via salem-news.com
Pic - Richard Sackler, co-chairman of Stamford, Connecticut based Purdue Pharma and adjunct professor of genetics at Rockefeller University.
EDAP TMS, Back on the Map (EDAP)
Submitted by BioHealth Investor Blog
EDAP TMS SA (NASDAQ: EDAP) is a French company which makes medical devices for the treatment of urological diseases and the company’s stock is soaring after the company was granted marketing approval of its newly designed, high-end Sonolith I-Sys lithotripsy device by the Japanese Administration. Because this market is still under-served, we wanted to look into the news despite this not being a drug or biotech company.
The Japanese equivalent of the FDA in the US granted marketing approval of EDAP’s Sonolith I-Sys lithotripsy device. What makes this unique is that the lithotripsy market in Japan is supposed to rank as the number one market in the world in total lithotripsy sales volume and in the installed base. The company also noted that Japanese physicians have traditionally been fast adopters of products in this field.
The Sonolith I-Sys is an easy to use high-end system that the company called an effective tool to deliver benefits to both patients and physicians with integrated and robotized features. The company noted that the device successfully obtained marketing clearance by the U.S. FDA in August 2009.
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EDAP TMS, Back on the Map (EDAP)
Submitted by BioHealth Investor Blog
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) has a big event on deck this week. This Friday, March 12, is its Prescription Drug User Fee Act (PDUFA) action date for an FDA panel to issue a recommendation on Byetta as the the first once a week treatment for Type II diabetes. The date had been moved due to recent weather closures in February in and around Washington D.C.
Analysts are mixed on the stock with BMO cutting its rating last week, but there were two positive calls from Credit Suisse and Jesup & Lamont.
Options are elevated today, but not overly active. The open interest of stock options is also large enough that the $20 synthetic options straddle would imply that shares have to rise above $24.70 or drop below $15.30 to be profitable.
Byetta is already sold with Eli Lilly & Co. (NYSE: LLY), and Alkermes, Inc. (NASDAQ: ALKS) provides the technology that makes Byetta last longer in the delivery mechanism for a once per week use. Open interest in the Alkermes options is elevated but not astronomical.
There is a risk here for a potential delay on top of what has already been seen. Some feel the FDA will delay this recommendation with a request for more side effect data.
Amylin is currently believed to be the winner of ultimate once-weekly approval, even if a delay comes this week. But that notion also depends upon whom you ask. The most recent short interest data shows about 16.25 million shares (almost 12% of the float) are listed as being in the short interest. The stock is at $20.10 and the 52-week trading range is $7.89 to $20.46. That 52-week high was also hit today.
JON C. OGG
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Amylin & Friends Brace for Diabetes Review (AMLN, LLY, ALKS)
Submitted by BioHealth Investor Blog
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) has a big event on deck this week. This Friday, March 12, is its Prescription Drug User Fee Act (PDUFA) action date for an FDA panel to issue a recommendation on Byetta as the the first once a week treatment for Type II diabetes. The date had been moved due to recent weather closures in February in and around Washington D.C.
Analysts are mixed on the stock with BMO cutting its rating last week, but there were two positive calls from Credit Suisse and Jesup & Lamont.
Options are elevated today, but not overly active. The open interest of stock options is also large enough that the $20 synthetic options straddle would imply that shares have to rise above $24.70 or drop below $15.30 to be profitable.
Byetta is already sold with Eli Lilly & Co. (NYSE: LLY), and Alkermes, Inc. (NASDAQ: ALKS) provides the technology that makes Byetta last longer in the delivery mechanism for a once per week use. Open interest in the Alkermes options is elevated but not astronomical.
There is a risk here for a potential delay on top of what has already been seen. Some feel the FDA will delay this recommendation with a request for more side effect data.
Amylin is currently believed to be the winner of ultimate once-weekly approval, even if a delay comes this week. But that notion also depends upon whom you ask. The most recent short interest data shows about 16.25 million shares (almost 12% of the float) are listed as being in the short interest. The stock is at $20.10 and the 52-week trading range is $7.89 to $20.46. That 52-week high was also hit today.
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The Changing Landscape of Biotech Valuations (ACOR, CBST, MNKD, INCY, SGEN, ITMN, IPXL, MRX, SVNT, VPHM)
Submitted by BioHealth Investor Blog
The biotech and biohealth universe is changing in size. In 2008 and 2009, partly due to mergers and partly due to market valuations, there had become a surprisingly small number of biotech stocks which had market capitalization rates of more than $1 billion. At one point there were only about 10 or 11 in our universe of biotech stocks that actually had market caps which were very far north of $1 billion, or at least out of the biotech stocks which followed at BioHealth Investor.
We have recently seen Acorda Therapeutics, Inc. (NASDAQ: ACOR), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), MannKind Corporation (NASDAQ: MNKD), Incyte Corporation (NASDAQ: INCY), Seattle Genetics, Inc. (NASDAQ: SGEN), InterMune, Inc. (NASDAQ: ITMN), Impax Laboratories Inc. (NASDAQ: IPXL), and Medicis Pharmaceutical Corporation (NYSE: MRX) either get into or get back into the $1 billion market cap club. And then we have Savient Pharmaceuticals Inc. (NASDAQ: SVNT) and ViroPharma Incorporated (NASDAQ: VPHM) that have been in the club and are currently just short of it.
Due to waves of big emerging drug news and due to strong performance we now have 16 of the biotech and related stocks (at least of those which we cover as pure biotechs) which have market caps north of $2 billion. More importantly, the biotech news flow and he bull market has suddenly helped many stocks rise or at least get back above the $1 billion mark. Many of these had been there before, but the market has helped many new names get back above the $1 billion market capitalization level. And waves of mergers in the last two and three years sort of thinned out the group.
In these we did not take into consideration revenues, earnings, and not even cash. This has largely been news-driven and momentum-driven. Below is a review of each.
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When Biotech Layoffs Come (XNPT)
Submitted by BioHealth Investor Blog
When conglomerates and consumer products lay off workers and employees, shareholders generally cheer the company for saving money and cutting costs by figuring out productivity measures that milk more output per employee. That leaves more income and ultimately brings more dividends down the road. But biotech firms are far from being thought of in the same light. These are growth stories and investors generally get more excited about expanding operations. So here comes XenoPort, Inc. (NASDAQ: XNPT) announcing on a Friday that HALF of its workers just won the pink-slip lotto ticket from the HR department. Today just officially became National Employee Morale Day at XenoPort.
XenoPort just announced a restructuring plan today that more narrowly focuses its R&D pipeline, and one that “includes an overall reduction in its workforce of approximately 50%.” The company says this will allow it to focus its resources to advance its later-stage product candidates. This comes on the heels of the February 17, 2010 FDA Complete Response Letter which effectively gave the complete response that its Horizant™ treatment for moderate to severe primary restless legs syndrome was a no-go.
XenoPort is collaborating with Astellas Pharma Inc. and GlaxoSmithKline (NYSE: GSK) to develop and commercialize XP13512, which is Horizant. Its product candidates are being studied for the potential treatment of restless legs syndrome, GERD, migraine headaches, neuropathic pain, spasticity and Parkinson’s disease.
The company called this an “unexpected setback” in the approval of Horizant. It also noted that this action is forcing it to review its operating plans.
It will now focus on later-stage development activities and more importantly will eliminate its own discovery research efforts. XenoPort claims a number of product candidates in clinical development as well as several other advanced preclinical compounds.
The company noted specifically that “maximum value will be created for our stockholders over the next several years by reducing our overall spending while focusing on helping our partners gain approval of Horizant in the U.S. and XP13512 in Japan, completing our ongoing Phase 2b trial of arbaclofen placarbil (AP) in gastroesophageal reflux disease (GERD) patients and initiating a Phase 2 clinical trial of XP21279 in patients with Parkinson’s disease.”
The projected estimates of annual cash saving reductions is approximately $15.6 million, most of which is from cuts to compensation and benefit expenses. XenoPort will incur cash expenditures of up to $4.2 million in the first half of this year and it does expect some non-cash charges as part of the action.
Traders and shareholders are also betting on “National Employee Morale Day” at the company being adverse. The stock is now down 2% at $7.72. The 52-week trading range is $6.39 to $25.42. This one effectively dropped from almost $20 to under $10.00 when the FDA determined that the best action for patients with Restless Leg Syndrome was to have less caffeine and to get more exercise.
The company still has close to $150 million in cash and short-term equivalents ($143.7 million per the company’s latest results) and its market cap is now $234 million. The most recent annual report data (on page 29) shows that XenoPort had 219 full-time employees, about 155 of which were involved in R&D.
This is usually one of those instances where the beatings will continue until morale improves.
JON C. OGG
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Winning from Boosting Good Cholesterol (RVXCF, RVX, PFE, AZN, MRK)
Submitted by BioHealth Investor Blog
BioHealthInvestor usually sticks to US companies or at least sticks to ADRs for investors. But sometimes there is a much larger bit of data either north of the border or in Europe. There is a company called Resverlogix Corp. which trades in Canada under the ticker ‘RVX’ and the stock also trades in the US on the Pink Sheets under the ticker ‘RVXCF.’ The stock is soaring today after Bloomberg gave a very positive article highlighting the merits of the company’s RVX-208. This potential drug candidate is targeting atherosclerosis in acute coronary syndrome patients. The target is to raise HDL levels to effectively reverse arterial plaque buildup. The company noted that there are approximately 350 million patients that require treatment for atherosclerosis.
We wanted to take a look at the potential for this drug candidate outside of what the article has to offer. Resverlogix is a clinical stage Canadian company which currently has no real products. The company has been public since late 2004. It has traded well under $5.00 and at ome point briefly rose to north of $20 per share in 2007.
Late in February, the company officially activated the first site for the ASSURE 1 trial and commenced enrollment of patients for dosing of RVX-208. This is the second Resverlogix Phase 2 clinical trial, led by Cleveland Clinic, and it will examine and evaluate this oral small molecule therapy for the treatment of atherosclerosis in patients with acute coronary syndrome.
As per the trial data:
This IVUS study is comprised of 15-20 US sites will dose approximately 120 ACS patients on standard of care therapy and examine lipid effects by RVX-208 compared to placebo control. In half of the patients a change in atherosclerosis will be assessed, i.e. change in plaque volume and plaque composition. The primary objective of this study is to determine the 3 month effect of RVX-208 on change in the plasma levels of ApoA-l in patients with a recent ACS event who require coronary angiography versus placebo. The secondary objectives for this study include assessing the safety and tolerability of the drug through evaluation of adverse events as well as to evaluate the effect of RVX-208 on other lipid parameters.
Here is the catch, and the ultimate factor which makes this a potential Holy Grail… Most cholesterol medications today are used as preventative medicine rather than just for treating those who have already had a stroke or heart attack or those who already have severe blockage. Statins and other lipid lowering agents account for billions and billions of dollars per year in revenues for Big Pharma. If this drug is ultimately approved for preventative measures the sky is the limit.
AstraZeneca (NYSE: AZN) has Crestor; sales of Crestor are forecast to reach $6.5 billion in 2013, up from $4.5 billion in 2009, per Thomson Reuters.
Pfizer Inc. (NYSE: PFE) has Lipitor; Lipitor brought in approximately $11.4 billion in revenue in 2009.
Merck & Co. (NYSE: MRK) has Vytorin; Annual worldwide sales for 2009 were $2.2 billion for ZETIA and $2.1 billion for VYTORIN.
The statin market is also coming under some generic pressure.
There are risks here. Many have tried this HDL raising tactic and targeting plaque. None of the existing drugs have effectively proven to be the ultimate plaque-eater. Pfizer has so far spent billions. This is a hopeful treatment but it is going to be some time before the results of a larger study are known and it will be far longer before the side effects are known.
Stay tuned.
JON C. OGG
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Talking Biotech ETFs: iShares Nasdaq Biochnology to $100 (IBB, OSIP, MDVN)
Submitted by BioHealth Investor Blog
Today’s price moves in the biotech sector are quite different from what we saw earlier this week. A hostile merger via tender from Astellas for OSI Pharmaceuticals Inc. (NASDAQ: OSIP) got everyone up in arms this week. So much that other investors were going back over buyout candidate notes. We also gave a list of those recently noted biotech buyout candidates this week.
But today’s news out of Medivation, Inc. (NASDAQ: MDVN) severely missing its endpoints in the Phase III targets for Dimebon as a new potential blockbuster to treat Alzheimer’s Disease has everyone reminded of the risks in betting on speculative biotech stocks with no products on the market. That has a sentiment reversal taking place, and unfortunately Dimebon has become Dime-Bag.
But before this morning’s blow-up there was an interesting call that may have more merit than just the bet against the sector. A chart analysis from OptionsZone.com on the iShares Nasdaq Biotechnology (NASDAQ: IBB) showing a potential break-out pattern on its chart. If these levels hold, the call is for the “IBB” to head to $95 to $100….
JON C. OGG
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Biotech Implosion: Medivation, Alzheimer’s Beats Drug (MDVN, PFE)
Submitted by BioHealth Investor Blog
Medivation, Inc. (NASDAQ: MDVN) is the next biotech implosion. The company’s highly awaited Phase III study on its Alzheimer drug called Dimebon did not meet expectations. It failed to meet primary and secondary endpoints. The problem is that this was hitting 52-week highs yesterday.
The company did note that a separate Phase 3 safety study demonstrated Dimebon’s tolerability when used alone or in combination with approved Alzheimer’s Disease medicines. Just one more problem… if it doesn’t work it doesn’t matter how tolerable it is. In some cases the placebo group even did better on the sugar pill, which is perhaps the worst endorsement a company can get.
Pfizer Inc. (NYSE: PFE) is also indicated lower this morning as well as it was Medivation’s partner on Dimebon for the Alzheimer’s treatment. Shares are indicated down about 1% on the news. Keep in mind that Pfizer has at least one other study in later stages in the fight against Alzheimer’s.
The real hit is in Medivation. Share sare down almost 70% at $12.55 on almost 5 million shares as of 8:28 AM EST. The prior 52-week trading range was $13.36 to $40.49.
Medivation had a market cap of $1.35 billion at yesterday’s closing bell. Its most recent balance sheet showed north of $200 million in cash and investments. It is now going to need every last of that cash.
This is one of those instances where everything failed to flag this. Analysts had been positive, the charts and 52-week trading range were indicating a green light being likely, and there was not a huge imbalance between puts and calls in options trading.
JON C. OGG
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More Biotech Buyout or M&A Targets (OSIP, VRTX, AUXL, ITMN, HGSI, CELG, DNDN, ENZN, FACT, PBE, XBI)
Submitted by BioHealth Investor Blog
After today’s hostile Astellas offer for OSI Pharmaceuticals (NASDAQ: OSIP), we have investors and traders alike looking for ‘the next takeover target’ in biotech. Buy now you know that there are many pitfalls in simply looking for biotech stocks to buy because they will be taken over. We have taken a look through our own recent stocks noted as takeover candidates and even gone through some sites of our partners looking through potential takeover candidates in the space.
Morningstar just last week had a short video with some key potential buyout targets in the biotech space. It noted Vertex Pharmaceuticals
Incorporated (NASDAQ: VRTX), Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL), and InterMune Inc. (NASDAQ: ITMN). Those are all names that have come up as takeout targets before.
But two that are on Morningstar’s list for buyouts are Human Genome Sciences Inc. (NASDAQ: HGSI) and Celgene Corporation (NASDAQ: CELG) for its REVLIMID franchise. The problem with Human Genome is that it is in the same boat we have addressed on multiple occasions: its size got away from the potential realm of buyers. And Celgene has just become too big at a $28 billion market cap for most potential buyers to consider it and the sales growth from $2.689 billion in 2009 is expected to go to $3.26 billion in 2010 and $3.75 billion in 2011 per Thomson Reuters estimates.
After looking around elsewhere, we went back to some Dendreon Corp. (NASDAQ: DNDN) rumors from last month we covered. This was based somewhat on options trading, and we think this company may have to wait for a suitor. Taking the risk of buying the company out before the FDA approves PROVENGE for advanced prostate cancer is something companies are seeming to shy away from.
Enzon Pharmaceuticals, Inc. (NASDAQ: ENZN) is another name that comes up routinely in the rumor mill. We noted this one hitting 52-week highs in January on fresh rumors.
Facet Biotech Corporation (NASDAQ: FACT) has also fought off attempts from Biogen Idec (NASDAQ: BIIB) as a new add-on for its MS franchise. Biogen has been rebuffed and it supposedly will not have an interest anymore.
ETF investors are chasing up names in the sector as well. PowerShares Dynamic Biotech & Genome (NYSE: PBE) is up 4% at $18.48 and the SPDR S&P Biotech (NYSE: XBI) is up 4.7% at $58.98.
Jon C. Ogg
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Hostile Mergers Back in Biotech (OSIP)
Submitted by BioHealth Investor Blog
Mergers are back in biotech…. Astellas Pharma Inc., a global pharmaceutical company in Japan, announced that it will commence a tender offer to acquire all outstanding shares of common stock of OSI Pharmaceuticals (NASDAQ: OSIP). The direct tender is nothing short of a hostile merger after Astellas said that OSI has refused to discuss terms.
The offer is for $52.00 per share in cash valued at approximately $3.5 billion on a fully diluted basis. Astellas notes that this offer is premium of over 40% to the recent closing stock price and it is a 53% premium over the three-month average share price. The deal is also said to not be suject to any financing terms or conditions.
In the deal, Astellas hopes to build a world-class oncology platform and expects to invest in OSI’s business and employees. Here is how Astellas describes the deal:
The acquisition of OSI – a biotechnology company primarily focused on the discovery, development and commercialization of molecular targeted therapies addressing medical needs in oncology, diabetes and obesity – would support Astellas’ growth strategy of becoming a Global Category Leader in oncology. OSI manufactures and sells Tarceva as a leading cancer medication and has several prospective new oncology medications in its R&D pipeline.
This is a hostile takeover rather than an approved and friendly merger. Astellas noted that it has made numerous attempts to engage in substantive discussions to acquire OSI. The company first raised its interest in acquiring OSI during a meeting with OSI’s CEO in January 2009. It noted that it then made its first written proposal in February 2009. It then sent letters reiterating its interest in March and June 2009 and several face-to-face meetings, including a meeting between the two CEOs on February 12, 2010. The company has maintained that OSI has refused to engage in a meaningful discussion, so Astellas is going directly to OSI stockholders.
This may not be the only or last deal either, because Astellas said it will consider all means necessary to secure a completed transaction. Astellas also intends to nominate directors at OSI’s upcoming annual meeting to give stockholders a voice in the outcome.
Stay tuned.
JON C. OGG
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Generic Drug Wars… Is Dr. Reddy’s The Answer? (RDY, TEVA, GSK)
Submitted by BioHealth Investor Blog
Generic drugs are just one of the many combined issues that are coming front and center in the world of healthcare reform. Frankly this is not a new notion. Not all. This weekend came a feature in Barron’s “Asian Trader: Pill Maker That’s Set To Pop” calling Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) of India the next big drug play for investors. We wanted to look closer under the hood here.
The Indian generic drug company’s ADR closed at $24.61 Friday and Barron’s noted two analysts with big price targets: one giving it room up to $29.63 and and another implied rupee price we pegged around $30.82.
Sales are expected to approximately double to around $3 billion by 2013 and the waves of name brand drugs coming off patent in the U.S. may offer some added hope there. That is the biggest wild card with many noting that generics have a chance to capture a part of what is put at $70 to $80 billion.
Dr. Reddy’s is thought of by the US investor public as a generic player, but it has its own products. It produces finished dosage forms, active pharmaceutical ingredients and intermediates, and biotechnology products; and it conducts R&D in cancer, diabetes, cardiovascular, inflammation, and bacterial infection.
There are some issues here in other drug makers. Teva Pharmaceutical Industries (NASDAQ: TEVA) is perhaps the best generics player out there with a whopping $53 billion market cap today versus about $4.1 billion as Dr. Reddy’s market cap.
Teva is a large customer and Dr. Reddy’s also has a distribution pact with GlaxoSmithKline (NYSE: GSK) for emerging markets and there are some who expect GSK to take a significant stake in the Indian drug maker. Teva’s stock is right around $60 and analysts on average have a price target of $63 and the highest target seen is $70.00. If Teva gets more downgrades on valuation, it seems as though it could pull Dr. Reddy’s down simply as the best can drag down or pull peers higher.
If the markets are flat or solid, it seems that Dr. Reddy’s may have a 2% or so Barron’s-pop. Our problem here with this one is that Dr. Reddy’s shares are up almost 200% in the last year. Its 52-week range is $7.27 to $27.33.
Dr. Reddy’s may have more room to run, but the big move has probably been seen. The recalls may be behind and they may not, ditto with FDA scrutiny. The stock is not cheap by some Indian company valuation standards, so it seems that waiting may offer better risk-reward here than chasing.
JON C. OGG
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Making sure pills go down, and money flows
Submitted by PharmaGossip
When drugs maker Wyeth Australia wanted its arthritis drug Enbrel listed on the pharmaceutical benefits scheme (PBS) it hired political lobby group Parker & Partners to wheel out sick kids in its meetings with politicians.
The image of arthritic 10-year-olds, together with the threat of a bleeding heart media campaign, was so potent that Enbrel was rushed on to the PBS under the watch of then federal health minister Kay Patterson, at a cost to Australian taxpayers of $100 million a year.
Getting a government subsidy for a drug through a listing on the PBS is the Holy Grail for big pharmaceutical companies.
Companies spend an average $1.2 billion getting a product to market, so making that pay off is the name of the game.
In the case of Enbrel, the cost of a yearly prescription was estimated at a prohibitive $25,000 back in 2003. Throw it on the PBS list - 600 drugs subsidised by the government - and the cost falls to $5.30 per prescription for healthcare cardholders and $32.90 for other patients.
If doctors are “educated” to prescribe the drug and the pharmacy chains stock the pill, then sales go up and up.
Welcome to the $100 billion health sector, one of the most powerful and complex industries in the country. It represents more than 10 per cent of gross domestic product, employs hundreds of thousands of people, and as the population lives longer, its tentacles grow stronger.
Pharmaceutical companies are among the biggest in the world, with annual turnovers in the tens of billions of dollars and lucrative recurring revenue streams.
While pharmaceutical companies outlay millions of dollars a year on grants and sponsorships to doctors and health groups, the industry spends far more on political donations in an attempt to influence health policy and get their drugs on to the PBS.
Australia’s PBS system is world renowned for making drugs for serious illness available cheaply. But the system, which costs $7.7 billion a year, and the process by which drugs are listed has become increasingly vulnerable to commercial and political pressure.
While the PBS scheme is overseen by an independent gate keeper, the Pharmaceutical Benefits Advisory Committee (PBAC), strong lobbying by the huge GlaxoSmithKline and home-grown drug manufacturer CSL, particularly during the later years of the Howard Government, succeeded in securing listings on the PBS for drugs that had earlier been rejected.
CSL’s anti-cervical cancer drug Gardasil was one case in point. John Howard promised the drug would make it on to the PBS despite its application being rejected by PBAC some months earlier. GSK’s version of the drug was also knocked back by PBAC but the Howard government eventually approved it for a nationwide vaccination program.
An investigation by BusinessDay has traced the millions of dollars spent annually by the health industry - which spans everything from pharmaceutical companies, hospitals, pharmacy chains, general practitioners and health insurance companies - buying political access and influence. The money mainly goes to lobbying, hiring former government staffers both internally and externally, issuing ads and making grassroots campaign contributions.
More than any other industry, drug companies take advantage of a revolving door between the industry and politicians and their staff. A search of where former political staffers go reveals a disproportionate number move to the lucrative health sector.
Jerrold Cripps, QC, who recently ended his five-year term at the NSW Independent Commission Against Corruption, said on his departure that political donations and lobbying by former ministers and other members of Parliament ”are activities that are unmistakably conducive to corrupt conduct”.
Dozens of former government staffers and former politicians are employed as lobbyists for drug companies and health associations, or work on the health accounts of PR firms.
For instance, Kate Carnell, the former ACT chief minister, mostly under the Howard Government, left politics at the start of this decade and became chief executive of the powerful doctor’s lobby group GP Network.
Carnell was recently poached to become chief executive of the Australian Food and Grocery Council, which represents supermarket heavyweights Woolworths and Coles. But her move to retailing was not really a sea change. The nation’s supermarkets are stepping up efforts to change legislation that would enable them to sell drugs in their stores.
Then there is former South Australian health minister Michael Armitage, who now runs the Australian Health Insurance Association, the private health industry body that represents 26 health funds throughout Australia and collectively covers more than 94 per cent of the private health insurance industry.
AHIA member funds today provide healthcare benefits for approximately 11 million Australians. The power of this organisation became apparent last year when it revealed it had received a letter from then opposition Leader Kevin Rudd four days before the November 2007 election setting out policy commitments to the industry, including retention of the private health insurance rebate.
While there has a backflip by Rudd on the health rebate, the real story was the ability of this lobby group to extract a letter out of a political leader days before an election, detailing his party’s policy.
As Richard Denniss, executive director of lobby group The Australia Institute said: “For me the most interesting question is why the then opposition Leader was making these private promises to the health insurance industry.
“It’s obviously a pretty powerful organisation than can demand such promises be made in the days before an election. I haven’t seen the environment groups waving secret letters around in which the ALP makes them promises about how they will tackle climate change.”
With the emissions trading scheme now seen by all political parties as a poisoned chalice, the focus will increasingly turn to the health sector, with the ownership of hospitals and other health-related matters to be fought out in the lead-up to the next election.
In recent weeks, opposition Leader Tony Abbott has spruiked the idea that Medibank Private would be privatised under a Liberal government and every major public hospital in NSW and Queensland would be given its own management board to make hospitals more accountable.
There is no doubt that the drug industry lobbyists are well connected, on both sides of government.
Wyeth’s spin doctor is Peter Poggioli, who was state director of the Liberal party under Jeff Kennett and who also worked for former Howard government minister David Kemp.
Poggioli is married to Rowena Cowan, who worked for former Liberal senators Nick Minchin and Richard Alston and now works at Sanofi Aventis as government relations manager.
A search of any of the big health associations reveals some heavyweight appointments from former politicians and political staffers.
A former staffer with NSW senator Bill Heffernan, Nick Campbell, is executive director of corporate and government affairs for Johnson & Johnson; Mark Elliott, a former adviser to Phillip Ruddock and Ian McDonald, works at Pfizer; and David Miles, a former adviser in John Howard’s office, is the communications boss at Pfizer.
Brendan Shaw, head of Medicines Australia, the peak group for drug manufacturers, previously worked with then minister for small business and consumer affairs Craig Emmerson when Labor was in opposition.
Then there is Catherine McGovern, a former staffer in SA Liberal senator Nick Minchin’s office, who now works for GlaxoSmithKline, and Nicole Feely, a former senior adviser in John Howard’s office, who went to work for tobacco giant Phillip Morris in 2001, became chief executive at St Vincent’s Hospital in Melbourne, then moved to Western Australia as chief of Southern Metropolitan Area Health.
As Denniss said: “There appears to be a tight-knit group of ex-politicians, and
ex-political advisers with experience in health who seem to circulate around the different health lobby groups.
“They seem to get quite well paid for whatever it is they do so obviously the big pharmaceutical companies and the other big health lobby groups think they get good value for money out of employing people with their knowledge of government processes.”
It is a concern expressed by several current and former politicians, academics and commentators.
John Warhust, a professor in the school of political sciences at Australia National University, described these relationships as “incestuous” and detrimental to the democratic process. “There should be some form of control over this cosy lobbying network and government,” he said.
Toby Ralph, a marketing strategist for several blue-chip boards and who has worked on more than 40 election campaigns in Australia, is well aware of the attraction of lobbying and the pharmaceutical industry.
“The pharmaceutical industry is awash with cash, much of it siphoned from the taxpayer. Approved medicines share $6 billion or $7 billion, so dipping the corporate bucket into that deep well is always a priority,” Ralph said.
“The starting point is to prove medical efficacy and social and economic benefit, but that just secures a seat at the roulette table. Next they hire people with strong connections to the decision makers.”
Then there are the specialist advertising agencies and PR consultancies that put together compelling cases for subsidy.
“This transcends the factual,” Ralph said. ”They can bring in sufferers to meet the decision makers, humanising the decision.”
According to Ralph, while decision makers are obliged to look for the most cost-efficient health outcome and there are complex evidence-based review systems, it’s tough to say no to funding a high-priced cancer drug when you’ve been confronted by an eight-year-old who may die if she doesn’t get it.
“Drug pushing is a high-risk game, but if a company secures a government subsidy it is potentially a long-term licence to suck on the teat of the taxpayer for a quarter of a century until patents evaporate,” he said.
The pharmaceutical industry spends a fortune on marketing and promotion - nearly twice as much as it spends on research and development. Pfizer is estimated to spend well above $17 billion a year to maintain and increase its 10 per cent market share.
Greens MP Lee Rhiannon said big pharmaceutical companies were also some of the biggest financial backers to major parties. “Pfizer has donated $572,560 and Medicines Australia has donated $392,386 to the major parties. What did they seek in return?”
Ms Rhiannon said political donations from the health industry to federal Labor shot up and then overtook those to the Liberal party after the 2007 election.
These shifting fortunes suggest that the donors from the private health sector have an interest in backing the party in government.
”It’s time the Rudd government swallowed the bitter pill and put an end to corporate donations so they can no longer be used to buy influence,” she said.
One of the country’s largest drug companies, Pfizer Australia, which last year bought Wyeth, has a gaggle of former government advisers working in its lobbying, media and marketing division. It donated to political parties last year, is a member of the Millennium Forum, which was set up in NSW in 1998 to raise money for the Liberal Party. The forum at present pulls in at least $700,000 from subscriptions alone.
The powerful Pharmacy Guild of Australia, a lobby group for pharmacies, is a big donor in its own right, having handed over $447,000 to Labor and $528,000 to the Coalition over the past decade. However, since 2007 its donations to Labor have steadily outpaced those to the Liberal Party.
At the start of last year, GSK announced a new global policy to voluntarily stop all corporate political contributions, a move aimed at countering the impression it was seeking to buy political influence.
However, GSK continues to use external and its own lobbyists while its executives are free to provide personal donations.
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Sackler Brothers Ties to Purdue Pharma and Profits
Submitted by PharmaGossip
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Drug ad claims - Ben Goldacre takes a sniff
Submitted by PharmaGossip
How closely do the great and the good, for example, scrutinise the promotional material for medical drugs? The latest paper looking at this question is published this month.
Researchers in Holland went through the world’s biggest medical journals – the Journal of the American Medical Association, Lancet, the New England Journal of Medicine, and so on – between 2003 and 2005. Adverts were included, once each, if they made a claim about the effect of a drug. For all the claims, they checked the references, found the trials referred to, and gave them out to easily exploited assessors: 250 medical students who’d just finished their evidence-based medicine teaching.
Each student independently assessed two trials, and associated adverts, following a questionnaire and a well-established scoring system to assess quality of trials. Scores were given for factors including:
• Whether the method of randomly assigning patients to one treatment or another was adequate, and clearly described.
• Whether patients could know which treatment they were getting.
• Whether drop-outs were appropriately included in the analysis, and so on.
These are good measures of whether a trial is a fair test of a treatment.
By now you will rightly be worrying that medical students – although cheap and easy to come by – are not reliable raters, so you will be pleased to hear that each trial was scored by between two and six students, and any discrepancy reviewed by a panel of four academics.
The results were abysmal. Only half of the claims in the adverts were supported by the specific trials referenced and, of all the trials, only 55% got a score of “high quality”. Overall, only 39.2% of these adverts referenced a high-quality trial which supported their claim.
This is not the first time such a study has been conducted. Villanueva and colleagues, in 2003, published a paper in the Lancet assessing claims for cardiac medication adverts in six Spanish medical journals: of the 102 references they could trace, 44% did not support the promotional statement. Similar results have been found in psychiatric drug adverts, and in the field of rheumatology.
To offset any suggestion that I am cherry-picking, a review in the Public Library of Science’s open access journal PLoS One found 24 similar studies, and overall only 67% of the claims in adverts were supported by a systematic review, a meta-analysis or a randomised control trial.
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PharmedOut Conference: June 25th 2010
Submitted by PharmaGossip
PharmedOut is pleased to announce a conference. “Prescription for Conflict: Should Industry Fund Continuing Medical Education?” will be held on Friday, June 25, 2010, on the Georgetown campus in Washington DC.
We intend to address the questions: Does drug industry funding of CME adversely affect the educational content of CME? If so, can commercial bias be assessed and mitigated?
Speakers will include:
Joel Lexchin M.D., University of Toronto
Dan Carlat M.D., Tufts Medical School; Editor, Carlat Psychiatry Report
Carl Elliott M.D. Ph.D., Center for Bioethics, University of Minnesota School of Medicine
Edmund Pellegrino M.D., Kennedy Institute of Ethics, Georgetwon University Medical Center
The conference is open to the public. We plan to offer continuing education credits to physicians and nurses.
For more information, please see: http://www.pharmedout.org/conference.htm
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Pfizer - Rapamune: DOJ conducts criminal probe
Submitted by PharmaGossip
Federal prosecutors in Oklahoma are conducting a criminal investigation of a Pfizer unit’s promotional practices for organ-transplant drug Rapamune, the drug maker disclosed Friday.
New York-based Pfizer said in a regulatory filing the U.S. Attorney’s office for the western district of Oklahoma was conducting the probe. There were no further details in the regulatory filing; a Pfizer spokesman declined immediate comment.
Officials at the U.S. Attorney’s office in Oklahoma City couldn’t immediately be reached.
Rapamune is an immunosuppressant used to prevent the body’s rejection of transplanted kidneys. Pfizer acquired the drug with its purchase of Wyeth last year.
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Judge Declines to Upset $22.5 Million Jury Award in Polio Case
Submitted by PharmaGossip
A New York state judge has refused to throw out the $22.5 million verdict awarded by a Staten Island jury in a 28-year-old polio vaccine suit. Last year, the jury found Pfizer Inc., as successor to Lederle Laboratories, liable for negligent manufacture of the oral polio vaccine from which plaintiff Dominick Tenuto allegedly contracted polio while changing his infant daughter’s diapers in 1979.
Justice Joseph J. Maltese on Staten Island declined to set aside the verdict. “This was a unique case for which there does not exist comparable facts or awards within this state. Dominick Tenuto has sustained almost 30 years of past pain and suffering before having his day in court. He had physical and psychological injuries as a result of his contracting polio. It cost him his job, his marriage and the loss of enjoyment of life,” wrote Maltese. “[W]ith 30 years of past pain and suffering with polio, and another 20 years of future pain and suffering, as well as the prognosis of constant care due to the physical and mental conditions of post polio syndrome, this court does not find the jury awards to be excessive.”
Benedict Morelli of Morelli & Ratner served as lead trial counsel for Tenuto. J. Peter Coll of Orrick, Herrington & Sutcliffe served as lead counsel for Lederle and Pfizer.
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Celebrating US Whistleblowers
Submitted by PharmaGossip
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GSK - Avandia: Harlan Krumholz MD writes in Forbes
Submitted by PharmaGossip
I want to believe in America’s pharmaceutical companies. I want to believe that people in these companies believe that the best strategy for success is to do what is best for patients. I want to believe that they are interested in scientific truth and eager to know of any safety issues and ready to share that information with the public.
This week I was disappointed again.
Over the years GlaxoSmithKline has repeatedly reassured the public about the safety of its blockbuster diabetes drug Avandia. But this weekend the Senate Finance Committee released a report revealing that inside the company Glaxo’s own experts and advisors were raising concerns about whether the drug could cause heart problems all along.
The report, based on more than 250,000 internal documents, provides a rare and unsettling glimpse into the decision by company executives to deflect safety issues–even as their own experts agreed with conclusions of outside researchers who were warning the public about possible harms.
The documents reveal that company researchers were deeply concerned about the cardiovascular safety of the drug as far back as 2003. The pages of the Senate report read like a spy novel: Glaxo receiving confidential documents leaked by a sympathetic academic who consulted for the company; the company embarking on a campaign to intimidate critics who warned about potential safety issues with the drug; and executives pulling strings to release data early from a scientific study that was supposedly controlled by an “independent” committee of researchers.
While Glaxo was publicly downplaying safety worries, a company statistician indicated that concerns raised by critics, including Cleveland Clinic cardiologist Steven Nissen, were legitimate. In one internal document the head of research states that analyses from the FDA, Nissen and GSK all suggested that Avandia could be causing heart attacks. Meanwhile, Glaxo’s media relations department was telling the public that there was no link between the drug and heart disease.
The story here is less about the drug–the Senate report breaks no new ground about Avandia’s safety issues (even among experts there remains some controversy)–and more about the ethical behavior of a company. What is clear: Glaxo failed to disclose its own concerns even as it sought to discredit outside researchers who were raising questions about the drug.
This type of behavior is eroding the public trust in the pharmaceutical industry. The fix is simple: Once a drug is approved, all data relevant to drug safety should be placed in the public domain and independent investigators across the country should be able to use it. There should be big financial penalties for withholding relevant information. Drug studies sponsored by industry must be truly independent–outside of company control. Companies should give outside investigators independence over every aspect of the study. There are too many examples of companies wresting control of clinical studies from their consultant investigators for reasons that seem more related to product promotion than clinical science.
And on all sides there should be a commitment to protect against the intimidation of academics who are willing to raise questions about the safety and effectiveness of company products. The free flow of information about the effects of drugs and medical devices will best serve the public’s interest.
Dr. Harlan Krumholz is a cardiologist and the Harold H. Hines professor of medicine and epidemiology and public health at Yale University. In the past, he did consulting for plaintiff lawyers suing Merck ( MRK - news - people ) over Vioxx.
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Cost of Cancer
Submitted by Health Economics
Dear All,
please find below link of an interesting piece of work on the cost of cancer in the UK.
best
Ulf
http://www.policyexchange.org.uk/images/publications/pdfs/The_Cost_of_Cancer_-_Feb__10.pdf
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InterMune Volatility Compression (ITMN)
Submitted by BioHealth Investor Blog
InterMune Inc. (NASDAQ: ITMN) has shown some very interesting options trading, and the trading looks to be a bet against all that huge volatility we have seen.
Joe Kunkle of OptionsHawk.com noted:
- ITMN with a 2,000X4,000X2,000 contract butterfly call spreads at the March $25/$30/$35 strikes. This trade bets on volatility to collapse, which will happen after the March 9th FDA meeting on it’s lung drug pirfenidone, given priority review for treating the chronic lung disease idiopathic pulmonary fibrosis, a disease impacting around 200,000 people in the US and Europe. Lazard Capital feels there is more than a 50% chance the drug gets approved, and has a $25 target for shares. However, the FDA may require post-approval studies for indications of effectiveness. It also sees shares doubling to $30 , currently trading at $15. The trade cost a debit of 50 cents, and offers profit from $25.50 to $34.50 in shares, with max profits at the $30 body strike, which offers around an 800% return. Implied volatility stands near 250% ahead of the event, and the straddle is pricing in around a 55% move in shares. Another large trade today was a buyer of 4,000 March $20 calls at the $2.55 offer. 20,996 calls and 3,348 puts have traded on the day, 8X average call volume.
It is just past noon and InterMune shares are down 4.1% at $14.70 on 975,000 shares. The 52-week range is $10.48 to $18.14 and the average stock volume is about 760,000 shares.
Just last week we saw comments from the company. Chairman and CEO Dan Welch noted, “Fourth quarter and recent events have been highlighted by the very important developments related to the regulatory progress of pirfenidone for the treatment of patients with idiopathic pulmonary fibrosis, or IPF. Our NDA for pirfenidone was granted Priority Review status on January 4, and is scheduled to be discussed at an FDA advisory committee meeting on March 9, 2010. If approved by the FDA, pirfenidone would be the first approved medicine for the approximately 100,000 Americans who suffer from this terrible disease. Regarding Europe, we currently expect to submit a Marketing Authorization Application (MAA) for pirfenidone in the European Union in the current quarter.”
JON C. OGG
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Two key Analyst Call in BioHealth Space (DNDN, HGSI)
Submitted by BioHealth Investor Blog
We have seen two very key biotech analyst calls this morning, and shares of both are responding. Dendreon Corp. (NASDAQ: DNDN) and Human Genome Sciences (NASDAQ: HGSI) were both given positive brokerage initiations this morning.
Dendreon Corp. (NASDAQ: DNDN) is seeing gains this morning after the stock was started as “Overweight” and $46 target at JPMorgan. The call is based upon a belief that PROVENGE will be approved for advanced prostate cancer. This is actually not the highest price target as a $50 target does already exist, but this implies a 42% upside to the target price versus the $32.36 closing bell price on Friday. Shares are up 2.6% before the open on this call.
Human Genome Sciences (NASDAQ: HGSI) was resumed at “Buy” with a $35 price target at BofA/Merrill Lynch. The belief here is that its Lupus drug BENLYSTA will be approved and a focus on its other franchises with more room for upside. The $35 price target implies upside of about 18.6% to Friday’s closing price of $29.47. The 52-week trading range was $0.45 to $32.07. Shares are only indicated up so 0.5% this morning before the open.
JON C. OGG
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Buyout Rumors Resurface in Biotech, Maybe (DNDN, MYGN)
Submitted by BioHealth Investor Blog
Sometimes it is the action seen in stock options gets traders moving more than the action in the stock. With more commentators on CNBC and other media outlets talking about ‘elevated options trading seen in…’ it gets even more on alert. From our best read today, that seems to be the case in Dendreon Corp. (NASDAQ: DNDN) and Myriad Genetics Inc. (NASDAQ: MYGN). There has been talk of ‘buyout rumors’ but we would first and foremost stress ‘caveat emptor’ when it comes to this.
Dendreon shares are up only 1.4% before the closing bell at $32.46 and not even on any crazy volume. But there was a new high today of $32.62. So far we have seen more than 18,000 CALLS and more than 6,000 PUTS trade today… but again, expiration may be part of the issue here.
Myriad Genetics saw more than 3,000 CALLS trade, but 1,100 of those were in the MARCH 2010 $24.00 CALLS, almost $2.00 above today’s share price. Myriad was up over 3% late in the day at $22.30, but its 52-week trading range is $20.62 to $47.08 and it traded about 150% of normal trading volume.
These ‘buyout rumors’ get tossed around far too liberally. Today was options expiration date and lots of the ‘unusual activity’ is frequently nothing more than expiration roll-outs in the last few trading days of each month when options are expiring. We’d also note that if there were genuine rumors of substance rather than of hope then you would be seeing much more than just a few thousand options contracts and more than 100% or 150% of normal volume.
Anything is possible, particularly in biotech. But for traders to really be honing in on buyouts, there is generally far more interest than this.
Earnings is getting tiring and the world is tired of it…. That being said i am going to do an early preview and have it ONLY focused on the big retail names so that it is targeted. That is the bulk of the earnings of big companies next week anyhow.
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THE HEALTH ECONOMICS BLOG - Trends, Politics, Opinions etc. in biotech & pharma industry
Submitted by THE HEALTH ECONOMICS BLOG
… am sure that will be very welcomed news by the consultants among the readers 
Cheers
Ulf
Pharmacoeconomics to Get Bigger Budgets, According to Preliminary Survey Results
Marketwire News Releases
Published: 02/15/10 12:12 PM EST
Cutting Edge Information Reports Findings From Ongoing Study
RESEARCH TRIANGLE PARK, NC — (Marketwire) — 02/15/10 — This year, drug makers’ pharmacoeconomics groups will spend more money than ever before — a clear sign of the function’s growing importance to success in the pharmaceutical and biotechnology sectors.
Early results from Cutting Edge Information’s (http://www.cuttingedgeinfo.com) ongoing survey, “Improving Pharmacoeconomics and Health Outcomes,” show that 2 out of 3 respondents will increase pharmacoeconomics spending throughout 2010. Zero respondents plan to reduce their budgets.
“As governments and payers worldwide keep a close eye on climbing healthcare costs, drug brands need to prove more than efficacy and safety,” said Jason Richardson, president of Cutting Edge Information. “They need to show cost effectiveness.”
Pharmacoeconomics, the intersection of health outcomes and financial considerations, has grown in prominence as costs and reimbursement issues pose challenges to drug makers. Just two years ago, the majority of surveyed companies waited until Phase 3 trials to launch their pharmacoeconomics work. Nowadays, teams kick off studies in Phase 2 and even in Phase 1, and more money is flowing to these early-stage endeavors.
Teams do this early work to ensure that they collect the right data, which eventually goes before regulatory agencies and payer organizations to establish a drug’s overall benefit — and win placement on payer formularies.
According to Richardson, “Neither patients nor bottom lines benefit from therapies that get buried.”
The survey, open until February 19 at identifies how pharmacoeconomics strategies are changing to meet the growing demand for health outcomes data. Findings will allow survey respondents to:
– Benchmark spending and staffing levels
– Learn how top companies customize pharmacoeconomics strategy to meet
the needs of individual brands
– See how the function has grown by coordinating with numerous other
internal functions
– Understand the growing importance of health outcomes liaisons and
risk-sharing agreements
– Discover how effective pharmacoeconomics teams measure ROI through
quantitative and qualitative assessments and prove their value to
their organizations
In exchange for completing a survey, respondents receive a complimentary copy of the results when they become available.
“This study will provide pharmacoeconomics professionals with ammunition to promote their groups and gain the resources necessary to best support brands,” said Shaylyn Pike, lead analyst for the study. “Without an effective pharmacoeconomics strategy in place early in development, brands can launch at a disadvantage.”
MEDIA CONTACT:
Stephanie Swanson
Email Contact
919-433-0212
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Rigel Attacks Rheumatoid Arthritis with AstraZeneca (RIGL, AZN)
Submitted by BioHealth Investor Blog
Rigel Pharmaceuticals (NASDAQ: RIGL) may be the biotech winner this Tuesday. The company has signed a pact with AstraZeneca (NYSE: AZN) which could ultimately bring in about $1.25 billion if all targets are met. This pact is a licensing agreement for Rigel’s rheumatoid arthritis drug R788 or fostamatinib disodium.
Rigel said last year that its R788 significantly improved rheumatoid arthritis symptoms in patients in a phase II study and Rigel has been seeking a development partner to help finance phase III studies.
AstraZeneca will design a global phase III study for the RA drug and believes that the study will be initiated in the second half of this year. We will double-check the goal dates here because the new drug application target date appears to be 2013 for the FDA and European Medicines Agency.
AstraZeneca is making an upfront payment of $100 million as the first part of the pact. There is also an additional amount which can go up to an additional $345 million if certain milestones are achieved. But the big kicker here for Rigel comes in the form of up to an additional $800 million if specific sales are achieved as well as significant stepped double-digit royalties on global sales.
Rigel had a market cap of about $488 million based on a close of $9.43 on Friday. The company effectively has no sales and its September-2009 balance sheet lists approximately $156 million in cash and short-term investments with effectively no considerable long-term debt.
Rigel closed at $9.43 on Friday and we have shares trading up 6% at $10.00 ahead of the opening bell. Its shares have traded in a range of $4.19 to $14.75 over the last 52-weeks.
JON C. OGG
FEBRUARY 16, 2010
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