania.
My prediction: 64% chance that the companies agree, with much face-saving theater, at a price of about $65 per share. 35% chance that the whole business falls apart for now, due to the uncertainly about IMC-11F8. And that leftover 1% chance is that there really is a $70/share bidder.
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September 25, 2008
Posted by Derek
I'm hearing reports that Pfizer is telling employees in various therapeutic areas right now that there will be deep cuts coming, and that more details will be coming out in about two weeks (individual-level layoff notices, etc.) I gather that obesity research is being hit hard, and some others as well - but any details from people in a position to know would be appreciated.
This is a heck of a time to be laid off, that's for sure. Here's hoping that things aren't as bad as I'm hearing. . .
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September 17, 2008
Posted by Derek
While the US has the world's most expensive prescription drugs, we have the world's cheapest generics: once that patent goes away, it goes away. But the generic drug business is still very profitable, and it's viciously competitive. One of the biggest players is India's Ranbaxy, now in the process of being acquired by Japan's Daiichi Sankyo. They compete hard at every step of the process, from fighting patent cases in order to make drugs go generic more quickly, right down to price and distribution to pharmacies.
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But it looks like they've been pushing it a bit too hard. The FDA has banned the import of thirty Ranbaxy-made drug substances after uncovering what they say are bad practices at three of the company's plants in India. And this comes on top of another investigation, an even more serious one, looking into whether the company out-and-out falsified data during the drug approval process.
The company seems to be co-operating with the first investigation, but they're fighting back hard on the second one - which makes sense, because that's the one that can really get them in trouble. Ranbaxy, for its part, seems to have suggested that some big-pharma rivals are behind the accusation. I doubt that myself, although it's not impossible - but neither is it impossible that the charges have something behind them. US companies have found themselves in big trouble over such issues, too.
Overall, what Ranbaxy and the other Indian drugmakers have to fear is ending up in the same public opinion category as the Chinese companies, who have had one quality scandal after another. It's going to be a long time before they lose their bad reputation, and the Indian firms definitely don't need to throw away what they've built up. Look for Ranbaxy to try to clear its name as fast and as publicly as possible.
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September 12, 2008
Posted by Derek
I haven’t mentioned the attempt by Bristol-Meyers Squibb to buy out Imclone until now, but there’s a nice . The reasons for the move are unsurprising – BMS would like all the revenue from Erbitux, instead of just a share of it, and sees some value coming up in Imclone’s pipeline (such as their development drug candidate IMC-11F8, vide infra). They’ve waiting quite a while, and apparently feel that the time is right – the only question is how much money such a move will cost them.
And that’s the question, all right, since Carl Icahn started talking this week about a mysterious preliminary offer from some unnamed other company for significantly more money ($70/share) than BMS is putting up. A lot of investors seem to have expected a sigh, a roll of the eyes, and a reach back into the pocket for more money - IMCL has been trading above the original $60/share offer. But that’s not what they’re getting, at least so far.
In a letter, Bristol-Meyers Squibb’s CEO is now reminding Icahn of a few things that you’d think would be obvious. One of them is that their offer is well-supported and requires no due diligence, as opposed to nebulous preliminary figures from companies that no one will name. The next paragraph is even more to the point:
As you know, Bristol-Myers holds the exclusive, long-term marketing rights in the United States to ERBITUX® and related compounds, including IMC-11F8. Bristol-Myers has no intention of agreeing to any modifications to these rights. ImClone also should understand that our offer is for the entire company, and any potential restructuring of the company could severely jeopardize ImClone’s value and deprive ImClone’s stockholders of the benefits of our offer.
That’s about the size of it, and I think that this message is being delivered in the way that Icahn understands best – right across the top of the head, with some good wrist action. There’s no reason for BMS to give up on their rights to Imclone’s products, except on terms that would make other potential buyers lose interest. Why would they? There is, I should add, quite a dispute between the two companies about who has the rights to that development antibody, IMC-11F8. Imclone has recently been acting as if BMS has no rights to it at all, but as that WSJ link makes clear, two years ago they clearly stated to Merck KGaA that the antibody falls within the scope of the BMS agreement. It's hard for me to see how they'll get out of that, and even if they do, it'll take a lot of expensive wrangling.
So, if there really is a company willing to go to $70 a share for Imclone, with revenue still flowing to BMS and plenty of legal uncertainty on top of that, well, this is the time for them to speak up. I’m not sure that there is one, despite what Icahn says, but perhaps he’s hoping for one to materialize. He’s always reckoned Imclone to be worth vast amounts more than people who know anything about oncology think it is, so maybe he sees no problem with those figures. Anyone else live in the same world?
Update: Icahn has already replied, in a fashion that makes this affair look to go on a while. He says that he "doesn't understand the point" of the BMS letter, and goes on to say:
. . .With respect to a potential restructuring of ImClone, rest assured that we will act in what we consider the best interests of all our shareholders and not just Bristol.
Obviously, should you wish to make another offer which you believe we would not find inadequate, you are free to do so. Upon receipt of that offer, we will respond appropriately.
Well! My guess is at this point that BMS will sit tight and wait to see if anyone really wants to get in on all this action - betting, reasonably I think, that no one will. I would enjoy it if they raised their bid to, say, $60.25, just to steam up Icahn's windows, but I assume that they're above that. As time goes on, with no competing bids in sight, I would think that Icahn and his board-of-buddies would have to submit the BMS bid to the shareholders - wouldn't they?
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September 11, 2008
Posted by Derek
There’s an interesting editorial in Nature Biotechnology on a role-playing exercise that took place recently in London. The UK government (in the form of the Bioscience Futures Forum) asked a University of London simulations group to work out what would happen to two identical companies in England and in the US. These would be university spin-offs with promising oncology compounds that had already shown oral activity in tumor models. (Here's the site for the whole effort - I have to say, it looks like an awful lot of effort for a two-day simulation).
What happened? Well, things diverged. The US version of the simulated company was able to raise more money, had better access to collaborations with larger companies, and better chances of going public by the end of the simulation. That gave them a broader platform to deal with setbacks in the original compound program. Meanwhile, the UK company faced this:
. . . the biotech finance marketplace in the United Kingdom is weak. AIM has little liquidity and virtually no follow-on market. Preemption rights allow existing shareholders to block potentially diluting but opportunistic fundraising rounds, such as private investments in public equity. And there is little access to debt capital for biotech firms.
The game also suggests that UK management and investors have mindsets adapted to constrained financial circumstances. They design businesses to fit the financial environment rather than seeking the environment that their business needs. They discount early valuations because of the inflexible later-stage financial circumstances. Their low expectations become self-fulfilling prophecies. In contrast, US management looks to build a sustainable business from the outset, and investors get higher returns as a consequence.
What I found interesting about the editorial, though, wasn’t these conclusions per se – after all, as the piece goes on to say, they aren’t really a surprise. (That makes you wonder even more about the time and money that went into this, but that's another issue). No, the surprise was the recommendation at the end: while the government agency that ran this study is suggesting tax changes, entrepreneur training, various investment initiatives, and so on, the Nature Biotechnology writers ask whether it might not be simpler just to send promising UK ideas to America. Do the science in Great Britain, they say, and spin off your discovery in the US, where they know how to fund these things. You'll benefit patients faster, for sure.
They’re probably right about that, although it’s not something that the UK government is going to endorse. (After all, that means that the resulting jobs will be created in the US, too). But that illustrates something I’ve said here before, about how far ahead the VC and start-up infrastructure is here in America. There’s no other place in the world that does a better job of funding wild ideas and giving them a chance to succeed in the market. The startup culture here a vital part of the economy and a great benefit for the world, and we should make sure to keep it as healthy as we can.
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September 10, 2008
Posted by Derek
The rumor seems to be going around that Pfizer might be making a bid for Bayer (aka Bayer/Schering). That sounds ridiculous to me, and if Pfizer actually does such a thing, then its management is even more starved for ideas than its nastiest critics could believe.
Why all the negativity? Well, Bayer doesn’t seem to be much of a fit, for one thing. The company’s Nexavar (sorafenib) oncology drug competes directly head-to-head with Pfizer’s Sutent (sunitinib), and a good chunk of that revenue goes to Onyx, anyway. (Which reminds me – I keep seeing mentions of that drug being an Onyx discovery which was picked up by Bayer, which isn’t right. That one was made at Bayer – why Onyx has a piece of it has to do with the biology, not the drug discovery). The market for kidney cancer would be completely tied up by a Pfizer/Bayer deal, which makes you wonder if the resulting behemoth would be required to divest one of the drugs.
Pfizer does like to pick up big-selling compounds by buying the whole company behind them, but Bayer/Schering doesn’t have anything in the Lipitor / Celebrex class right now. (Remember Celebrex?) They might have one coming, though, with their Factor Xa inhibitor, rivaroxaban: it’s expected to do very well in the extremely lucrative clotting market, but it’s not there yet. And besides, some of that one is already tied up with J&J, at least in the U.S.
Then there’s the general objection: I’d argue that Pfizer is in the shape it’s in because they’ve pursued the big, big, acquisition strategy. Their own labs have been unproductive, and they unfortunately seem to spray down the research organizations they purchase with whatever’s in the air supply at the home base. OK, that’s probably unfair – but no one can deny that as a whole, Pfizer’s internal drug discovery efforts have been remarkably frustrating for many years now. And they’ve got a massive cost structure, what with all the various facilities they’ve accumulated over the years, which is what’s led to things like their mass exodus from Michigan.
More of that sort of thing is what I expect from Pfizer, not some big acquisition. (And I suppose that it should be mentioned that it’s now a widely held belief that more layoffs are coming there this fall, anyway). But if they buy something, it won’t be pretty. What they need is revenue to replace Lipitor in a few years, not people or research facilities. And that’s another reason that a Bayer purchase makes no sense – have you looked into how hard it is to lay people off or close a site in Germany? Years, it takes years, and buckets of money – just what Pfizer doesn’t need to take on.
So if you need an excuse to dump Pfizer’s stock (and why, exactly, would you be holding Pfizer stock?) a purchase of Bayer would be the perfect signal that they’ve lost their minds in Groton. I don’t think they have, though. Not completely. Not quite yet.
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September 3, 2008
Posted by Derek
It’s a truism that half of all advertising dollars are wasted, but that no one buying the ads can be sure which half it is. Advertising from the drug companies is ubiquitous: how much of that is doing them no good?
A recent study suggests that the widely reviled direct-to-consumer (DTC) campaigns may be in that category. A paper in the British Medical Journal looks at the cross-border effect of US-based advertising on English-speaking and French-speaking Canadians, on the reasonable assumption that the former group is more likely to pay attention. They picked products that had been on the market for at least a year before the ad campaigns started, and looked at the number of prescriptions among both groups once the ads started running. What they found was no effect on the prescriptions for Schering-Plough’s Nasonex (mometasone) and Wyeth and Amgen’s Enbrel (etanercept), both of which were heavily advertised. Novartis’s Zelnorm (tegaserod, now off the market) did show a 40% rise, which gradually went back down again.
A reasonable theory to explain these results starts by looking at the respective markets. In the case of the first two drugs, a number of different therapies were already available. But Zelnorm was pretty much the only thing available in Canada for irritable bowel syndrome. It could be that DTC ads are useful in letting patients know that there’s finally something for a disease that previously had few options, but less effective in pushing into a crowded area. There’s also the multiple-step barrier problem – seeing a general practitioner and then a specialist, and so on – which can mitigate the effect of advertising, depending on the drug.
But the people who would know these effects best aren’t talking: the marketing departments of the drug companies themselves. As I’ve pointed out here before, the whole purpose of advertising is to make money: if you don’t increase sales enough to more than cover the cost of the ads, you’re clearly wasting your time. And that’s why I don’t have a lot of patience with outraged comparisons of pharma R&D budgets to marketing budgets, because the latter are there to bring in even more money for the former.
If, though, some of these marketing campaigns really are wasted money, then clearly that spending needs to be redirected. And that’s what makes me wonder. No one keeps a closer eye on prescription trends than the companies that sell the drugs, and they’re in the best position to see if a given ad campaign is doing anything or not. Even allowing for the usual human quota of inertia and incompetence, it would seem that DTC campaigns must be doing something for the companies involved, at least in many cases, or they wouldn’t exist at all. It’s also worth keeping in mind that what they may be doing is not so much boosting the number of prescriptions written as keeping them from falling. In the case of the drugs in the BMJ study, you have to wonder if the normal trend would have been for the number of scripts to have declined, while the ad campaigns held them steady.
That can be hard to prove, of course, and no doubt there are some marketing strategies that have far outlived their usefulness on just that kind of reasoning. But overall, I have trouble believing that DTC campaigns are useless across the board. Some of the marketing folks are weasels, but they’re not dumb ones. (It's also important to remember that DTC ads are only 5 to 10% of the total amount spent on drug promotion, according to the figures I've seen). In the end, I can agree with this statement from the paper:
Until we better understand how direct to consumer advertising modifies prescribing for particular drugs, debates about its positive and negative consequences will continue to be based on conjecture rather than strong evidence.
Comments (20)
+ TrackBacks (0) | Category: Business and Markets | Drug Prices
August 21, 2008
Posted by Derek
Many readers will well remember when Merck bought the RNA-interference company Sirna in 2006. They paid over a billion dollars for them, and made the whole RNA area an even bigger field for speculation than it was already.
Another big player in that field is Alnylam, who have been making deals all over the place. Many shareholders have been waiting for someone to buy ALNY for a similarly hefty premium, but the wait has been long (and all those agreements make such an acqusition harder and harder to realize).
As that post (and this one, and this one from 2004)) should make clear, I've been a bit cooler on the prospects for RNA therapies. I think the current RNA field is full of extremely interesting things, wonderful discoveries, fascinating research tools which could lead to all sorts of things - but I don't necessarily think it's full of new drugs per se. Nucleic acid-based therapies are just nightmarish to administer, and unless a real breakthrough in doing that appears, I think that (as drugs) they're always going to have their ankles tied together.
Well, Jonas Alsenas at Leerink Swann agrees, and he's not afraid to say so. According to Mike Huckman at CNBC, the firm initiated coverage of Alnylam with Alsenas saying that he thought the stock should be trading at about half its current value, and that he didn't see them developing any products for many years, if ever. And he went on to this statement, which I don't think anyone in the industry can deny:
The pharmaceutical industry is often swept by new technology fads. They are caused by sincere enthusiasm, fears of being left behind, and desperation to fill chronically depleted development pipelines, in our view.
I'm sure that the ALNY investors are not going to take this well, but hey, the truth hurts. For now, I continue to agree that modern RNA techniques are extraordinary research tools - but not drugs, not in almost every case.
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August 18, 2008
Posted by Derek
So Genentech has told Roche to get lost – well, to a first approximation, anyway. I think what they’ve actually told them is to go open their Swiss wallets wider. What it comes down to now is how highly Genentech values itself versus how much Roche is willing to pay – the balance between those two will determine how things go. And then there are the large shareholders in Genentech to consider – if their idea of a good price clashes with the figure that Genentech’s board has in mind, then things could get more complicated. (And if the US dollar continues to climb against the Euro, that could complicated everyone's calculations, too - at the very least, it's speeding things up).
Personally, I think that Genentech is better off being left alone. But that’s no surprise – I think that in a lot of the M&A deals I’ve seen in the industry, particularly between large companies, I’ve thought that the participants should have stayed home and spent their money elsewhere. A personality defect, to be sure, and clear evidence that I’d never make it at an investment bank.
The reasons I think that Genentech is better off unmolested are probably the same ones that its own employees have. The company seems to have a good research culture going – they’ve been productive and willing to take risks, which is all you can ask of a drug discovery organization. Roche, for its part, isn’t exactly an Evil Empire, but they’re not Genentech. And that, I think, is what gets me about most of these deals. I think that there is no one best way to do drug discovery, since the problems we face are so varied. And that means that the more different approaches there are being tried, the better. We need a healthy ecology in this industry, and the closer we get to a monoculture, the worse off I think we’ll be. I think that Genentech has something to offer all its own, and that it’s in danger of being lost if Roche buys (and Roche-ifies) the place.
Some people out there are worried more than others. Roche doesn’t have as much experience in biologics, so they’ll want to retain the protein groups. (The question is whether they'll want to work for Roche!) But Genentech has also made a push into small molecules in recent years, and medicinal chemistry might be an area that Roche feels it has enough of already – they’re not buying Genentech for small molecules, after all. We’ll see over the next month if they’re buying Genentech at all. . .
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August 5, 2008
Posted by Derek
I've just been told (by a reliable source) that something big is up with the Roche-Palo Alto site. I don't know if this is part of their bid for Genentech or what, but the word "closing" has been mentioned. I hate to pass on news like this with no more details, but something does appear to be going on. Anyone with more details, please add them in the comments section.
So much for not posting on my vacation - I haven't even finished packing for my flight yet. What a year this is for the industry, and it's only August. . .
Comments (32)
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August 4, 2008
Posted by Derek
As mentioned in the comments here (and as told to me by e-mail as well), a lot of Genentech employees are looking around for other options in the face of a possible Roche takeover. A lot of Genentech employees – some other Bay area biotechs are apparently seeing shoals of CVs coming in. Does that ever give an acquiring company pause, when people start diving over the sides at its approach? I suppose it depends on if they’re in it to buy the current pipeline or to buy some research productivity. But surely Roche wants some of the latter? If they do finally succeed in buying Genentech, what will they have bought by the time they finish?
And while we’re on the job-seeking topic, I’ve heard about some possibilities for ex-GSK people (and others out on the market from the various recent layoffs). Merck is hiring at their West Point, PA site, for one. EMD-Serono is expanding and looking for people in Rockland, MA. And a rare drug-discovery opportunity outside the industry is also available at the NIH Chemical Genomics Center. I have contacts for these if people want to send in CVs directly - just e-mail me and let me know.
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August 1, 2008
Posted by Derek
The ax is falling again at GlaxoSmithKline. This time it’s the oncology group.
Last month the cardiovascular people got this same treatment, you’ll recall, and there was some disagreement about how many jobs were being affected. But it looks like the company is moving one by one through its Centers of Excellence in Drug Discovery (CEDDs) and running a most excellent scythe through them. By the time they’re through, the total number of layoffs looks like it will be substantial indeed.
That’s because inside each area so far the cutbacks are pretty sweeping. Total oncology head count is apparently being reduced by about 40%. Discovery chemistry seems, unfortunately, to be getting it a bit worse, since some of the sub-areas aren't losing head count at all. The estimates I have are that of the c. 120 chemists in the area, about 60 are losing their jobs. That includes the entire oncology med-chem group at the Research Triangle Park location, and from what I'm told, none of them are being relocated to the Philadelphia-area sites. So much for discovering Tykerb, et al.
Are all of the CEDDs going to get this same treatment, or to the same degree? GSK isn’t saying, but I’d certainly bet on this sort of thing happening again as the year goes on. What the company’s research arm will look like when it’s all over is anybody’s guess, too, but there’s one thing for sure: it’ll be a heck of a lot smaller.
And whether this new trimmed-down inlicensed/outsourced GSK will be any more productive is anybody’s guess either. But we won’t know that for a long time. It’ll take quite a while just for all of these changes to stop reverberating through the company, for one thing, and then it’ll be several years after that before it’ll be possible to look at the pipeline and have a majority of it be a product of the new organization. As I’ve said before, this is one the biggest challenges in trying to engineer a large-scale change in a drug discovery shop – the lag time before you see the effects.
I’m already seeing resumes, but I’d like to invite any readers who know of openings for experienced drug discovery positions to either mention them in the comments or email me about them for a future post. (I did a lot of that during my own experience with a site closure, but of course, this time I don’t know most of the people involved personally). At the rate things are going, I’m going to have to start running classified ads down the right side of the page.
Comments (53)
+ TrackBacks (0) | Category: Business and Markets | Cancer
July 29, 2008
Posted by Derek
I've talked about a lot of difficult therapeutic areas, but here's another boulevard of broken dreams: schizophrenia drugs. I was working on follow-ups to a promising clincial candidate, which has since been promising a number of times without ever delivering. It certainly missed its endpoints in schizophrenia by a mile in Phase II. That was actually my introduction to the drug industry back in 1989 - I followed that up with several years working on Alzheimer's, another notorious graveyard of good ideas, which makes me wonder why I didn't just quit at some point and open that chain of all-you-can-eat catfish restaurants that the Northeast so desperately needs.
Of course, once in a while a drug for dementia actually works a bit, and since there's a huge underserved market out there, it's a prize worth seeking (ask Lilly or J&J). But clinical success rates are absolutely horrific in the whole CNS area, and the latest company to demonstrate this is Vanda Pharmaceuticals in Maryland (I've always wondered if they're named after a spectacular, and spectacularly finicky, genus of orchid).
Vanda's drug iloperidone has been kicking around for years now. Hoechst Marion Roussel (now Aventis) seems to have discovered it in the early 1990s, and they, Novartis, and Titan have all handed it off to someone else over the years. Vanda was the last in line, but they got the dreaded "Not Approvable" letter from the FDA yesterday, and the company's stock was blitzed, down 73 per cent at the close. And the thing is, this drug got a lot closer than anything I used to work on. Vanda did hit their endpoints against placebo and against haloperidol, but the problem is, these are not necessarily the standard of care in schizophrenia:
" The FDA stated that Vanda had demonstrated the effectiveness of iloperidone at 24 mg/day in the 3101 study for which the company reported results in December, 2006, and that the efficacy was similar to the active comparator, ziprasidone (Geodon(R), Pfizer Inc.). In addition, the FDA also stated that iloperidone was superior to placebo in patients with schizophrenia at doses of 12-16 mg/day and 20-24 mg/day in a prior study. However, the FDA expressed concern about the efficacy of iloperidone in patients with schizophrenia relative to the active comparator, risperidone (Risperdal(R), Johnson & Johnson), used in prior studies. The FDA indicated that it would require an additional trial comparing iloperidone to placebo and including an active comparator such as olanzapine (Zyprexa(R), Eli Lilly & Company) or risperidone in patients with schizophrenia to demonstrate the compound's efficacy further. The FDA also stated that it would require Vanda to obtain additional safety data for patients at a dose range of 20 to 24 mg/day."
So iloperidone works, but quite possibly not well enough compared to what's already on the market. That alone won't quite sink your drug - you can always hunt for a patient cohort that benefits from a new compound, and you'll quite likely be able to find one if you have the resources. But as that last line mentions, there are additional safety concerns.
Reading between the lines, it would appear that iloperidone had the best chance of distinguishing itself in efficacy at the higher doses, but that the FDA wanted to make sure that side effects didn't start kicking in up there. This paper makes you wonder if one problem is the (dreaded) QT interval prolongation. Many other factors have looked relatively clean in some of the reported trials.
I greatly doubt if we'll see iloperidone surface again. Vanda wouldn't seem to have the resources, and too many other organizations have passed on it. At this point, it's hard to see why more money would be put into the compound. . .
Comments (9)
+ TrackBacks (0) | Category: Business and Markets | Clinical Trials | The Central Nervous System
July 25, 2008
Posted by Derek
Now for some belated Roche/Genentech comments: the first thing that I found surprising about this was that there was some surprise involved. Even though a move to buy the rest of Genentech has always been a possibility, the actual timing of the announcement seems to have been unexpected out in South San Francisco. But it probably had to be that way.
What alternative was there? Roche wouldn’t have made some announcement along the lines of “You know, we’re thinking about buying the rest of Genentech sometime pretty soon”, because that would have made the deal even more expensive as everyone piled into the stock. Regulation FD would mean that they really couldn’t give a heads-up to Genentech’s management without telling the world – after all, these are two separate companies, so it’s not an internal matter. So this had to be done just like any company making a bid for any other – with the difference being that Roche already had a head start on a majority of Genentech.
The second thing that occurred to me, though, was “why, and why now?” The first half of that question is answered, as are most “I wonder how come. . .” queries are, with the word “money”. Genentech has been coining the stuff, and Roche would like to have all that revenue instead of just part of it. “Why now” comes down to money, too. The two companies were due to renegotiate their revenue sharing in 2015, and Roche apparently decided (among other factors) that the US dollar was about as cheap as it was going to get. You could turn the question around and ask why Roche took the whole don't-own-it-all approach in the first place. (They did own it all for a while, but put Genentech back out into the market in 1999).
I always assumed that they were worried about messing up whatever it was that had Genentech doing so well in the first place. If true, that showed an admirable level of self-knowledge on Roche’s part. Too many other companies seem to assume that the outfits that they buy will be just fine under the new letterhead – even better, probably, now that they’ve been bought by such a fine bunch of people! But it certainly doesn’t always work out that way. The challenge is to keep the acquired company, and its culture, from dissolving into the larger one like a sugar cube. (The alternative is to just buy companies for their physical or IP assets, not giving a hoot for who might be working there, and we’ve seen plenty of that, too).
But Genentech is a mighty big sugar cube, and it’s a long way from the rest of Roche’s operations. I’d guess that the folks in Basel are planning (hoping) that Genentech will go on just like it has, just with a few accounting adjustments (like all the money ending up on Roche’s books). There are probably a lot of reassuring messages going out to the Genentech people about how gosh, we already had a majority interest in you, so this is just sort of a formality, and it’ll probably save lots of money besides, you know, so just keep right on doing what you’re doing. . .
We’ll see. The Swiss are not known for their delicate managerial touch. One solution that's been talked about would be (once Roche has Avastin et al. safely booked) for them to spin out a new version of Genentech as a publicly traded company again - 1999 all over again. And we'll see if Genentech even goes for the offer - there's a lot of doubt about that, at least at the price the Roche is offering. They've apparently opted out of the provisions in the 1999 agreement about how Roche could buy them, so all sorts of things are now possible. . .
Comments (27)
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July 22, 2008
Posted by Derek
Merck took the unusual step of delaying its earnings release yesterday until after the close of the market. A report on another clinical study of Vytorin (ezetimibe), their drug with Schering-Plough, was coming out, so they put the numbers on hold until after the press release yesterday afternoon. Naturally, this led to a lot of speculation about what was going on. A conspiracy-minded website vastly unfriendly to Schering-Plough suspected some sort of elaborate ruse to drum up publicity.
But that sort of thinking doesn't take you very far, unless you count the distance you rack up going around in circles. As it turned out, the SEAS trial (Simvastatin and Ezetimibe in Aortic Stenosis) was, in fact, very bad publicity indeed for the drug and for both companies. In fact, a real conspiracy would have made sure that these numbers never saw the light of day, or were at least released at 6 PM on a Friday. But no, the spotlight was on them good and proper.
This trial studied patients with chronic aortic stenosis, which is a different condition than classic atherosclerosis. The two have enough similarities, though, that there has been much interest in whether statin treatment could be effective. The primary endpoint, a composite of aortic valve and general cardiovascular events, was missed. Vytorin was no better than placebo. It reached significance against one secondary endpoint, reducing the risk of various ischemic events, but not in any dramatic fashion.
That's not necessarily a surprise, since there's not a well-established therapy for aortic stenosis (thus the trial design versus placebo). As several commenters to the conference call after the press conference pointed out, this shouldn't change clinical practice much at all. But it's not what Merck and Schering-Plough needed to hear, that's for sure, because the sound bite will be "Vytorin Fails Again".
Actually, the sound bite will be even worse than that. There are a lot of headlines this morning about another observation from the SEAS trial: that significantly more patients in the treatment arm of the study were diagnosed with cancer. That's a red warning light, for sure, but in this case we have at least some data to decide how much of one.
For one thing, as far as I know there have been no reports of increased cancer among the patients taking Vytorin out in the marketplace - of course, one could argue that this might have been missed, but if the effect were as large as seen in the SEAS study, I don't think it would have been. Analyses of the earlier Vytorin trials and the ongoing IMPROVE-IT trial versus Zocor have also shown no cancer risk, and the latter trial is continuing. So for now, it would appear that either this was a nasty result by chance, or (a longer shot) that there's something different about the aortic stenosis patients that leads to major trouble with Vytorin.
None of these scientific and statistical arguments, and I mean none of them, will avail Schering-Plough and Merck. Among people who've heard of Vytorin at all, the first thing that will come to mind is "doesn't work", and after today's headlines, the second thing that will come to mind is "cancer". Just what you want, to put out press releases that your compound, even though it failed to work again, isn't actually a cancer risk. You really couldn't do worse; a gang of saboteurs couldn't have done worse. Of course, there's no such gang: the companies themselves authorized these trials, thinking that there were home runs to be hit. But all these sidelines - familial hypercholesteremia, aortic stenosis - have only sown fear, confusion, and doubt. The only thing that I can see rescuing Vytorin as a useful drug is for the IMPROVE-IT results to show really robust efficacy in its real-world patients. And I wonder if even that could be enough.
Comments (19)
+ TrackBacks (0) | Category: Business and Markets | Cancer | Cardiovascular Disease | Clinical Trials | Toxicology
July 11, 2008
Posted by Derek
Here's an interesting idea: Merck, Lilly, and Pfizer are bankrolling a startup company to look for new technologies for drug development. Enlight Biosciences will focus on the biggest bottlenecks and risk points in the process, including new imaging techniques for preclinical and clinical evaluation of drug candidates, predictive toxicology and pharmacokinetics, clinical biomarkers, new models of disease, delivery methods for protein- and nucleic acid-based therapies, and so on.
It's safe to say that if any real advances are made in any of these, the venture will have to be classed as a success. These are hard problems, and it's not like there's been no financial incentive to solve any of them. (On the contrary - billions of dollars are out there waiting for anyone who can truly do a better job at these things). I wish these people a lot of luck, and I'm glad to see them doing what they're doing, but I do wish that there were more details available on how they plan to go about things. The opening press release leaves a lot of things unspoken, no doubt by design. (For instance, where are the labs going to be? What's the hoped-for balance of industry types to academics? How many people do they plan to have working on these things, and how will the companies involved plan to share the resulting technologies?)
Enlight is a creation of Puretech Ventures, a Boston VC firm that's been targeting early-stage ideas in these areas. Getting buy-in from the three companies above will definitely help, but their commitment isn't too clear at present. For now, it looks like they're getting to take a fresh look at some areas of great interest, without necessarily having to spend a lot of their own money. The press release says that Enlight will "direct up to $39 million" toward the areas listed on their web site, but those problems will eat thirty-nine million dollars without even reaching for the salt. Further funding is no doubt in the works, with the Merck/Pfizer/Lilly names as a guarantee of seriousness, and if any of these projects pan out, the money will arrive with alacrity.
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+ TrackBacks (0) | Category: Business and Markets | Drug Assays | Drug Development
July 10, 2008
Posted by Derek
In the wake of continued expansion of medicinal chemistry efforts in China, a discussion between me and some of my colleagues at work had me sticking to my positions: (1) Scientific outsourcing is not going to go away, although it may move from country to country as costs change. (2) If you’re going to stay employed as a medicinal chemist in a high-wage area like the US, you have to bring something that can’t be purchased so easily overseas.
We got to discussing what that something is. One position was that it could be fast in-house turnaround time, but while true, that one makes me uneasy. It is easier to run a fast-moving project with in-house chemistry, because you can react more quickly to changes. The cycle time for stuff that’s being done in India and China is always going to be longer. But I expect that the outsourcing outfits are working on that problem, too, in order to bring in more business. So if you’re going to compete with them just on the basis of turnaround, you’re saying that you’ll always be able to make the compounds quickly enough to justify your higher salary. Not, I think, necessarily a safe bet.
I’d rather not try to outdo the low-margin people at their own game. I held out for the high-wage advantages being things like idea generation, the ability to take on harder chemistry that doesn’t lend itself as well to making libraries of compounds, and the advantages of real-time interaction with the biologists, PK, and formulations people. You’ll note that all of these are harder than cranking out methyl-ethyl-butyl-futile analog lists. That’s outsourcing in a nutshell: the easy stuff can be done more cheaply somewhere else, so the hard stuff is going to be left for us. We’d better get used to it, and fast. (Some of that hard stuff will eventually be done offshore as well, but it’ll be more expensive to do, intrinsically, and offshore wages in general will have risen by then. The big cost savings will be at the margin, for the routine work, and I expect other countries to rise up and take business away from India and China as their economies improve).
A few more points: I get a fairly constant stream of complaints about the whole business of outsourcing, but I have to say that I don’t see the point of many of them. I mean, I understand why people are upset, but I don’t see what complaining about it is supposed to lead to. What are we going to do, lobby for a law that forbids any aspect of drug discovery to take place outside our borders? Whether you think that’s a good idea or not, it’s not going to happen, any more than we’re going to do the same thing for clothing, cars, or candy bars. If it’s feasible and effective to do something more cheaply, companies will do it more cheaply. ‘Twas ever thus.
It’s true that there’s room to argue about how appropriate all the chemistry outsourcing is. Some of it is surely being misused, and there are surely some companies that are (or will try) outsourcing too much of their expertise, then ending up less effective than they would have been. Trends are taken to extremes, before things settle back. But things are never going to settle back to the pre-outsourcing employment situation for chemists. For better or worse – and I still think that overall, it’s for better – industrial science can now be found (and contracted for) around the globe.
Comments (38)
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July 7, 2008
Posted by Derek
I thought I’d start out the week by opening the mailbag for a recent reply to my posts about Pfizer’s research cutbacks. Here’s a perspective that you won’t get from me, at any rate:
You never surprise me of your uncanny ability to cast good news in a negative light.
Pfizer has been a bloated company following its acquisitions of Warner Lambert and Pharmacia & Upjohn. The company should have rationalized its workforce, including sales, marketing, and most especially R&D, a long time ago. So, hopefully, you are correct and there will be massive layoffs in R&D soon. Why should Pfizer spend all that money on high risk, low probability of success R&D projects?
Pfizer's belated cost-cutting will make it a leaner and more focused company. All the bad news is out there. Pfizer generates over $7 billion in free cash flow annually and pays a 7.4% dividend. Projected 2012 earnings per share (without Lipitor) are $2.05. So the stock is trading today fully discounting Lipitor and any possible good news the next 5 years. Does that really make sense to you?
So keep up your trash talk, so to speak. Pfizer today is money in the bank. The lower you can drive the stock price, the greater the future return. I just love folks like you who help to create great buying opportunities. Are you certain you're not buying Pfizer as you trash talk??
My response? Well, I can reply on several levels. I’m actually going to skip the outraged how-dare-you stuff about what a great thing it is that all those research people are losing their jobs, though. Let’s just take that as having been delivered, because I think a lot of good invective would just be wasted, anyway. We’ll keep this on a strictly business level, since my correspondent is nothing if not all business.
And from a business perspective, he has the beginning of a point. As many readers can attest, Pfizer’s in-house research productivity has not been good – at least, nowhere near as good as it’s had to be to sustain a company as huge as Pfizer. (There’s the problem, actually – as I’ve said before, the one thing that certainly doesn’t scale when a company gets larger is research productivity). So from my correspondent’s perspective, what do you do with the underperforming units of a company? You lop ‘em off, like pruning a shrub to get rid of unsightly branches.
Of course, one branch of a bush is pretty much like another as far as the survival of the whole plant goes, but cutting the R&D out of an R&D organization is not without risks. A Pfizer investor might be excused for forgetting that, since most of the company’s money has been made off the research of other labs, but the Lipitors do have to come from somewhere, eventually. And try as I might, I just can’t see Pfizer buying its way out of its current troubles. So, why should Pfizer spend its money on those "high risk, low probability of success R&D projects"? Because that's the only kind of R&D projects there are.
Now, as to whether all the bad news is already out there, I won't speculate. But I do know that if I had a dollar for every time someone proclaimed that all the bad news was already in some company's stock, I wouldn't have to work for a living. I invite my correspondent, though, to take a look at the company's history before sitting back and trusting those EPS numbers from the past. Let's take a trip down memory lane, back to the days of 2002, when the analysts said that it was going to earn about $1.60 per share for that year, $1.84 in 2003, and $2.14 per share in 2004. Watch it go! And after that, hey, who knew. . .well, reality intervened on those forecasts, but by 2005, now, double-digit growth was on the way.
Let's take a look at the company's actual financials and stock price over that period. It isn't inspiring. Click around on that chart: if you'd bought Pfizer ten years ago, you would have been flat with the index until early 2004, but since then it's been a disaster. Now, like my correspondent, you may be able to look at this and figure that hey, what could go wrong, and that all the bad news just has to be in by now, and that those earnings forecasts will finally start working out. Or. . .
So let's file that statement away for future reference: "Pfizer today is money in the bank". That's July of 2008, folks, and if you'd like to put some of your cash down on that statement, PFE is available during normal trading hours. I'll sit this one out.
Comments (38)
+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
June 16, 2008
Posted by Derek
About a year ago, I wrote about GSK's attempt to sell the lipase inhibitor orlistat over the counter as Alli:
"So my forecast for Alli is strong sales - for a while. Then it takes a dive, never to scale those heights again, as the word gets out. And the demand continues to grow for a weight-loss drug that works. . ."
Thanks to Pharmalot, this week we find this AP story which seems to confirm that suspicion. Sales for Alli aren't up to GSK's hopes, and the company is declining to say how much repeat business there is after people have tried it out, which says all that needs to be said. And this after one of their biggest marketing campaigns ever.
What still throws me is that an analyst quoted in the piece still talks about it as a drug that should, in theory, be a big seller. As that post from last summer makes clear, I've never once understood that, since Roche never could make it a huge seller as Xenical. You'll never be able to get around the unpleasant side effects of a pancreatic lipase inhibitor, as far as I can see, and you'll never be able to advertise one without mentioning them.
I think that the new, slimmed-down GSK organization is wasting money on this whole idea. But hey, Marketing thinks it's a great opportunity. . .
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+ TrackBacks (0) | Category: Business and Markets | Diabetes and Obesity
June 12, 2008
Posted by Derek
Well, this is turning into GlaxoSmithKline week around here, but with good reason. I’ve had a lot of mail from people who have been affected by this week’s cutbacks, and others who left the company before the latest round. And that leads to these thoughts for today:
1. The company is being rather coy when they describe the current layoffs as only involving 2% of the work force. The recent cuts were focused on the Centers for Excellence in Drug Discovery (CEDDS), which is where the great bulk of discovery medicinal chemists are. To be more specific, this one seems to have hit the Metabolic Pathways group especially hard, and there’s thought that the other CEDDS will be going through similar contractions.
And there have been other cutbacks over the last few months, though, and there are surely more to come. With such a smaller head count in the CEDDS, everyone seems to be expecting the related groups to be next in line – IT, chemical development, more of the in-house biology, and so on. If the company is doing more research on the outside, then some of these folks will presumably not be needed. GSK looks to be shrinking for many months to come.
That makes a person wonder about whether these cutbacks are meant to send some big signal to the investors or not. You'd think that you'd make a bigger deal out of them if that were the case, rather than minimizing them for the public, as the company seems to be doing.
2. It’s going to be interesting to watch to see if the new style the company is trying will work. They’re breaking down the CEDDS into even smaller teams, from what I hear, turning the discovery organization into who-knows-how-many smaller competing units. It’s been described as the “if only we were a bunch of startups” philosophy, and there are several points to consider about that.
For one thing, startups may not be as wonderful as they appear statistically, because of survivorship bias: a number of them disappear with people having hardly been aware that they were around in the first place. Even if that’s a desirable state of affairs, will a large company be able to replicate it in-house? And even if it can be done, will it happen in this case, or will the teams be either too large to be nimble or too small to work? I’ve no idea. Neither does anyone else, and it'll be years before we know.
3. There have been a lot of comments, both here and at other news sites, about how this is another evil deed of the MBA folks, and if they’d only turn things over to the scientists and get back to the science, the company wouldn’t be in this position. Hmmm.
What I'm about to say feels strange to me, because I’m a scientist through-and-through, and I’ve done my share of complaining about ridiculous business attitudes. For that matter, I've found myself laid off though what I thought was a mistaken site closure. But all that said, there’s a case to be made that GSK partly got themselves into this fix by letting the scientists free to do science. That’s how I see, for example, the huge effort the company had for years in nuclear receptors. A massive amount of fundamental work was done, but (because it’s such a horrendously difficult area) little or nothing ever came out the far end to make anyone any money. I'm willing to be corrected on those points, but that's how I see it now.
And it’s not like the company’s productivity has been one of the wonders of the world overall. One correspondent, an ex-GSK researcher, pointed out to me in an e-mail that one of the sites hit hard this week had taken one drug to market in twenty-five years. Some of that is surely bad luck, but that explanation can only take you so far.
It’s interesting to hear people talk about the good old days in the industry. The other day I saw a comment about getting things back to the good productive days of the mid-to-late 1990s, which (I can tell you) didn’t seem to flippin’ productive at the time. But there are stories beyond counting of the days when Company XYZ Really Had Their Act Together, when the scientists were happy and management was wise and stayed out of their way, and the clinical candidates flowed like a free bar at an ACS meeting.
I used to feel bad, hearing these tales, sorry that I’d missed such days. But then I noted their similarity to the myths of Golden Ages that you see everywhere, and began to wonder. The drug industry was definitely a different place back when. Screening cascades weren’t so rigorous, animal models ruled the day (and actually, in some cases, steered projects right more quickly than their replacements), and there were more good targets that hadn’t been exploited yet. I’m willing to stipulate all that; it was a different world.
But most of us, I think, date the Real Good Old Days of the industry to a period before we joined – no matter when that was. Listening to people talk about when things were good is like listening to the guys down at the lake tell you that you should have been around last week when the fish were biting. There were any number of severe problems back in any Golden Era, but those sort of disappear into the glowing mist.
4. So GSK’s upper management is doing what upper management does: they’re trying to get a better return on their money – for which, read “the money of the shareholders”. Looking over the last ten years or so, they’ve decided that what the company has been doing has not been working. The loss of Avandia (whose discovery goes back further than that period) made the problems unignorable. So they’re trying something different. It’s hard to make the case that something different wasn’t needed.
We can all argue about whether this particular something is the right idea, or whether it’s being implemented in the right way. But no one should be surprised that a company with GSK’s current issues and cost structure is being shaken up. These cutbacks may be the work of people who are mistaken; they may even be the work of fools. But it's not the work of greedy sociopaths bent on destroying the drug industry. I’d give up on that line of thought and switch to something more useful.
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June 11, 2008
Posted by Derek
Thoughts on the GSK cutbacks, whose size, interestingly, is reported by Reuters this morning as (only) 350 jobs (i.e. 2%) worldwide, a figure which does not jibe with what I've been hearing from various people on the ground:
1. If the company seriously expects external collaborations to run at the same level of detail and efficiency as their internal research, they’re kidding themselves. I think – or hope – that they’re smarter than that, and that they’re planning to mostly just buy these things outright, as with Sirtris, rather than strike collaborative deals for them. Of course, they now have fewer people to prosecute the fruits of those acquisitions, but someone appears to think the numbers add up.
2. Doesn’t a statement that you’re going to emphasize external research rather than internal stand as an indictment of upper management? After all, who set the priorities and funded the programs? They surely won’t let individual project leaders or area heads explain lack of progress as “just one of those things, you know how it goes”, so how to explain what is apparently a catastrophic lack of progress across the board? And what does this say about the whole “Centers of Excellence” framework for drug discovery, erected some years ago at great cost of time and money?
3. Still, if you’re going to do such as thing as cut half your research staff, it’s probably better to go ahead and do it the way that GSK did. Update: see the comments. This has actually dragged on for a while, and productivity appears to have gone where it goes in the sentence after next. Get it over with in one day rather than spread it out over time, department by department. The latter method sends productivity straight to hell. The death-of-a-thousand-cuts routine tends to terrify and dismay everyone, even in areas that are left untouched, and it sends a lot of good people out the door on their own.
4. But it’s not that productivity is going to be anything wonderful at GSK now. The people that are left will feel (will have felt?) a brief interval of relief that they still have jobs. But that’s followed by the employment equivalent of survivor guilt as they watch longtime colleagues go out the door, and on the heels of that comes the realization that nothing in particular holds the company back from doing the same thing to them, whenever it sees fit. That brings on (rightly) a feeling that you owe your company exactly as much loyalty as it seems to owe you. Many good people will be looking for the door themselves, and will be gone as soon as an opportunity presents itself.
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June 10, 2008
Posted by Derek
Update: GSK is indeed wielding the ax today and tomorrow. I'm hearing that that the smallest cuts are around 40% of the entire research staff at the various sites. This is big, and it's bad. . .
GlaxoSmithKline has been going through some sort of mid-life crisis recently. Their chairman, Jean-Pierre Garnier, just retired amidst the mutter of angry shareholders, for one thing. And the company has been splashing out on some very flashy acquisitions, such as the Sirtris deal which has just now completed. This is all going on against the backdrop of the Avandia disaster, and a perceived drought of current clinical successes.
Now the company is cutting their own head count in research, to what sounds like a pretty serious degree. There have been substantial cuts at their sites in Italy and the UK, and the Research Triangle and Pennsylvania sites are getting it even harder, from what I'm hearing. Some chemistry areas are losing more than half their people. I believe that today is the day that a lot of people are hearing whether they stay or go, and I feel bad just hearing it from a distance, having seen that stuff close up a few times myself.
The proximate cause of all this turmoil is probably the loss of all that Avandia revenue, although that may have just advanced the timetable on some decisions that the eompany was going to make eventually no matter what. Many GSK scientists are (understandably) feeling as if they’re being ditched in favor of a bunch of people whose main advantage is that upper management isn’t so familiar with them yet.
Whether that’s true or not, it’s a tough one to refute. There is a persistent “grass is greener” mentality in the drug industry. Perhaps that’s partly because, on an individual basis, the grass really is often greener. The best way to work your way up in the industry, for the majority of scientists, is to jump ship once in a while, which keeps you from being pigeonholed or taken for granted in your current company. (A less charitable view, accurate in a few cases, is that it’s in some people’s best interest to leave before everyone else catches on to them).
And on a company-wide level, it’s hard not to think of everyone else as being at least a little more competent than your own shop is. That’s because you see the inevitable bozo mistakes of your own workplace up close, whereas you don’t get such good seats for the ones happening elsewhere. And the side that all drug companies show to their competition is a bristling pile of patents and confident press releases about their mighty drug pipelines. You know, looking at your own company’s public face, how much of it is real and how much is bravado or wishful thinking. But it’s hard to keep in mind that the same goes for everyone else, too.
I don’t know how much this effect is contributing to what’s going on at GSK. After all, some of the deals that the company’s making are for specific development compounds that they didn’t have in house. But I’m pretty sure that there are researchers over there who are thinking about whether they could have gotten a sirtuin program off the ground a few years ago, like the one they just bought. Or what would have happened to them if they'd tried. . .
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June 2, 2008
Posted by Derek
A longtime reader pointed me to this article from Business Week. Fuji Film of Japan, facing all kinds of problems like the other film makers of the world, has decided to put some of its money into a more exciting, profitable, high-margin business: pharmaceuticals! Back in February they made an offer for small-to-medium sized Toyama.
Readers who have been around the industry for a few years may shudder, remembering Kodak's disastrous experience with Sterling-Winthrop. (You couldn't have paid a gang of saboteurs to do a better - well, worse - job on Sterling and its employees; this PDF will give you some of the story). The details of the interview, which gets crazier as it goes on, do not inspire happy feelings. Well, unless schadenfreude counts as "happy", that is. Feast on this, for example, from Yuzo Toda, the company's VP for Life Sciences:
"The film in your camera is about 15 microns (one-thousandth of a millimeter) thick. Our color film has 17 different layers, each with a different function, and it contains nearly 100 different chemicals. Controlling the chemical reaction to develop these photos is extremely difficult. You have to start and stop the various chemicals at exactly the right time to make it all work. The trick is all in the conversion of chemicals. Drugs targeting a specific [organ or receptor in the body] work the same way. We have a chemical library of 200,000 compounds, which we think will help us with creating new compounds, and we have an expertise in nanotechnology. From our viewpoint, it's more a question of why not pharmaceuticals?"
Well, with a library of two hundred thousand compounds (cue Mike Myers as Dr. Evil, demanding his million dollars), I don't see what's going to hold them back. Considering the sorts of wonderfully druglike photosensitive absorbers and dye-coupling agents they're stocked up with, I'm sure the screening hit rates will be exciting, too. And yes, I am considering making "The trick is all in the conversion of chemicals" the new slogan of this blog, and I urge Fuji to make it the advertising tag line for their whole drug business.
But let's not pick on just one guy. Here's Toshio Takahashi, the company's CFO:
"Many drugs are made in higher dosages than we need. That's because they can't be fully absorbed by our bodies. It's a waste of resources, and it can have an adverse effect on organs such as the stomach and liver. We're researching compounds that will work in smaller doses because they will target a specific part of the body."
Now there's a thought. I wish Fuji luck with these innovative ideas, although I don't think I'm capable of delivering the quantities of luck that it appears they'll need. I assume that the people at Toyama don't talk this way, i.e., as if they'd just been beamed in from Neptune and then hit over the head, and for all I know they're burying their heads in their hands as they read this stuff, too. Who knows, maybe if Fuji can keep their hands off of them and not impart too many lessons from the film business, the deal could work.
But for now, check out the interview, and be glad it's not you. Sheesh.
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May 29, 2008
Posted by Derek
Since I was talking the other day about the analytical habit of mind, this is a good time to link to an article by someone who has it like few other people alive: Freeman Dyson, who is thankfully still with us and still thinking hard. At the moment, he seems to be thinking about something that involves chemistry, physics, economics, and plenty of politics.
He has an article in the latest New York Review of Books that is one of the most sensible things I have ever seen on the issue of global warming. I strongly urge people to read it, because it’s a perspective that you don’t often see. (It ends, in fact, with a small note of despair at how seldom that particular viewpoint comes up). I found it particularly interesting, as you might guess, because I agreed with it a great deal.
Dyson stipulates at the beginning that carbon dioxide levels are, in fact, rising, and that they have been for some time. And he also is willing to stipulate that this will lead, other factors being equal, to a rise in global temperatures. He doesn’t get into the details, although there are endless details to get into, but goes on to make some larger points.
One of them is economic. One of the books he’s reviewing, by economist William Nordhaus, is an attempt to work out the best course of action. Nordhaus is not denying a problem, to put it mildly: his estimate comes out to about 23 trillion dollars of harm in the next hundred years (in constant dollars, yet) if nothing is done at all. The question is, how much will the various proposed solutions cost in comparison?
His numbers come out this way: the best current policy he can come up with, a carefully tuned carbon tax that increases year by year, comes out to only 20 trillion of damage, as opposed to 23 – that is, plus three trillion constant dollars. The Kyoto Protocol, turned down by the US Senate during the Clinton years, comes out to 22 trillion dollars of harm (one trillion to the good) if the US were to participate, and completely even (no good whatsoever) without the US. The Stern Review plan, endorsed by the British government, comes out to 37 trillion dollars of total harm, and Al Gore’s proposed policies come out down 44 trillion dollars: that is, twenty-one trillion dollars worse than doing nothing at all.
As Dyson correctly points out, these latter two proposals appear to be “disastrously expensive”. And the problem with such courses of action are that this money could be used for something better: Nordhaus also calculates the effect of finding some reasonably low-cost method to cut back on carbon dioxide emissions, such as a more efficient means of generating solar or geothermal power, the advent of genetically engineered plants with a high carbon-sequestering ability, etc. That general route comes out to roughly 6 trillion dollars of total harm, which is seventeen trillion better than doing nothing (and thirty-eight trillion better than the Full Albert). That’s by far the most attractive solution, if it can be realized. But doing an extra ten or twenty trillion dollars of damage to the global economy will make that rather unlikely, if we choose to do that.
And there are other effects. To quote Dyson:
” The practical consequence of the Stern policy would be to slow down the economic growth of China now in order to reduce damage from climate change a hundred years later. Several generations of Chinese citizens would be impoverished to make their descendants only slightly richer. According to Nordhaus, the slowing-down of growth would in the end be far more costly to China than the climatic damage.”
But there’s a factor that neither of the books he reviews mentions: that atmospheric carbon dioxide exchanges, on a relatively fast time scale, with the Earth’s vegetation. About eight per cent of it a year cycles back and forth, and that hold out hope for a biotech solution. Engineered organisms could fix this carbon into useful forms, or (failing that) just take out out of circulation completely. But we need to go full speed ahead on research to realize that.
The last part of his review addresses a larger question. Environmentalism, he states, is now more of a religious question than anything else. (Other people have realized that, and many who do bemoan the fact, but Dyson has no problem with it, saying that the ethics of environmentalism are “fundamentally sound”.) But here’s his problem:
”Unfortunately, some members of the environmental movement have also adopted as an article of faith the belief that global warming is the greatest threat to the ecology of our planet. That is one reason why the arguments about global warming have become bitter and passionate. Much of the public has come to believe that anyone who is skeptical about the dangers of global warming is an enemy of the environment. The skeptics now have the difficult task of convincing the public that the opposite is true. Many of the skeptics are passionate environmentalists. They are horrified to see the obsession with global warming distracting public attention from what they see as more serious and more immediate dangers to the planet. . .”
The distressing thing, as he mentions, is that many organizations (including, I'm sorry to say, the Royal Society among other groups of scientists), have decided that the issue is settled and that anyone dissenting from this view is to be slapped down. As for me, I’m not completely convinced by the current climate data, so I probably am to the right even of Dyson on this issue. Here he is, though, willing to stipulate that most of the basic assumptions are true, but finding no place for someone who can do that and still not see global warming as the Single Biggest Issue Of Our Time.
I know how he feels: I consider myself an advocate of the environment, but I think the best way to preserve it is to do more genetic engineering rather than less. Better crops will mean that we don’t have to plow up more land to feed everyone, and we won’t have to dump as many insecticides and herbicides on that land we’re using. That means that I also think the best way to preserve unspoiled spaces is to do less organic farming, and not more: organic farming, particularly the hard-core varieties, uses too much land to generate too little food, and it does so mainly to give people in wealthy countries a chance to feel good about themselves.
And I think the best way to preserve wild areas and biodiversity is to have more free trade and economic development, not to slow it down. Richer countries have lower birth rates, for one thing. (I actually think that the planet would be better off with fewer people on it, but I’m not willing to achieve that goal by killing off a few billion of us).
And finally, economic growth is what’s giving us the chance to find technologies to get us out of our problems. I know that there’s another way to look at it – that the technology we have got us into this problem, and that we should reverse course. But I don’t think that’s even possible, or desirable. I’d rather have engineered plants cleaning out the atmosphere, and I’d rather have electricity from fusion or orbiting solar arrays. I’d rather find cheaper ways to get some of our fouler industries off the planet entirely, and mine the asteroids and comets. I’d rather people get richer and smarter, with more time and resources to do what they enjoy. How we’re going to do any good by putting on hair shirts and confessing our sins escapes me.
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May 28, 2008
Posted by Derek
So Takeda has opened up its roomy wallet once again, and signed on with Alnylam for a nonexclusive partnership in oncology and metabolics. The InVivoBlog has all the details, but the main point is that Takeda had to put $100 million down at the beginning, with all the milestones, options, and extras coming after that. And Alnylam’s CEO seems to be saying that he’s not going to bother with any offers down in the mere double-digit millions, so don’t waste the man’s time. Roche didn’t – they signed a non-exclusive deal of their own with the company last year.
There are several interesting things about this. One is that Takeda is really in a deal-making mode, apparently, which (historically) has been unusual for a Japanese company. But no Japanese drug company has ever quite been in the position that they find themselves in – a big international player with patent expirations coming – so I guess we should expect something new. More remarkable, though, is the nonexclusive nature of all these deals that Alnylam is making. Other things being equal, of course, larger drug companies much prefer exclusive deals, or a complete buyout. That's what Merck did with Sirna in this same area, in what was no cheap deal, and one that led to Alnylam terminating their own Merck agreement. In this case, though, the amount of money for such terms has apparently been too much for anyone to handle, or Alnylam has perhaps just refused to go exclusive. It’s worth thinking about the position they feel they must be in, to make that stick.
The last time I can remember a situation like this was when the genomics frenzy was on. And I think the RNAi business is turning into something very similar, for very similar reasons: fear and greed, the two flywheels of the financial world. We'll take the greed as stipulated, since the whole purpose of modern capitalism is to harness its mighty and potentially destructive force. But the fear, in both cases, was the very real fear of being left behind when a rare landscape-altering technology is potentially coming on. If there really had been dozens of good ready-for-prime-time targets lurking out there in the genomic data, well, the companies that sewed them up would do very well, and the ones that didn’t would eat dirt. So better to spend the money, right? And so it is with RNA interference: if it really does work therapeutically, there are going to be a lot of previously-undruggable targets within reach, as well as a lot of new shots at the ones we already know. So. . .better to spend the money again?
I suppose there’s no way around it, even though I’m not convinced that RNAi is going to deliver any time soon (or at all?) After all, its difficulties seem (to me) very much like those of antisense DNA, subject of yet another train’s-leaving-the-station investing frenzy in the late 1980s and early 1990s. For one thing, delivering these oligonucleotides in a living human is definitely nontrivial, to use a word that scientists and engineers use to mean anything from “pretty damn hard” to “impossible at the present level of human civilization”. I don’t think that RNA therapy is in the second category, but I do think that it’s in the first category good and hard.
And there’s the whole question of off-target effects, which I’ve spoken about here before. These may not be show-stoppers, true, but the problem is that we don’t know if they are or not. At the very least, it’s a complicating factor, and a big one – and the fact that it’s out there makes you wonder what other interesting complications are yet to be discovered as we go into humans.
So no, RNAi is not going to remake the landscape later this year or anything. It’s going to be a long business, with (I feel sure of it) plenty of expensive head-slapping and hand-wringing along the way. But all that said, can a company like Takeda (or Roche, or Merck, or. . .) afford to ignore it? After all, by the time the kinks are worked out of the technology, it’s presumably going to be too late to buy into it. (Or if you can, it’s going to make the 2008 prices look like the discount rack). Perhaps it’s better to just decide that that’s what the money’s for, to buy into things that could pay off big, with the realization that most of those purchases are going to look idiotic in ten years. . .
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April 29, 2008
Posted by Derek
So why is Merck's stock dropping - again?
The FDA just unexpectedly handed them a "not approvable" letter for their latest drug, Cordaptive. Actually, we should stop calling it that, since they also told the company that they're not going to approve that name, either. What Merck's going to do with all their promotional freebies now, I can't imagine.
What's Cordaptive, or whatever it's called, anyway?
That's Merck's newest cardiovascular drug - although the active ingredient isn't new. It's niacin, also known as vitamin B3. It's been known for many years that niacin can both lower LDL cholesterol and raise HDL, as well as lowering triglycerides - in fact, it's probably one of the only things that can do all of those significantly at the same time.
So this is a rip-off, then? Merck's trying to sell vitamin B for $20 a pill?
No, it actually isn't, at least not to the extent you're thinking. The problem with niacin as a cholesterol therapy is that you have to take whopping amounts of it to see an effect. And there's a side effect - flushing of the face, which is basically uncontrollable blushing that can last for hours in some cases. That may not sound like much, but the great majority of people who take niacin at these levels have a problem with it, and a lot of people discontinue the therapy rather than put up with it. If the drug is taken for a few weeks, the flushing reportedly eases off some, but not everyone makes it to that point. By all reports, it's very irritating - and since patients can't feel their cholesterol being high, but can feel their faces burning and turning red, they solve the problem by not taking the niacin.
So why doesn't Cordaptive do the same thing?
A lot of people have tried to find a way to keep the lipid effects of niacin and get rid of the flushing. Merck added a prostaglandin receptor antagonist, laropiprant, to try to block the pathway that leads to the vascular effects. And it seems to help quite a bit, which made the combination a potential winner. Abbott already has Niaspan, a slow-release version of niacin, which also has reduced flushing problems and does about $600 million of sales a year. Niacin therapy itself seems to be pretty safe, although you do want to make sure that liver and kidney function are normal before you start, so the only big question has been what blocking that DP1 receptor might do on the side: can you take that pathway out without causing more trouble?
Well, can you?
Apparently not. Actually, that should be "apparently there isn't enough evidence to say yet" - that's probably more in the spirit of the FDA's letter. They want to see more information about the drug. Problem is, the FDA treats this (properly) as a matter between the agency and the drug company, so they aren't saying what the problem is. And Merck, for its part, isn't saying, either. Investors feel rather left out in these situations - perhaps the most striking one in recent years was Sanofi-Aventis's absolute wall of silence for months about why the FDA wasn't approving their potential blockbuster Acomplia (rimonabant).
Why's this so unexpected, if there wasn't enough evidence given to the FDA?
Well, there seems to have been enough evidence in the same pile of data for the European Union, whose regulators approved recommended the drug for approval a few days ago. Merck must have felt reasonably confident that they'd get the same treatment here. No such luck. And as just mentioned, we don't know if the problem is not enough evidence of efficacy, not enough evidence of safety, or a bit of each.
Why don't you people just make cholesterol-lowering drugs that work better, then, so there's no doubt about efficacy?
Would that we could. Statins basically only lower LDL - they don't raise your HDL. And if you push the statins too hard, patients start coming down with rhabdomyolysis, and you don't want that - ask Bayer. Raising HDL has proven to be a real challenge, too. There are a lot of ideas about how to do it, but the most obvious ones aren't working out too well - ask Pfizer.
OK, then, why don't you just make safer versions of what you already have?
Would that we could. But in almost every case, we have no idea of how to do that. For the most part, either the safety concerns are tied up with the beneficial mechanism of the drug, or they're occurring through side pathways that we don't understand well and don't know how to avoid. And some of those are things that you don't even get a read on until your drug gets out into the market, which is no way to do things, either.
So, why is the drug business considered such a safe bet?
Now, that one I don't have an answer for. Unless it's the conviction that people are always going to get sick, which I guess is a pretty safe bet. And that's coupled with a conviction, apparently, that we're always going to be able to do something profitable about that. And some days, I have to wonder. . .
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April 25, 2008
Posted by Derek
I don’t want to say that this is a trend, but I notice that GSK is saying that they’re going to leave Sirtris more or less alone as well (as Takeda has said they’ll do with Millennium). The researchers in both shops should feel good about that, and not only because they’ll be keeping their jobs. They’re getting a vote of confidence in the most meaningful way that a large company can give that to its employees: by paying you money and not messing with you.
Of course, these deals have two sides to them. I don’t know what it’s like in Takeda back in Japan – my contacts inside the Japanese pharmaceutical industry aren’t extensive. But I think that some of the people at GSK (where I do know a lot of people) are wondering just what motivated their company to spend $720 million on Sirtris rather than on them.
It’s a fair question, even though I don’t have a problem myself with the Sirtris deal (as I said yesterday). But the sirtuins themselves are targets that anyone can work on, and you’d assume that a big outfit like GlaxoSmithKline could, if they wanted to, make a big push into the area and find some interesting things. So why didn’t they? The most obvious reason would be Sirtris had already done a good deal of that work, and it was more economical for GSK to buy it than to redo it. Another possibility is that the chemical space for drug-like hits in that area may not be very spacious, and that Sirtris may have already carved out a good piece of that real estate.
There’s also a bit of Glaxo history to deal with. The company had already, about fifteen years ago, decided to make a great big push into a promising new research area: nuclear receptors. They set up a whole research institute and did a huge amount of good science trying to figure out how these things worked, what they were good for, and how to get drugs that affected them. I got interested in the field in the late 1990s, and it became clear to me very quickly that Glaxo’s effort was the most serious of the bunch (and that included some really substantial research going on at Merck, Lilly and some other outfits). The company had teams of people who seemed to do nothing else than study the structures of these things, generate reams of X-ray data, synthesize huge lists of ligand molecules of every kind you could want, and so on. Just run "Glaxo nuclear receptor" through PubMed to see what I mean.
And what did it get them? From what I can see, not much. Avandia (rosiglitazone) is a nuclear receptor ligand (for PPAR-gamma), but its activity had already been discovered, and it was in clinical trials without a known mechanism. Figuring out how it worked was one of the Glaxo team’s early triumphs. But Avandia has turned out to be famously troublesome, and no others have come to market, despite multiple tries in the clinic. The huge amount of time and money the company spent generated a lot of interesting science, but appears (at least to me) to have brought in not one dime of revenue. (No doubt someone from GSK will correct me if I’m wrong).
So you can see how the company might be wary of starting a big internal effort to explore a massive, complex, and risky new field of biology. Politically and psychologically, it’s probably easier for them to structure this in terms of an acquisition.
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+ TrackBacks (0) | Category: Aging and Lifespan | Business and Markets | Diabetes and Obesity | Drug Industry History
April 24, 2008
Posted by Derek
Well, I’m back from a brief vacation, and catching up with the news. It looks like the big headline is GlaxoSmithKline’s offer for Sirtris: $720 million, which is a hefty premium (84%!) to what the company was trading for previously. Reckless waste of money, or canny deal?
I lean toward the latter, but I’ve long had a place in my heart for sirtuin research and its potential. It’s still a long shot, but it’s one of the most intriguing ones in the history of medicine. Actually, from one perspective, you wonder how long a shot it is: a biochemical pathway that seems to extend healthy life in yeast, roundworms, flies, and mice would seem to have some odds of doing the same thing in man. A lot of drug programs have been started with a lot less backing them up, albeit for rather less earth-shattering indications.
Of course, Sirtris hasn’t officially been targeting life extension drugs, at least not in the near term. A number of these potential life-extending biochemical pathways are tied up with insulin signaling, which makes sirtuin-targeted drugs a natural for diabetic therapy as well. Sirtris has reported encouraging data for just that indication. If a sirtuin-based drug is going to make it to market, that’s a good bet for how it’ll do it. I note, though, that the company has also applied for orphan-drug status for resveratrol itself for a rare muscle disorder. But they don’t own that parent compound, just its use in this case – the diabetes work is being carried on with second- and third-generation analogs that address some of resveratrol’s problems. (It’s not a particularly stable compound, for one thing).
Once one of these drugs is approved, it’ll have the biggest, strangest potential for off-label use that anyone has ever seen. Oh, that’s going to be something to watch. GSK is well aware of this – I’m not saying that it’s part of their business plan, but when you see their head of drug discovery talking to Forbes and tossing the word “transformational” around, you know that they’ve thought beyond a replacement for Avandia. The Wall Street Journal headlines it like it is: “Glaxo to Buy Sirtris in Bet on Antiaging Reseach”.
That’s the truth, all right, and it’s going to be fascinating to watch things develop. As I was saying here the other day, a drug for aging is a perfect example of something the FDA has absolutely no idea of how to approach. Well, it’s not just the FDA, come to think of it: how on earth would you design a Phase II trial for life extension? How long would it take? What’s your clinical endpoint? And further on, how long will you want to monitor your Phase III patients (recall Pfizer’s recent follow-up of Exubera trial participants? How long will it take before you could be sure that some horrible bargain wasn’t struck along the way?
That’s the lurking fear behind all this research, fit to give Leon Kass the shakes. Life extension tends to give some people the same “Things Man Was Not Meant to Know” shivers as (for example) germ-line genetic manipulation. I’m tempted to cue the theramin music in the background, but I can’t really make fun of this attitude, since I understand where the uneasiness is coming from. In all these cases, we’re looking at real alterations of what we think of as human. Personally, I think there’s room for improvement in what we think of as human, but I agree that we should reach for those improvements carefully. And I can see how the very thought could strike some people as coming close to crazy.
But we’re going to find out. That’s the real import of the GSK news: the money is there to find out what’s possible in this field. I’m happy to hear it. But then, I was a bit euphoric back in 2003 when this news started breaking, and I’ve never really lost that feeling. We shall see.
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April 11, 2008
Posted by Derek
So Takeda has surprised the folks at Millennium with a buyout offer. (They're battening down the hatches over in Japan, and looking for something new). I know several people over at the latter company, and I can imagine that yesterday was one of the less productive days around the labs. No doubt there was a lot of initial fear that this would be a Pfizer-style deal (see below), but as the day went on that didn’t seem to be the case. I’m told that retention bonuses are being offered, along with several other features to try to keep the Millennium operation running.
Takeda’s been increasing its US presence over the years. Signing up with Abbott to form TAP (Takeda-Abbott Pharmaceuticals) some years ago was one step, as was recently buying out that entire partnership. They bought San Diego-based Syrrx a couple of years ago, and now they have a foot on the ground in Cambridge for oncology research. The Syrrx site is now "Takeda San Diego", but interestingly, Millennium is apparently going to keep its name. I also find it interesting that the company hasn’t decided to put up a big research site in one location and call it “Takeda – US”, but have rather taken the retail approach.
How easy managing those sites will be depends on what approach they take. For now, it looks like they’re going to take the easier one, which is to let Millennium carry on in their own style (albeit with more money). We can debate the wisdom-to-folly ratio of that another day. But overall, it looks like the Japanese see something in the smaller US companies that they don’t have themselves, and would like to try to buy. The lighter their touch, the more likely that what they’re after will actually still be around once the checks clear.
Contrast that to, say, Pfizer’s purchase of Sugen, or Lilly’s purchase of ICOS, or J&J’s purchase of Scios. In those cases, the larger companies were in it to buy a drug (or a few possible drugs), and that was that. Medicinal chemists? Pharmacologists? Those they already had. What they needed were the clinical candidates or marketed compounds. The folks in the small-company labs quickly found themselves getting those “What, are you still here?”. And pretty soon, most of them weren’t, voluntarily or involuntarily.
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March 18, 2008
Posted by Derek
Do drug discovery and drug marketing belong in the same company or not? That question’s been asked in several forms, but two MIT professors are taking it about as far as it can go. Stan Finkelstein and Peter Temin have a book coming out (“Reasonable Rx: Solving the Drug Price Crisis”) which proposes decoupling the two by force.
By analogy to the way the electrical power industry was divided into generation and distribution sectors, they propose splitting up the pharmaceutical business into drug discovery firms and drug marketing firms. But wait, there’s more: they also would like to have an “independent, public, non-profit Drug Development Corporation” formed to act as an intermediary between the two:
“It is a two-level program in which scientists and other experts would recommend to decision-makers which kinds of drugs to fund the most. This would insulate development decisions from the political winds," (Finkelstein) said.
The MIT press release also talks up the other putative benefits of this plan, such as how it would “insulate drug development from the blockbuster mentality, which drives companies to invest in discovering a billion-dollar drug to offset their costs”. There’s a lot to talk about in this idea, but here are some of my first impressions:
1. The electric power analogy is probably specious. Generating electricity is, for the most part, a sure thing. If you build a big coal-fired generating plant, which we most certainly know how to do, it will generate electricity for you. And its output will be proportional to how fast the turbines spin. Research is most profoundly different, as many executives from other industries have found to their sorrow. You can turn the crank like crazy and have hardly anything come out the other end at all – ask Pfizer – and that’s because we do not have a very clear idea of how to discover drugs.
Another problem is that electricity is fungible. The electric power coming from one plant is exactly the same as that coming from another, and can be pooled and distributed in exactly the same way. Every drug, however, is different. The electric power industry would be rather changed in appearance if some kilowatts were ten times as profitable as the others, but only for a few years after the generating plant came on line, or if particular kilowatts were only of benefit to certain homes or businesses and had to be routed there specifically.
2. Where are these experts, exactly? I have an instinctive distrust of plans that call for a board of dispassionate technocrats to step in and do things that the market is supposedly doing by itself. It’s not that such things absolutely can’t work, but my default belief is that they won’t work as well as their planners hope. Finkelstein and Termin’s “DDC” proposal is just the sort of thing I worry about. I can see establishing something to make sure that less immediately profitable diseases get R&D directed to them, but running the whole industry like an NIH grant review board sound like a recipe for disaster.
3. To some extent, the industry is already divided in the manner proposed. But it's not done through review boards, it's done through business dealings. Many small firms don't have the resources to develop their own drug candidates, so they shop them to larger firms who can handle the clinical, regulatory, and marketing aspects of the process. This goes on all the time. It's been proposed (many times) that one or more large companies might shut their own research down completely and serve as a clearinghouse for the smaller ones in just this way, but no one has been willing to take the plunge. My guess is that there aren't enough good ideas out there for sale to keep a company going without having some of its own research in the game; I feel sure that the numbers have been run on this idea more than once.
Of course, these deals are made on the basis of who will make money, rather than how much society will benefit. But you'd be surprised at how often those two can overlap.
Where do the costs go? I suppose I'll have to read the book to get the details, but I'm not sure how money is supposed to be saved here. The cost of developing drugs doesn't look like it'll be changed much, since Temin and Finkelstein aren't coming in with any insights into human biochemistry or any new ways for us to predict efficacy or side effects. Profits, however, would surely be reduced: the the DDC that they propose would seem to exist to recommend that less profitable drugs be developed, for the good of society, rather than the ones that companies believe that they can make the most money from.
I note that the press release makes much of climate change and globalization, probably because in many circles these days you can't be taken seriously unless you mention those somewhere. This is done in the context of tropical diseases possibly making inroads into the US and other industrialized countries. But if that were to happen, research on these diseases would become much more profitable - which I realize is a crude way of looking at it, but the market doesn't have to be pretty to work. And I think the process would be slow enough to fit the timelines for drug discovery as it's practiced today - an example would be the burst of work on avian influenza in the last few years. A sudden epidemic would be bad news indeed, and might well catch the industry flat-footed, but that's going to be hard to avoid under any drug development regime.
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Prices | Why Everyone Loves Us
March 10, 2008
Posted by Derek
There’s an article in the latest Nature Reviews Drug Discovery on recent drug attrition rates that caught my eye. The authors are looking over 2006-2007 trials and approvals, comparing the biotech industry with traditional pharma. ("Biotech" is defined as a company that's included in either the American Stock Exchange's biotech index and/or the NASDAQ's). In that period, the biotechs scored 47 FDA approvals (45% of the total approvals), but had 68 Phase III failures, which is 74% of that total. Pharma companies had only 5 Phase III failures during that stretch – the other 18 were biotech/pharma joint ventures, and those had a corresponding 16 approvals.
That’s food for thought, all right. The authors make much of the comparatively higher success rate for the biotech/pharma alliance compounds versus the biotechs that went it alone. I have to say, though, that the first explanation that came to my mind was one that they mention, but refer to as “cynical”: that the products which got partnered were disproportionately drawn from the list of those more likely to succeed in the first place.
But is “higher success rate for alliances” really the way to look at the data? Coming at the figures from another direction, I’d argue that “lower success rate for anything labeled biotech” would be a better fit. After all, the FDA approval/Phase III failure numbers are 47/68 for biotech, and 16/18 for biotech/pharma codevelopment, and I’d argue that those ratios are a lot closer to each other than either one is to the ratio for pure pharmaceutical companies, which was 36/5. Look at it this way: if the biotech-alone success rate was as good as the alliance one, you’d expect maybe 53 failures for those 47 successes instead of the 68 that really took place. But if biotech had the same success rate as pharma alone, those 47 winners would have been accompanied by only about 7 failures.
Cynics with a different orientation might wonder if the higher failure rate comes from a higher number of attempts on innovative drugs in biotech, as opposed to follow-ups and me-toos. But looking at another table in the same paper, where the authors split such compounds out, the me-too data in the pharma industry shows 15 FDA approvals versus 1 Phase III failure. The corresponding biotech figures show 20 approvals and 17 failures, so even the follow-on drugs have a harder time of it. (In case you're wondering, the figures from the opposite end of the spectrum, the new compound/new indication class, are 17 approvals versus 4 failures for pharma, as opposed to a toe-curling 9 approvals and 42 failures for biotech). Breaking down the numbers in another way, biotech companies had 37 out of 115 compounds in the me-too class (32%), while pharma had 16 out of 41 (39%), which isn't that big a difference.
This sort of thing is particularly interesting for someone of my age or older, because it brings back memories of the 1980s and the first big biotech boom, back when Genentech and Biogen went public and Cetus was still a going concern. The pitch back then was that biotech products were actually going to have a higher success rate, because they were, after all, mostly proteins that were already in use by the body, right? The definition of "biotech" has changed a lot since then, though - if you look at those companies in the two indices linked above, you'll notice that many of them don't work on biological products at all, but would be better classified as "small pharma". But I'm not sure if the general public appreciates that distinction. . .
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February 4, 2008
Posted by Derek
The topic of “me too” drugs has come up quite a bit around here over the years. For the most part, I’m a defender, although there are some places I draw the line (Clarinex for Claritin comes to mind as a particularly useless advance). A reader pointed out the amount of advertising he’s seeing for Aciphex (rabeprazole), another proton pump inhibitor for gastrointestinal reflux and general stomach acid problems, and wonders what side of the line this one is on.
I’m already on record as wondering just how much of an advance Nexium (esomeprazole) was over its racemic form, Prilosec (omeprazole), so the bar is set pretty high in this area already. Looking through PubMed, I find numerous comparisons between the drugs, which suggest some small differences in PK. Some earlier studies suggested that rabeprazole works more quickly over a course of therapy, but this is in dispute. There do seem to be differences in drug interactions between the various drugs in this category, which could be important in older patients who are already taking other medications. (Protonix (pantoprazole) may also be in this category). Perhaps reflecting this, this study found that rabeprazole was "significantly more effective" in elderly patients.
So, overall, there do seem to be some differences between the various drugs in this category (summarized here, among other places). In most cases, though, they're pretty much the same. This looks like a fight among near-equals, with the occasional tiebreaker going to one compound or another. This would explain why the ads for the various compounds are pretty interchangeable as well, featuring people holding their stomachs when confronted with a plate of barbecue. (Living in the Boston area, I can understand that reaction to some of the local stuff, but that's another topic).
As I say, I generally defend the idea of several drugs entering the same therapeutic space. In theory, and for the most part in practice, each new entrant provides something that the previous ones didn’t, and can thus carve out a space for itself. In this case, though, the differences between these drugs, though real, are comparatively small and subtle. There are patients who benefit from the number of choices in this category, but not as many as the advertising dollars would suggest. The whole proton-pump inhibitor market seems to be a fight among near-equals to carve up a large and lucrative market. The parallels that occur to me are the markets for SUVs and laundry detergent.
That means that it's a fight made for the big companies, for one thing. A smaller outfit would have been crazy to get into the PPI arena without a big partner. Given the current state of the art, it would seem crazy for anyone else to be contemplating an entry at all, unless they have some huge advance that they can demonstrate clinically. The exi |