Big Pharma’s high-risk pursuit of CNS gold faces major market doubts

Posted under Alzheimer's, Big Pharma, Blog, CNS, Companies, Diagnostics, Eli Lilly, Funding, gantenerumab, ISI Group, Johnson & Johnson, Medical Devices, Medical Supply, neuroscience, Pfizer, Pharmaceuticals, Pipeline, Roche, schizophrenia, semagacestat, solanezumab, Startups, Universities, Videos by john

Here's an interesting number for anyone interested in the risks and rewards of drug development: Two of every three analysts and fund managers recently queried by the ISI Group say they expect that new Alzheimer's drugs in late-stage testing at Eli Lilly and Pfizer/J&J will fail. 

The poll comes up in a broad look at Big Pharma's relentless pursuit of CNS gold by Bloomberg. The story starts off with a look at Roche's ($RHHBY) central nervous system picks, which include a mid-stage Alzheimer's drug as well as a shot at schizophrenia. Analysts have been pushing Roche to show that it can succeed in developing new drugs outside of the cancer arena. And the stakes spiked considerably last week when Roche tanked its high profile cholesterol drug after it failed to register efficacy in Phase III.

Drawn by the prospect that even a modest success against a disease like Alzheimer's will deliver Lipitor-sized rewards for years to come, pharma companies have been diving ever deeper. In Lilly's ($LLY) case, the push to complete a late-stage program for solanezumab follows the failure of semagacestat. But this time around Lilly says it has a better understanding of the disease. And Roche has ventured into the same arena, with four of its 10 brain drugs focused on treating the memory-wasting disease. Its Alzheimer's program--gantenerumab, which reduced amyloid in a small study--is now in mid-stage testing.

Not all pharma outfits are as bullish. Big setbacks in depression prompted AstraZeneca ($AZN) to restructure its CNS division, downsizing its staff and looking for outside partners to share the risk. GlaxoSmithKline ($GSK) famously decided to stay away from high-risk CNS drugs several years ago. And fresh reversals later this year could prove an even more painful setback for the field, where the high failure rate may force other companies to change tactics as well. 

"The central nervous system will remain the highest of the high-hanging fruit," Citigroup's Andrew Baum tells Bloomberg. And fewer hands will be reaching for it if the market turns even more skeptical about the odds of this game. Lilly, for one, is already in a weak position with one of the industry's weakest late-stage pipelines. Another blow could force major changes.

- here's the article from Bloomberg

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Burrill: Big Pharma’s academic tie-ups are ‘nuts’

Posted under academic partnership, Big Pharma, Blog, Burrill & Co., Companies, Diagnostics, Funding, Medical Devices, Medical Supply, Partnering, Pharmaceuticals, R&D, Startups, Steven Burrill, Universities, Videos by rmcbride

During an event at the University of Chicago, biotech visionary Steven Burrill discussed Big Pharma's role in the healthcare system and mentioned that its fate will lie in its ability to reinvent itself. One of the trends he commented on is the string of tie-ups involving drugmakers and academic groups, a trend that could help pharma stay on the cutting edge of research as it axes scientists' jobs. After saying that pharma has "gone back to school" in the academic collaborations, he added: "This is somewhat nuts. Pharma wants access to that ability but has no interest in paying for the downstream development." Read more

Crazy or creative? MIT finance whiz suggests a twist on CDOs for R&D

Posted under Andrew Lo, Big Pharma, Blog, CDO, collateralized drug obligations, Companies, Diagnostics, Drug Discovery, Funding, Medical Devices, Medical Supply, Milken Institute Global Conference, MIT, NIH, Pharmaceuticals, R&D, Startups, Universities, Videos by john

MIT finance engineering professor Andrew Lo caused a stir this week when he expounded on an unorthodox idea for financing drug research. Lo's notion, according to Financial Times columnist John Gapper, is to create CDOs--collateralized drug obligations--which can invest in a set of drug development projects and pay returns on successful treatments.  

Starting from the rather shaky premise that venture capital groups, the NIH and Big Pharma are essentially played out, incapable of successfully financing a new generation of therapies, Lo treated the audience at the Milken Institute Global Conference with the potential of a variation on the CDOs that spawned a housing bubble and triggered a global financial crisis. In this case he would look for debt investors willing to put up $50 billion to $100 billion to fund 150 experimental drugs over 10 years.

According to Gapper, Lo believes that we're headed into an era of underfinancing in drug R&D. And while these new CDOs might tempt a fresh financial catastrophe, society can ill afford the impact of a swoon in research.

Noted Lo: "If there's a cancer bubble, I can live with that."

Gapper's column has issues. The 43% drop in venture funding in the first quarter could be a mere blip on the screen following a surge late last year. And the repeated warnings over a shortage of R&D cash for early-stage work has been greeted with a swarm of new initiatives. The NIH also remains a big investor. And David Brennan was not fired from AstraZeneca ($AZN) because investors wanted him to curb R&D--that was already under way--but because the company's R&D strategy had performed so poorly.

Still, most observers would agree that R&D financing remains an issue. If enough investors felt that CDOs offered a relatively low risk way to invest in new drugs, the added cash could make a big difference for drug developers.

- here's the column from the Financial Times

Scrambling to add new drugs, Big Pharma is paying big premiums for biotechs

Posted under Big Pharma, Biotech IPO, Blog, Companies, Diagnostics, Funding, Human Genome Sciences, M&A, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by john

If you've been thinking that it's a seller's market out there for biotech companies, Bloomberg has some numbers to support the case. 

Buyers have been forking over a 71% premium for companies valued at more than $500 million, says the business news service. And that's the highest level the analysts have seen since 2000. Applying that formula to Human Genome Sciences ($HGSI), which warranted a 68% premium in GSK's ($GSK) bid, the dealmakers in the crowd are looking for a bump in the offer.

"It's a good time to be a seller if you're a biotech company," Greenwood Capital's Walter Todd tells Bloomberg. "These bigger pharma companies are trying to fill in the gaps in their portfolios. Human Genome has come out and said it undervalues the company, so the assumption is that Glaxo is going to have to raise the offer or somebody else could step in."

What's driving the higher premiums? It's a simple case of Big Pharma scrambling to line up promising new drugs. That's a good place for biotech to be in, especially considering the poor IPO market that has plagued the industry for three years,  

- here's the story from Bloomberg

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