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The Blog of Drug Discovery News

CROh-my-goodness!

Well, it looks like Christmas came early for Covance, landing a $2.2 billion deal with sanofi-aventis (more on that here). I don’t think I’m anywhere near alone when I say, “Didn’t see that one coming!”

Whether this is a sign of much larger things to come in terms of the contract research space and continued pharma and biotech outsourcing, only time will tell. But I’m guessing we’ll see more deals and even bigger dollar amounts before long.

By the way, maybe it’s me just showing my age (42, for the record), but I still have trouble wrapping my mind around multibillion-dollar collaborations. Buying a whole company for billions…well, I’ve gotten used to that, and understand it totally. But the world is moving fast, because I don’t recall too many deals (aside from acquisitions) going into the billions-and-billions of dollars territory until pretty recently.

Anyway, more details on, and insights into, the Covance/sanofi-aventis deal from us in the weeks to come.

September 30, 2010 Posted by | Corporate, Dealmakers | , , , , , | Leave a comment

Market may be shrinking, but there are opportunities not to be sneezed at

According to global business information and analysis firm Datamonitor, generic erosion is set to shrink the allergic rhinitis market, and the firm predicts a 20% decline in sales value over the next 10 years despite a marginal increase in sales volume.

Datamonitor estimates that there are approximately 181 million people living with allergic rhinitis in the seven major markets, driving disease-specific drug sales of approximately $5 billion in 2009. This is set to drop to $4 billion in 2019 as a result of the entrance of generics following patent expiries, most notably in the United States.

However, despite the forecast drop in sales in the allergic rhinitis market, Datamonitor has identified potential growth areas, most notably in the immunotherapy segment of the market. Furthermore, life cycle management strategies have been identified that may help to lessen the impact of patent expiry of symptomatic treatments.

“Immunotherapy is the only treatment option for allergic rhinitis with a disease modifying potential, but concerns over cost and safety, particularly for subcutaneous formulations, have kept symptomatic treatments as the more popular choice,” notes Jacoba van der Gaag, healthcare analyst at Datamonitor. “However, in recent years we’ve been witnessing large-scale development programs in immunotherapy for the first time, driven largely by new guidelines and changing regulations. This will always be a niche market, though this innovation is now promising growth.”

For example, Datamonitor forecasts that two new sublingual tablets targeting grass allergies, Grazax (ALK-Abelló) and Oralair (Stallergènes), will have combined sales of $264 million in the United States and European Union by 2019. The potential for growth in this market is reflected by the pipeline for allergic rhinitis, which is dominated by immunotherapies targeting multiple types of allergen.

Another opportunity exists within the antihistamine class, where life cycle management strategies are used to lessen the impact of generic erosion. An established strategy amongst key brands is the reformulation of molecules and/or combinations with decongestants. This strategy helps to reduce the loss to franchise sales and strengthen brand recognition following patent expiry of the primary molecule.

Jacoba concludes: “The success of this strategy relies heavily on timing of new launches relative to generic entry. Merck’s Clarinex (desloratadine) suffered as a result of launching after its predecessor Claritin’s (loratadine) patent expired, which was demonstrated by it reaching only a quarter of Claritin’s peak sales in 2009. Meda Pharma, on the other hand, has seen successful patient switching from once to twice-daily azelastine having launched prior to patent expiry, and is developing an azelastine/fluticasone combination that is expected to further strengthen its franchise.”

September 29, 2010 Posted by | Corporate | , , , | Leave a comment

Companion diagnostics ready to soar

As I’ve worked with companies putting together the next installment in our Trends in Cancer Research series, I’ve learned that pharma seems to be realizing that it needs to collaborate with diagnostic companies to stratify patients and to make safer, more effective drugs.

The development of companion drugs and diagnostics has the potential to improve treatment outcomes, enhance patient compliance with prescriptions and eliminate the need for insurers to pay for expensive therapies that often prove to be ineffective.

And the available information on biomarkers that indicate whether a therapy could work on a particular individual continues to grow rapidly.

Still, it can be a daunting task to develop drugs and companion diagnostics.

One company—Eli Lilly & Co.—has announced plans to build a diagnostics capability. A big part of the company’s innovation strategy is providing improved outcomes for individual patients—which it says can be achieved through tailored therapies.

Several technologies exist that enable the development of biomarkers into companion diagnostics. PCR, microarrays and expression profiling are being used to improve the sensitivity and selectivity of companion diagnostics. Next-generation sequencing and proteomics are two other growing areas of interest.

Biomarkers that are validated have the ability to lead to safer and more effective products, especially when developed into a companion diagnostic.

There certainly are challenges, such as identifying the right biomarker early in the discovery process; developing a robust biomarker assay in advance in the clinic; developing companion diagnostics well before reaching Phase III trials; and gaining approval of a drug and diagnostic at the same time.

An example of just how far this area has come is the World Companion Diagnostics Summit—to be held Dec. 1-2 in Boston. The summit will be addressing exactly these most crucial challenges, and has been developed in collaboration with the companion diagnostic pioneers from Roche, Genentech, Johnson & Johnson, AstraZeneca, Bristol-Myers Squibb, Novartis, Pfizer, Amgen, Abbott, Qiagen and Dako.

According to the website, the meeting has “evolved from the urgent need for those committed to personalized medicine to come together and share expertise that will underpin the path for making companion diagnostics a reality.”

Workshops will be held Nov. 30 and Dec. 3.

The summit will provide the scientific community an opportunity to have an open discussion of strategies for developing companion diagnostics and making strides in the quality and efficacy of research results. In the end, hopefully, we will all be winners.

(Note: If your company or institution is doing pharma or biotech research and development the oncology arena and would like to serve as a source for the last installment in ddn’s Trend in Cancer Research series, contact David Hutton at hutton@drugdiscoverynews.com.)

September 27, 2010 Posted by | Corporate, Dealmakers | , , | Leave a comment

What happens when a biotech takes its talents to South Beach?

What happens when a biotech takes its talents to South Beach?

No, that’s not yet another joke borrowed from the strange vernacular that has become former Cleveland Cavalier LeBron James’ recent decision to leave the Cleve for Miami.

“This is tough, but … this fall, I am taking my talents to South Beach,” James announced via an overblown, overhyped, hour-long special on ESPN in July called “The Decision.”

The revelation and associated public relations mess sent Cleveland—where ddn is based—as well as sympathetic fans in other cities, into a tailspin. In the months since and leading up to the start of the NBA season, this poorly planned PR tsunami has so dominated headlines and popular culture that even I, who can be quite accurately described as “not a sports fan,” dedicated my monthly column to it in June (see “We are all witnesses … to failure and success”). In the piece, I drew a correlation between Cleveland’s projections of hope and success onto a guy who wears sneakers to work, and the pharma industry’s inability to rebound from some of drug discovery’s most inherent failures, such as failed clinical trials.

The column proved popular among our readers, who very generously took the time to reach out and weigh in on what I described as “misguided frustration.” They were equally opinionated when I penned a “Jeers” to James and his astonishingly short-sighted PR reps in his camp for our August issue.

Most people marveled that I was somehow able to make a comparative leap between professional basketball and Big Pharma work. To tell you the truth, I still don’t know what made me decide to attempt it. But it seems like I am not the only one who thinks that Big Pharma can learn something from South Beachgate.

Weighing in on Bristol-Myers Squibb’s (BMS) recent acquisition of Seattle-based biotech ZymoGenetics—a deal valued at approximately $885 million—Stewart Lyman, owner and manager of Lyman BioPharma Consulting LLC in Seattle, took to an Xconomy blog to draw his own parallel:

“I guess I look at the ZymoGenetics acquisition in the same way that people in Cleveland look at the loss of LeBron James to the Miami Heat,” Lyman writes. “They spent years watching him develop his game to the highest level, only to see him depart just when they were hoping for greatness. Yes, it was his decision to leave, but would the fans be less upset if he had been traded to Miami for a second-round draft choice, just so the team could save payroll?”

Lyman is disappointed that the ZymoGenetics buyout will mean a loss of more than 300 biotech-related jobs from the Seattle area, a region that is ranked third or fourth among U.S. biotech centers, and is a popular destination for start-up companies.

“Publicly traded biotechs are supposed to be acting in the best interests of their shareholders, but this may not align with the best interests of their employees or the greater public at large,” Lyman adds.

According to BMS, the fate of ZymoGenetics’ facilities in Seattle and its 300-plus employees has yet to be decided. But until the deal closes and that announcement is made, Lyman has another sports analogy:

“The Green Bay Packers thrive in the smallest market of any team in professional sports. However, because the people in Green Bay actually own the team, they never have to worry about them leaving town for a bigger market. Could such a model work in biotech?” he wonders.

Speaking of jobs, BMS apparently just announced that it will  eliminate about 3 percent of its workforce, or 840 jobs, over the next six months as part of a “streamlining initiative.” Interesting!

What do you think? Is merger and acquisition activity in the pharma/biotech industries a sign of a healthy industry, or does it adversely impact specific geographic regions that are trying to become biotech hubs, creating jobs and producing novel therapeutics in the process?

We’ll discuss the BMS-ZymoGenetics deal in-depth in our upcoming October issue, but in the meantime, feel free to weigh in on this popular topic.

September 23, 2010 Posted by | M&A activity | , , , , | Leave a comment

Metaphors and M&As

I am a man who likes metaphors.

Perhaps too much.

I don’t get to cut loose much on that front in the magazine, but I’m feeling a little more casual here at the blog, so let me give you my metaphorical take on the two big merger-and-acquisition (M&A) situations going on right now: sanofi-aventis’ bid to woo (or take over) Genzyme Corp. and on the other end of the spectrum, Johnson & Johnson and Crucell both looking to get hooked up.

Many have said that the sanofi/Genzyme situation is a game of chicken. I don’t like that. In a game of chicken, someone’s going to get run off the road, and this seems more like each party trying to get as much as it can, not ruin the other person. So, that also takes my initial metaphor of two gunslingers facing off in a dusty street off the table, because no one’s out to destroy anyone. And I myself have used the staring contest metaphor, except that there’s not much action in that game.

No, I think perhaps it’s an arm wrestling match. Each side is exerting effort to shore up their case and enhance their position, and right now, neither side can pin the other’s arm down to the table. So, we just have to wait to see who does, or if someone calls a tie.

As for the J&J/Crucell situation, I liken that to a couple of lovers making eyes at each other and officially becoming engaged. Most of their friends and family (analysts and investors) like the idea of them getting together and think they’ll be quite happy, but a few close relatives are saying, “Maybe you shouldn’t walk down the aisle unless he buys you a bigger diamond ring or a house or something.”

September 21, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment

J&J and Crucell…But wait, there’s more!

If the recent action with sanofi-aventis and Genzyme has taught us anything (in the several articles on this blog and our website), the announcement of a potential merger or acquisition often means the beginning of protests and confusion. Get ready for another one of those rides, perhaps. Within hours of the announcement by Johnson & Johnson and Crucell that that latter is on the part toward becoming a vaccine division of the former, at least one Crucell investor is waving a red flag.

Today, on the heels of the announcement that Crucell and J&J were in the advanced process of negotiations for the shares of Crucell that J&J doesn’t already own for $2.3 billion (click here to read the story on our website), Crucell’s second-largest shareholder, private investment company Van Herk Groep, is chiming in with some serious reservations.

As Gertjan van der Baan, a director of Van Herk says, the offer to buy the rest of the Dutch company is too low and has come too early, and he calls the EUR24.75-per-share proposal (roughly $32.30 per share) “meager.” However, he declined to say whether Van Herk will tender its shares, saying that he will wait for the formal offer.

Van Herk Groep has a 9.6 percent stake in Crucell to J&J’s 17.9 percent, making its voice a pretty loud one. Van der Baan told Dow Jones Newswires that he thinks Crucell is in a transition phase and has the revenue potential of a biotech company along with the low risk profile one tends to see in other pharma companies.

On a more positive note, Jack Jonk, head of equities at Delta Lloyd Asset Management—which owns between 4 percent and 5 percent of Crucell’s stock—says the proposal seems to be a move “in the right direction” and one that makes sense strategically.

“But it’s to early now to assess [the bid] so we’re going to take our time to study it,” he said.

One thing that analysts seemed united on is the low potential for any bidding war over Crucell, in part because J&J already owns such a significant chunk of the company.

About a year ago, J&J paid $443.5 million for the nearly 18 percent stake in the Dutch biotech, and the two companies also forged a pact at that time, initially concentrating on advancing a universal flu-mAb antibody that can treat and prevent all influenza A strains, including swine and bird flu. Long-term strategies at the time were to develop a universal influenza vaccine as well as monoclonal antibodies and vaccines directed against up to three other infectious and non-infectious disease targets.

“Despite significant advances in prevention and treatment, influenza remains a major health threat, and each year, vaccines must be formulated to address the current influenza strain,” Paul Stoffels, the global head of pharmaceuticals R&D at Johnson & Johnson said at the time. “A universal antibody or vaccine that protects against a broad range of strains would be an important advance in helping doctors and nurses manage the annual influenza season and control acute epidemic and pandemic outbreaks.”

September 17, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment

Genzyme vs. sanofi-aventis: Who’s asking for too much?

We’ve run several stories on the developments around sanofi-aventis’ bid for Genzyme, from the intial overture and refusal to a potential suitor backing off to some interesting cuts and sales by Genzyme in the midst of all this.

All in all, it’s been quite a ride, and it gave the entire ddn staff flop sweats as we went to press with the September issue wondering just what might happen last-minute to nullify our coverage up to that point. Thank goodness for our online presence to keep up, eh?

In any case, with all that’s happened thus far, we thought we’d ask all of you what you think of the value of Genzyme in this potential merger or perhaps even hostile takeover.

September 13, 2010 Posted by | Corporate, M&A activity | , , , | Leave a comment

Anacor throws its hat into IPO ring

Anacor Pharmaceuticals Inc. on Sept. 13 filed a registration statement with the U.S. Securities and Exchange Commission (SEC) relating to a proposed initial public offering (IPO) of shares of its common stock, with a goal of selling up to $86.3 million in stock.

The Palo Alto, Calif.-based company had not, however, yet determined the number of shares to be offered nor the price range for the offering. All shares of the common stock to be sold in the offering, however, will be offered by Anacor.

Anacor is a biopharmaceutical company focused on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. Anacor has discovered and is developing five clinical compounds, including its three lead programs: AN2690, a topical antifungal for the treatment of onychomycosis; AN2728, a topical anti-inflammatory PDE-4 inhibitor for the treatment of psoriasis; and GSK 2251052, or GSK ‘052 (formerly referred to as AN3365), a systemic antibiotic for the treatment of infections caused by Gram-negative bacteria, which has been licensed to GlaxoSmithKline under the companies’ research and development agreement. In addition, Anacor is developing AN2718 as a topical antifungal product candidate for the treatment of onychomycosis and skin fungal infections, and AN2898 as a topical anti-inflammatory product candidate for the treatment of psoriasis and atopic dermatitis.

September 13, 2010 Posted by | Corporate, Government | , | Leave a comment

Genzyme sells business unit and announces cuts

Two big numbers are making the news right now for Genzyme as it works to either fend off a potential takeover by French pharma sanofi-aventis or drive up the offer price: $925 million and 1,000. The former is the price Genzyme will get for selling its Genzyme Genetics business unit to Burlington, N.C.-based Laboratory Corporation of America Holdings, better knowns as LabCorp. The latter is roughly the number of jobs—some 10 percent of its workforce worldwide—that Genzyme plans to cut by 2012.

Reports of the $925 million dollar deal made the news with the Sept. 13  announcement by LabCorp that subject to customary closing conditions, it will buy Genzyme Genetics and, net of expected income tax benefits—less acquisition-related expenses—the acquisition will pose a net cash cost to LabCorp of approximately $795 million.

“Genzyme Genetics is among the premier genetics and oncology laboratories in the United States. It has an excellent clinical reputation, a track record of growth and innovation and outstanding people,” says David P. King, chairman and CEO of LabCorp. “This acquisition will substantially expand our capabilities in reproductive, genetic, hematology-oncology and clinical trials central laboratory testing. The acquisition of Genzyme Genetics provides us with an unprecedented opportunity for revenue growth in our key strategic focus areas of esoteric testing and personalized medicine.”

Genzyme Genetics performs more than 1.5 million high-quality, high-clinical-value tests annually, with reported revenue in 2009 of approximately $371 million. LabCorp has reported that it is committed to keeping the unit’s 1,900 employees, and it will gain all of Genzyme Genetics’ services, technology and intellectual property rights, as well as its nine testing laboratories.

Although the sale of the business unit coincides closely with the acquisition overtures by sanofi-aventis and the cold shoulder to sanofi from Genzyme, the divestment of Genzyme Genetics doesn’t appear to be an out-of-the-blue response. Back in May, the company announced a series of strategic moves, including buying back $2 billion dollars worth of its stock, largely with proceeds to be gained by ridding itself of three businesses that are not part of its core operation.

Genzyme’s genetic testing, diagnostics and pharmaceutical intermediates businesses were all put on the potential bidding floor in May, with Genzyme CEO Henri Termeer saying at the time, “As we evaluated our company to create a mix of businesses that will deliver sustainable growth and stronger returns on invested capital, it became clear that these businesses do not fit within this strategy.”

With the sale of the genetic testing unit presumably behind it, Genzyme has indicated that it is still on track in its plans to sell the diagnostic products and pharmaceutical intermediates units.

The other news, about the job cuts, seems to have reached the Genzyme workforce first late on Friday, Sept. 10. That announcement came via a memo to employees from Termeer, though the Boston Herald and the Boston Globe were quick to get wind of—and get copies of—the memo and report on the news.

In announcing a roughly 10 percent cut of the more than 12,000-strong Genzyme workforce, Termeer told employees, “The recent takeover proposal reinforces how important it is to take control and maximize the value we bring to patients and shareholders.”

A Genzyme spokesperson confirmed that the company is cutting jobs, saying that further details would be revealed this week and adding that the cuts would have happened even in the absence of interest from sanofi-aventis in a merger or takeover.

Speaking about the sale of the Genzyme Genetics unit, Geoffrey Porges, an analyst with Sanford Bernstein & Co., told Bloomberg that sanofi may now feel pressures by the sale of the unit to increase the amount of its offer to acquire Genzyme. “Genzyme is making it clear they’re not sitting around waiting for Sanofi to raise their bid,” he said.

“Our offer to acquire Genzyme for $69 a share in cash remains unchanged,” Jean-Marc Podvin, a Paris-based spokesman for sanofi told Bloomberg, and sanofi-aventis’ CEO, Chris Viehbacher, made it clear in an Aug. 30 conference call that the Genzyme Genetics unit wasn’t a major focus in the acquisition bid.

Still, Michael Yee, an analyst with RBC Capital Markets, noted in a report Sept. 13 that sanofi’s bid for Genzyme may rise “into the low $70s,” adding that sales of the diagnostics and pharmaceuticals units could generate a combined $1.3 billion.

September 13, 2010 Posted by | Corporate, M&A activity, Sales, Shutdowns & Spinoffs | , , | Leave a comment

Collaboration in the Cleve

Just weeks after German pharma Merck KGaA closed on its $7 million acquisition of Millipore Corp., the bioscience research and biopharma manufacturing technology, tool and service provider—now operating under the name EMD Millipore—entered into a licensing agreement with the Cleveland Clinic for a method to rapidly assess tissue.

The method co-developed by EMD Millipore and the world-renowned hospital research center uses the immunohistochemistry (IHC) application of EMD Millipore’s SNAP i.d. Protein Detection System to stain and study patient tissue, and reduces the time it takes to do so from hours to minutes.

Launched in April 2008, the SNAP i.d. system uses a vacuum to actively drive reagents through membrane-fixed tissue sections, dramatically increasing exposure of tissue antigens to blocking reagents, antibodies and wash buffers. Traditional tissue staining involves mounting sections on glass slides and relies on diffusion for reagent permeation through the sections, which can take as long as 12 hours. But the SNAP i.d. system reduces this time to about 22 minutes, says Don O’Neil, director of product management at EMD Millipore.

“SNAP i.d. is a simple and elegant system that leverages our core competency in membrane technology development with some really cool ideas that came out of our engineering group,” he says. “It’s an injection-modeled system about half the size of a shoebox. You run your Western blots, pull the vacuum and within 22 minutes, you are getting results.”

According to O’Neil, the initial application of the method will focus on melanoma research, and will be a game-changer in terms of easing many of the time burdens of a typical Mohs procedure, a pathology sectioning method that allows for the complete examination of the surgical margin. The procedure—which involves the surgical removal of tissue; mapping, freezing, cutting and staining the piece of tissue; interpreting microscope slides; and reconstructive surgery—is both time-consuming and has a high incidence of false negatives.

O’Neil says ultimately, scientists at EMD Millipore will collaborate with doctors at the Cleveland Clinic to validate the use of SNAP i.d. for diverse tissue types and fixation protocols to accelerate translational research and drug discovery.

“This system enables the pathologist and surgeon to work together, hand-in-hand,” O’Neil says. “They can use the SNAP i.d. system for IHC during the surgical procedure, and make a decision on what to do next right there and then.”

In the current research environment, there is a critical need to be able to evaluate test results in a timely and effective way, says Chris Coburn, executive director of Cleveland Clinic Innovations, the technology commercialization arm of the clinic. Ranked among the top corporate venturing arms in the world, Cleveland Clinic Innovations works on more than 200 new technologies per year and engages in dozes of similar transactions.

“SNAP i.d. is widely in use already as a means of conducting Western Blots,” Coburn notes. “The Cleveland Clinic technology expands the applications of SNAP i.d. to not only Western Blots, but also immunohistochemistry, which currently is a eight-hour procedure. But by using the SNAP i.d. application developed at the Cleveland Clinic, that immunohistochemistry time is reduced to around 30 to 45 minutes. This system will allow all researchers to increase their immunohistochemistry volume by reducing the time it takes for each procedure, which will help make lab work more efficient.”

Coburn says the first use of SNAP i.d.’s immunohistochemistry application will be for basic science research in the lab. Clinical applications, such as in the pathology lab, will follow in the future.

The Cleveland Clinic, he notes, has had a long relationship with Millipore in terms of licensing and product usage.

“The SNAP i.d. application was a good fit for the Cleveland Clinic to work with Millipore since Millipore sells the device,” Coburn says. “In addition, the Cleveland Clinic’s unique blend of clinical expertise and research prowess make us a good partner for a company like Millipore.”

O’Neil says Millipore is “excited to partner with such a world-class organization.”

“It’s a huge honor for us to have this opportunity,” he says. “I know they are an exceptional organization and a tremendous group of people who are very dedicated and collaborative. They are one of the highest volume centers for Mohs surgery in the world. While this initial application is very specific to that procedure, there are certainly other opportunities within IHC that we want to leverage—potentially in higher-volume workflows where time is of the essence.”

September 10, 2010 Posted by | Academia & Non-Profit, Corporate, Dealmakers | , , | 1 Comment