Achillion vs. Actelion More Biotech M&A’s to Come

Last week’s announcement by Swiss drug maker, Roche Holding AG, that it was buying biotech firm InterMune, Inc. for $8.3 billlion sparked speculation by industry watchers about who would be the biotechs that might be involved in the next round of M&As. InterMune makes a drug, Esbriet (pirefnidone) that treats a lung condition, idiopathic pulmonary fibrosis. Esbriet is approved in Canada and Europe. The drug has the potential to become a blockbuster seller. InterMune’s product would join Roche’s Pulmozyme and Xolair to build up its lung drug portfolio.

A number of names popped up such as Achillion Pharamaceuticals, Actelion, Puma Biotechnology, Intercept Pharmaceuticals, and others. Maybe people heard Achillian but were attracted to similar sounding Actelion.

  • Achillion Pharamaceuticals makes Phase II hepatitis C virus (:HCV) candidate, ACH-3102.
  • Puma Biotechnology is developing its Phase III breast cancer candidate neratinib, PB272.
  • Intercept Pharmaceuticals makes its phase II nonalcoholic steatohepatitis drug, obeticholic acid, OCA.
  • Actelion Pharmaceuticals makes a cancer drug to treat a rare form of non-Hodgekin’s lymphoma.

Some in the big pharma side are still holding out hopes of buying a biotech that can make their next blockbuster. So which will it be? Achillion? Actelion? Others? To be sure, we will need wait and see.

Advertisements

Bay Area Biopharma Firms Evolve Their Mobile Apps

I recently attended the Apps World North America Conference on Feb. 5, 2014 held at, San Francisco’s Moscone West convention center. The event is driven by the huge interest in mobile apps by mobile device users, developers and device makers.   Since mobile apps are a core technology that makes mobile devices so useful, the subject of developing and commercializing mobile apps has become an important business topic to over 8000 visitors to this interesting event.

Apparently, a number of healthcare companies were doing some work in the mobile apps space that might benefit many kinds of enterprises.  Paul Lanzi, Senior. Manager of the Mobile, Web and Portal Team, Gilead Sciences, gave a talk about the Evolution of mobility in the enterprise. Paul’s team provides the infrastructure to support mobile solutions at Gilead. Paul said that he started in the tech industry in 1994 and worked at Genentech in a similar job prior to his Gilead role.

Lanzi cited recent mobile milestones by saying that change has come rapidly and best practices were learned from various experiences.  In 2012 his company’s apps development grew from 1 to 100 enterprise mobile apps. By 2013, they were creating enterprise apps that employees actually want to use. Going into 2014, he expects to see more of the evolution of enterprise mobility.  Paul said that the most common mobile devices ten years ago were the Motorola Razor and the Blackberry. Lanzi said that developers need to use the idea of Mobile First and said that “In the Net, Net things change really fast.

There are four evolutionary stages of mobility in the enterprise.

Brochureware. He gave an example of his local restaurant took their paper menu and put it on the web. That’s all they did.  He showed that pharmaceutical firms like Gilead or Genentech make brochureware of Rx package inserts. People can go online and read the drug package insert online.  It adds value above a paper version, its low cost, fast to deploy and easy to update.

Paul said that enterprise app developers need to watch out for certain things by saying that it is best to avoid making an evolutionary dead end with mobile apps. Paul used a biology evolution example to make his point that crocodiles and chickens have something in common.  At some intermediate points along the evolutionary path, dinosaur-like birds with teeth emerged that became evolutionary dead-ends and went extinct.  Similarly in the PC apps evolution, the keyboard driven command line interface evolved into the familiar windows and mouse click interface.

 Snackable Apps. Its best to mobilize a key subset of business processes, “instead of providing the whole ocean.”  For example, Lanzi said that a business app that enables “Review pending transactions, approve pending transaction” is a very simple user interface. Users at Genentech said “I approve with gApprove even when I’m sitting in front of my computer.”

He said that sometimes you get some surprises.  Once they need to needed to assign support tickets on mobile devices for facility power plant workers.  They had a new app designed, but no one used it. It turned out that a 37-yr-old designed it, but the average age of end-user was 58.  What happened is the workers at that age had worse eyesight and could not read the app. The app had 12 point type.  Lanzi said that mobilize the right part of the process,  get a deep understanding of process, and keep adjusting the app.

Full Business Processes. Paul said that Concur is a complete business process at his company designed for expense reports. Concur has done a great job of adapting with Blackberry and IOS devices.  Lanzi said that developers need to choose the right process and never stop evolving.

Mobile First Enterprise.  Paul said that developers need to consider mobile first, the philosophy, and leadership, procurement, finance, hiring, and so on. Lanzi said that enterprise app builders need to design for change. For example, when Paul was working at Genentech, he said that the sales team in Spain was given iPads to replace laptops. The sales people had to get used to doing work on that device instead of on their laptops and so forth. He said that you can contact Paul on Twitter using @planzi.

Emerging Changes Coming to the Drug Development Ecosystem

At last, the face of the Affordable Care Act (ACA) has entered the public arena.  Last October at the launch of the web marketplace of the ACA, the public became keenly aware that major changes in the US healthcare system were underway.  Despite its rocky beginning, by January several million customers had successfully signed up for their new healthcare insurance plans for 2014.  The ACA will have an impact on many stakeholder groups including patients, health care providers, hospitals, insurance payers, government agencies, drug developers, and others.  In particular, one can expect to see changes of the drug development ecosystem emerge over the next few years.

On January 14th at the Parc 55 Hotel in San Francisco, the Biotech Showcase presented a plenary luncheon presentation, The Changing Dynamic of the Drug Development Ecosystem.  A panel of experts shared their insights and opinions of what might play out in the industry over the next few years.  Moderator, Ellen Corenswet, Partner at Covington & Burling LLP, posed key questions to the panelists.

The panelists included:  Karen Bernstein – Co-Founder, Chairman and Editor-In-Chief, BioCentury; Anton Gopka – Managing Partner, RMI Partners; Dan Mendelson – CEO, Avalere Health; Dennis Purcell – Sr. Managing Director, Aisling Capital; Evonne Sepsis – Managing Director, ESC Advisors.

Karen Bernstein opened the initial discussion about patients, what drugs they want, how they pay for healthcare insurance and so on.  She spoke about the ACA (aka: ObamaCare) in relation to patients and how they interact with drug companies.  Dan Mendelson seemed to know many detail data points about what to expect from the ACA since his firm has done some studies that model the potential impacts of the law.  Dan said “more and more, healthcare costs are being pushed to consumers.”  He said that many of the plans offered on the Exchanges cause consumers that need Tier-4 drugs “to pay 50% of the market price of the drugs.”  Tier-4 drugs are expensive targeted cancer drugs.

Berstein said that drug companies have offered discount coupons to consumers for some expensive drugs.  Mendelson said that there is a contradiction between ObamaCare and Medicare.  For example, Medicare does not accept discount coupons.  But, ObamaCare does accept discount coupons.

Dennis Percell said “In Boston, there are three hospitals within three miles of each other that do heart transplants. In New York City, there are hospitals that repair hips. There is one that charges $15,000.  At another place it costs $60,000.”  He asked, “What’s going to happen in pricing five years from now to the hospitals that do the heart transplants and the ones that do the hip repairs?”

Dan Mendelson  said he has “seen that consolidation is already happening either through acquisition or through contracts among organizations.“  “In many areas there is significant over capacity such as from teaching hospitals and academic centers.”  He said that “a lot of the teaching hospitals are being excluded from the networks that are fielded under the exchanges.”  Dan said that the exchanges will get up to about 6 million people and will represent just two percent of the health care system.

He said that “small businesses are calling the insurance companies and asking them to design new insurance plans for them.” He expects that “over the next five years, the benefit designs for the ACA will eventually spill over to whole healthcare insurance market.”  This scenario will have an impact on biotech’s future drug development plans.

Evonne Sepsis said “Reimbursement needs to be considered at the beginning of drug development process. She said “historically, most drug development companies considered reimbursement later.”  But not now.

Bernstein noted that companies say that their partner’s drug R&D costs need to be recovered through higher prices. However, high new drug prices are not sustainable. Dennis Purcell pointed out that “the last ten of twelve new cancer drugs cost $100,000 or more” for a course of treatment.

Evonne added “A few years ago, ten years ago, we saw the orphan drug market emerge. It needed just a patient population of 1000-5000.”  But now “with smaller patient populations in personalized medicine it is similar to the orphan drug market.”

Ellen asked  “What about the role of international going forward?”

Anton Gopka said that international pharmas are doing clinical trials in Russia for proof of concept studies.  This business model might work.  After the trials they can commercialize the new drug in U.S. Dan Mendelson said “Well maybe not so, because most U.S. payers or regulators prefer drug trials to be done in U.S.”  Dennis Purcell said  “If it were a country, the U.S. healthcare system would be the 5th biggest country in world.”

The discussion turned toward disease foundations and patient groups.

Dennis Purcell said “I believe that we will see lot of disease foundations that will open a VC arm.  So VC groups should work together with them to bring their projects forward.  Dan Mendelson offered that disease groups would work as clients. That is. A diabetes group would test the glucose value of products.

Ellen asked how to engage with the patients.

Dan Mendelson said that we need to understand and look at the quality measures. “We can’t expect the payer to give you a guarantee. Its not possible.” “We need to show an advantage vs. other drug competitors.  We need payer buy-in — each payer wants something different.  Small companies need to be competitive.  This situation has ham-stringed the FDA — They are not up to speed with the leading technologies.”

Karen Bernstein wrapped up their discussion by saying that the FDA is good in certain areas.  They are the only government agency that is under funded.  She noted that Janet Woodcock is expected to return soon, others, key people are expected to leave or retire by 2016.  She said “I see the next five years as tough for the FDA.”

New Biotech VC Investing Model Emerging

It appears that a new biotech investing model is emerging and may play out through 2013.

On October 9, 2012, I attended the BIOInvestor Forum at the Palace Hotel in San Francisco. At the Plenary Session “It Takes A Village: The New Pharma-VC Model for Biotech Investing,” moderator Alan Eisenberg said, “Thirty-nine percent of VCs reported decreased HealthCare investment in the past three years.”  This sector has continually underperformed.  In addition, there were only 16 early round financings.

Will Biotechs Play a Kind of VC “Hunger Games”  to  Survive?

One panelist believes that 2013 will be like the “Hunger Games.”  “Companies need to change how things are done to survive,” said De Rubertis. According to Brian McVeigh, Vice President of Worldwide Business Development Transactions and Investment Management, at GSK Pharma, “This is a relationship business.  Relationships with academics are also important.

Location, Location, Location

The other piece is geographic.”   Francesco De Rubertis, Partner, at Index Ventures said, “Returns have to be good enough for investors to get back in.”  Index Ventures’ strategy is to invest in early-stage, single-asset companies in Europe, U.S. and Israel.  Recently, there have been a number of high-profile funding collaborations between pharma companies and traditional VC funds such as GSK and JNJ with Index Ventures, Sanofi and Third Rock (Warp Drive), and Eli Lilly and TVM Capital.  The strategy is that by combining their resources and expertise, these firms hope to source and develop drugs that are winners.

Biotech Experts Highlight Clinical Sequencing at Rx/Dx Summits

I recently attended the IBC Rx/Dx Summits held in San Francisco in the first week of August 2012.  The meeting was held at the Westin San Francisco Market Street Hotel.  I was attracted to this event because it gave me the opportunity to learn about some of the new emerging market dynamics in next generation sequencing (NGS) and other areas that I track for my firm.

I listened to a talk comparing desktop sequencing systems by Jason Lih, Ph.D., Principal Scientist, SAIC-Frederick.  His talk was called Assay Development for Detecting Somatic Mutations in Cancer by Targeted Amplicon Sequencing: A Technical Comparison between PGM  and MiSeq.

Dr. Lih’s talk compared two desktop NGS machines, the Life Technologies, Ion Torrent, PGM with the Illumina MiSeq. At the beginning of his discussion, he said that he would not say which NGS platform is better.

In his NGS application, he used targeted amplicon sequencing to develop assays to detect somatic mutations in cancer.  Jason said that the PGM used AmpliSeq  v. Illumina’s TruSeq Custom Amplicon  (TSCA) technology.  He said that Life’s PGM requires just 20 ng of DNA sample, whereas the Illumina MiSeq requires 250 ng of DNA sample.  The Life PGM uses a 4-plex #‘316’ chip which outputs 1×200 base pairs of bi-directional sequence in one day plus 4 hours. (or 28 hrs).  The MiSeq takes 27 hrs (or 1 hr. less).

Using a comparison concept that he called the “Cosmic” MOI (Molecule Of Interest), he created a comparison chart comparing 1160 Cosmic MOIs.  He compared both vendor’s reagents.  His results showed that the PGM produced slightly more MOIs.

Vendor Model Reagents MOIs DNA Sample Run Time QScore
PGM AmpliSeq 1148 20ng 28 hrs 30
MiSeq TSCA 1108 250ng 27 hrs 30

The PGM variant caller was the Ampliseq Reporter.  He used a 3rd party software from CLC Bio.  The CLC Bio Integrated Genome Viewer showed a Qscore of 30 for each NGS machine.

What is interesting to me is that at end of his talk during the Q&A, an attendee asked Jason for his opinion about which was the best of the two NGS machines that he compared.  He said that his comparison was not intended to find the “best” NGS machine. My take away from his answer was that as far as Jason’s application was concerned, one could use either NGS machine and get comparable/ usable research data.  Also of note is that Roche Applied Systems demonstrated their 454 GS Junior desktop sequencer at the exhibit hall.  I wonder how the 454 GS Junior would compare against the PGM and MiSeq machines.

During the lunch- networking break in the exhibit hall, I met Robert Klein, Ph.D., Chief Business Development Officer, Complete Genomics, Inc. who said that he was giving a talk later in the day.  I attended his talk called: Large-scale, Accurate Whole Genome Sequencing to Enable Genomic Medicine. 

Robert gave a update on the business direction or activities at Complete Genomics (CG).  He said that CG v.1 was about research sequencing and that CG v.2 is more about clinical sequencing.  Dr. Klein said that in 2006 CG developed its proprietary sequencing technology and service model.  By 2011 they had delivered 3,000 genomes to customers.  Robert said that CG now produces 1,000 genomes per month.  He explained that they have a DNA factory in Mountain View and sends the data to its data center in the nearby city of Santa Clara.  CG does this because Santa Clara offers a lower cost for electricity.  CG provides “research ready” data to the customer and the customer analyzes the data.

Robert highlighted CG’s goals as including: Setup a CLIA facility 2H’12, Scale-up quality, Scale down cost, Scale-up throughput and Offering ‘clinical use’ sequencing.  CG will be focusing on new apps. including Idiopathic kids, Refractory cancers, Replacing cytogenetic arrays and Replacing targeted panels.  Dr. Klein also added that CG is interested in Wellness/ concierge medicine and Reproductive genetics.  He mentioned that CG is exploring other market spaces such as Prenatal screening, Newborn screening, and Reproduction Issues.  Dr. Klein predicted that the first areas that whole genome (clinical) sequencing would show clinical utility would be in studies of copy number, neuroblastomas and translocations. Robert said that NGS will likely democratize genomic medicine.

Several speakers echoed TGEN’s David Craig, Ph.D., Deputy Director for Bioinformatics and Professor of Neurogenomics,  comment that “the cost of NGS went up in 2011 because the analysis bottleneck is the culprit.”  My take on that is that in clinical NGS, the all-in $1,000 genome might be postponed to beyond 2014 by perhaps a few more years.

Smart Pill Helps Patients With Drug Compliance

San Jose Convention Center, December 6, 2011. During the luncheon at the conference part of the BIOMEDevice Expo and Conference, I met Patricia Johnson, Director for Pharma Integration, at Proteus Biomedical, Inc. , a medical device maker.  She explained to me about one of the company’s products.  She said that they have developed ingestible event markers (IEMs) that use the body to power the device.

IEM’s are tiny (the size of a grain of sand), digestible sensors made from food ingredients.  The IEM can be integrated into any drug tablet or capsule without changing its properties or performance.  After the pill is swallowed, the stomach fluids activate the pill.  The IEM creates a digital signal that is then detected by a microelectronic recorder, which can be configured as either a skin patch or a tiny device implanted under the skin.  The detector records the information that includes the type of drug, dose, and place of manufacture, etc.  It also measures and reports vitals such as heart rate, activity, and respiratory rate.  The information is sent up to the cloud where it can be retrieved and reviewed by the doctor.  Two of its partners include Novartis and Medtronic.

Drug non-compliance as well as making sure a drug regimen is working is a big problem with older or chronically ill patients.   This can reduce the number of doctor visits and relieve some of the stress felt by family caregivers.   It is especially helpful for patients that live alone and in remote areas.  Being a caregiver myself, I am excited about the potential of this product.

Outsourcer Hunts for New Uses for Old Drugs on the Cheap

I recently listened to an interview with Noel Dudley, Ph.D., co-founder at NuMedii presented by Labroots.  NuMedii, located in Menlo Park, California, is a spin-off from Atul Butte’s lab at Stanford.

What I found very interesting listening to Dudley was the very low overhead costs to running a service business like NuMedii.  Dudley said, “This is a very exciting time we live in right now.”  NuMedii is involved in drug repositioning or new uses for existing drugs.  “They use a new computational approach to look for drug repurposing opportunities,” he said.  “All you need is a bunch of guys with laptops,” said Dudley.  They have a big network of CRO’s that they leverage that they have worked with in the past.  They do not do the experiments in house.  The CRO’s cost has been driven down by pharmaceutical companies who started to use CRO’s and have really driven down the margins.  “So for very small amounts of money you have vast experimental resources,” said Dudley.  It is not necessary to have a lot of computational power in house because of cloud computing.  In addition, a lot of data can be accessed from the public domain.

According to Dudley, they have the expertise to manage everything from the informatics through the preclinical validation and experimentation — so he believes that is where NuMedii has a lot of value.

He gave an example of two drugs that could potentially be used for other indications.  Dudley said they were able to identify an anti-ulcer drug that could treat lung cancer, which again is a non-intuitive leap, and the other one was an anti-epileptic drug that could be used to treat inflammatory bowel disease (IBD).  “They can also find new indications for drugs that are in development,” he said.  This could be useful for diversifying the development of the drug.

NuMedii is a service company.  Their approach is to partner.  They set up a development partnership in which NuMedii gets access to the partner’s data.  They then go back to their partner with their findings.

%d bloggers like this: