VentureBeat

(UPDATED: See below.)

A common dilemma in biotech acquisitions is how to keep a startup’s entrepreneurial management happy and productive when they’ve just been assimilated by the Borg. The answer, often enough, is not to bother, and to let them spin out a new company with scientific “leftovers” that weren’t the point of the acquisition in the first place.

That’s more or less what Amgen has just done in launching Relypsa, a new Santa Clara, Calif., biotech just spun out of the big biotech’s Ilypsa unit. Relypsa is basically a full restart of Ilypsa — thus the name, I suppose — which Amgen acquired earlier this year for roughly $420 million (see our coverage here).

Of course, the new startup now lacks the kidney-disease drug (specifically, a treatment for hyperphosphatemia) that Amgen had shown particular interest in. But Relypsa is free to rev up its existing drug-discovery platform — one focused on making drugs out of long-lasting polymers that grab and eliminate excess molecules such as potassium or sodium — and also managed to keep a pipeline of promising candidates that might one day be useful in treating kidney and heart disease.

Such restarts of acquired biotechs aren’t unknown in the industry, although they’ve been growing in popularity. For instance, the former management of Eyetech Pharmaceuticals recently banded together to form Ophthotech with technology left over from Eyetech after it was swallowed by OSI Pharmaceuticals (our coverage here). This sort of strategy is likely to hold increasing relevance for Big Pharma as its companies fire up their biotech-acquisition machines.

The Relypsa deal, however, may set records for speed and continuity. The former CEO of Ilypsa, Jay Shepard, reprises that role at Relypsa; Ilypsa co-founder Garrett Klaerner returns as COO; and Ilypsa’s former chief medical officer Detlef Albrecht now resumes that position at Relypsa. (Honestly, props to whoever came up with the name “Relypsa,” because it’s really apropos here.) And so on down the line.

Relypsa raised $33 million in a first spinout round, with investors that included 5AM Ventures, New Leaf Venture Partners, the Sprout Group, Delphi Ventures, CMEA Ventures and Mediphase Venture Partners. Amgen, of course, retains a minority stake in Relypsa, and probably insisted on some form of right-of-first-refusal should Relypsa get interested in striking a partnership with — or selling itself to — another company. (I’ve asked Relypsa’s representatives about that, and will report back if I learn more.)

UPDATE: Relypsa’s external PR person got back to me on the right-of-first-refusal question, but kudos to you if you can make any sense of it. Here’s the response in its entirety: “Amgen retained certain rights related to transferred programs customary for spin outs at this stage. Relypsa will initiate partnering campaigns for certain indications and territories as appropriate.” Well, that was helpful. Sometimes I wonder why I bother asking.

UPDATE REDUX: In a later interview, Relypsa COO Gerrit Klaerner told me that “of course” Relypsa has an “entanglement” with Amgen, although he wouldn’t go much further than the official statement in describing Amgen’s particular rights. “There is enough skin in the game for Amgen to keep an interest in Relypsa,” he said. “If you see us doing a partnership, you will get an answer to your question.”

Klaerner added that the idea of recreating Ilypsa came up shortly after the acquisition. “We wanted to save a bunch of jobs and create a new home for the technology,” said Klaerner, who worked as an advisor to 5AM for the deal. “We had 38 people who, after the success of Ilypsa, had multiple job offers and asked them to stick with us, even though the company wasn’t really created.” What’s more, he said, Amgen’s backing of the deal didn’t waver despite the company’s recent woes (see, for instance, here). “Given what they were going through, to give this level of high-level support was really, really remarkable,” Klaerner said.

Oh, and the name Relypsa was apparently an internal placeholder that turned into the real thing when no one could think of anything better, Klaerner said.

FINAL UPDATE: I started thinking about other recent deals that resemble Ilypsa-Relypsa after an email correspondent planted the bug in my ear. The one that comes most immediately to mind would be the launch of Sequel Pharmaceuticals — another clever name — out of NovaCardia’s acquisition by Merck (our coverage here). Another example would be Cerexa Pharmaceuticals, which spun out of Peninsula Pharmaceuticals in 2005 after Peninsula was purchased by J&J. Cerexa was acquired by Forest Labs this past January, and doesn’t appear to have launched another spinout.

Have any other good examples? Sound off in comments.

(UPDATED: See below.)

Erythropoietin, or EPO, and its close relatives didn’t become the world’s most popular biotech drugs — at least through last year, when they pulled in sales of almost $12 billion — for nothing. On the plus side of the ledger, the anemia treatment owed its early success to the near miraculous improvement it wrought in the health of kidney-dialysis patients, who previously required numerous blood transfusions and frequently died relatively quickly anyway. On the other side, though, EPO makers, primarily Amgen and Johnson & Johnson, have long pushed hard to boost dosage and use of the drugs in a variety of situations, even when the evidence of patient benefit was weak and sometimes in the face of worrisome early signs that the drugs might actually be hurting instead of helping. (See our previous coverage here and here.)

In light of evidence this year that high doses of EPO increase the risk of blood clots, heart attacks and death, and that the drug might also encourage tumor growth, it was encouraging to see J&J announce yesterday — to the WSJ, at least — that it’s dropping efforts to expand EPO use in surgical and trauma patients. The main reason: Negative findings in a large J&J-funded study published yesterday in the New England Journal of Medicine, which reported that use of J&J’s EPO, brand-named Procrit, failed to reduce the number of transfusions or even the quantity of transfused red-blood cells among patients in intensive care.

That trial did produce equivocal evidence that EPO might contribute to the survival of these critically ill or injured patients, as there were fewer deaths among those who received Procrit at both day 29 and day 140 following their first injection. The result at day 140, however, wasn’t statistically significant. More worrisome was the fact that EPO use was associated with a 45 percent rise in blood-clot related events, including lung clots, deep-vein clots and heart attacks. Not that long ago, J&J would have most likely pointed to the mortality data as evidence of benefit and planned another study. Not this time, particularly when the same issue of the NEJM also carried an editorial warning against routine use of EPO in the ICU.

On the other hand, the EPO lobby isn’t close to folding its tent. Over at GoozNews, Merrill Goozner recently noted a sly provision slipped into a children’s health-insurance bill that would likely boost EPO use in dialysis patients, quite possibly to dangerous levels — and at a cost to taxpayers of $100 million a year. The details are too complex to get into here, but Merrill does a great job of laying it all out, so head over and take a look, and marvel at the tenacity of drugmakers who are down but nowhere near out.

UPDATE: The In Vivo blog offers this weighty analysis — and I mean that in a good way — of what to expect as yet another FDA committee looks into EPO usage and side effects next week.

(UPDATED: See below.)

The biotech colossus Amgen, stung by safety and regulatory issues that hit hard at sales of its core anemia drugs, announced today that it will cut its headcount between 12 percent and 14 percent, ratchet back on new plant construction, close production operations and prioritize its research spending. The giant biotech said these measures will yield savings of up to $1.3 billion by next year.

The restructuring is the first in Amgen’s history, and virtually unprecedented within the biotech industry. For the last six years, the company has been on a serious roll, largely thanks to its second-generation anemia drug called Aranesp, which allowed Amgen to sidestep a restrictive marketing agreement with Johnson & Johnson and to vastly expand its sales efforts. The company has more than doubled in overall revenues and employment since Aranesp’s approval in 2001. Last year, Aranesp accounted for almost 30 percent of the company’s $14.3 billion in revenue.

Last October, however, studies began to raise questions about the way Aranesp and its older cousins, all of which stimulate the production of red-blood cells, were used to treat anemia in kidney-disease and cancer patients. One study showed that higher doses of the drugs were associated with higher risks of heart attacks, strokes and death in kidney patients. In another, Aranesp used to treat anemia caused by cancer itself led to a greater number of deaths than no treatment. Regulators were soon involved, and recently the federal Medicare program decided to limit the degree to which these anemia drugs can be used to boost blood-oxygen levels in cancer patients. Next month, an FDA panel will meet to consider similar restrictions for kidney patients.

Until last week, Amgen had denied that it would need cost-cutting measures. But the company couldn’t ignore the pain from a 19 percent second-quarter drop in Aranesp sales. The job cuts will reduce employment at the company by 2,200 to 2,600 people, returning it to 2006 levels.

CEO Kevin Sharer sounded philosophical in an interview with the WSJ:

“It’s the first time in our 27-year history we’ve had to restructure,” Kevin Sharer, Amgen’s chief executive officer, said in a telephone interview, sighing audibly. But, he added, “These kinds of things happen cyclically. Genentech Inc. in 1995 went through their own discontinuity with Roche buying [a majority share]. Virtually any company with any scale has gone through this kind of event. It’s our turn.”

It’s hard to know if, or whether, this sort of bad news will impact biotech startups further down the food chain, but it’s unlikely to help. For instance, Amgen may reconsider the amount of funding it devotes to venture-capital investments. And general biotech-stock turmoil — Amgen shares are down 26 percent this year — is never good for entrepreneurs and VCs looking to take their startups public. This week, for instance, will bring the first test in that regard: Cumberland Pharmaceuticals, which we noted briefly here, is due to launch its IPO sometime between now and Friday.

The WSJ story is here; the LA Times and the WSJ Health Blog have more. If you’d like to look at the Amgen slides for its conference call earlier today, click here (PDF).

UPDATE: The NYT has more, including a more coherent explanation of the likely effects of the Medicare restrictions on anemia-drug sales than I’ve seen elsewhere, here. You can also read the transcript of Amgen’s conference call here (PDF), courtesy of the WSJ and Thomson StreetEvents.

UPDATE REDUX: Aha, it also turns out that Amgen has pulled the plug on a planned expansion in South San Francisco, where the former Tularik serves as its local base of operations.

(UPDATED: See below.)

Catching up on a few life-science related items you may have missed over the weekend:

If you prick a cyborg, does he not bleed? — The WaPo’s Joel Garreau brings us this fascinating story about Peter Houghton, the first permananent recipient of a “left ventricular assist device” — a mechanical replacement for a failing chamber of his heart. Houghton’s heartbeat no longer goes lub-dub — instead, it whirrs as an impeller pushes blood through it. He has an electrical socket in his skull that connects his heart device to a camera bag filled with batteries. Worst of all, he’s become “less sympathetic in some ways,” he tells Garreau. “You’re an invented person trying to cope with it, trying to deal with the emotional context of it…. You become coldhearted. The thought doesn’t agree with me, the fact that it happens. But I don’t know what to do about it.”

The psychological problems of this latter-day cyborg are real, although as the story points out, no one knows if they’re the result of surviving a life-threatening illness, the machinery, the drugs Houghton must take, depression, advancing age or the absence of unknown hormones produced by the heart. Houghton spent some time contemplating suicide, but backed away in part because he couldn’t overcome his fear of actually choosing a method. (Antidepressants also seem to have helped.) He’s writing a book titled Cyborg Life and has even tried his hand at poetry:

A roller coaster.
Better than being dead, I think.
Three days out of five.

Provenge and the private eye — Pharmalot’s Ed Silverstein brings us the interesting tale of a plaintiff’s private investigator who stalked the editor of Cancer Letter, a newsletter that ran leaked letters critical of Dendreon’s cancer vaccine Provenge, which we’ve written about at length here and here. (The FDA asked Dendreon for more Provenge data, despite the previous endorsement of its advisory panel.) The plaintiffs — representatives for patients who want the FDA to reverse its Provenge decision — are now suing FDA officials and one of the two advisory-panel member whose critical letters ended up in Cancer Letter; they’re trying to figure out who leaked them to the newsletter.

Earmarking, a habit that’s hard to kick — The NYT’s Robert Pear reports a nice piece detailing how members of Congress — mostly Democrats, apparently — are steering Medicare money to select hospitals through the practice of “earmarking,” or inserting language that directs funding to a particular lucky recipient. Despite the Democratic leadership’s promise to make earmarking more transparent by listing them openly — something I’ve grappled with in a biotech-related context here — Pear found earmarks worth hundreds of millions of dollars hidden away in a House bill designed to expand health insurance for lower-income children.

Amgen’s Sharer called on to resign — Also from Pharmalot comes news of an Internet petition demanding the resignation of Amgen’s CEO, who has overseen a sharp decline in the biotech giant’s stock price amid accusations that the company has pushed overuse of anemia drugs which have been linked to various severe side effects. It’s likely to be about as effective as most Internet petitions, but it certainly doesn’t improve the climate for the embattled biotech.

American life expectancy outpaced by 20% of the globe — This AP story (courtesy of the Boston Globe) reminds us of a major cost of our dysfunctional healthcare system: We’re not living anywhere near as long as people in other countries. In fact, the U.S. has been sliding for years in global rankings of life expectancy. A baby born in the U.S. in 2004 can expect to live 77.9 years, ranking the U.S. 42nd in the world. Twenty years ago, we were 11th. UPDATE: Apparently we’re slipping in other respects as well. This WaPo story notes that Americans are no longer the world’s tallest people, either — the Dutch and other Europeans are now looking down on us. This observation isn’t entirely frivolous, either, since height is a proxy — albeit somewhat indirect, but still meaningful — for general health.

How to get, and keep, health insurance — Those not fortunate enough to work for a large company who provides health benefits already know that the individual-insurance market can be a scary place, at least if you’re not young and healthy. In most states, insurers have no compunction about denying you coverage for a variety of pre-existing conditions or if you take common prescription drugs, such as statins that lower “bad” cholesterol. What’s more, many insurers also ask if you’ve ever been denied insurance in the past, which if you answer truthfully — and lying is a bad idea — makes you a prime candidate for subsequent rejection again.

So it was quite a relief to find this LA Times advice on getting and keeping health insurance. Some of the advice is California-centric — it appears, for instance, that state law may require employers to extend your insurance for up to 36 months if you leave or are fired — but it’s still a good rundown of your rights and the pitfalls you can face in trying to protect your health and that of your family. For non-Golden State residents, there are plenty of other resources available — try, for instance, healthinsuranceinfo.net, which provides state-specific information compiled by the Georgetown Univeristy Health Policy Institute.

Patients, patients everywhere, yet not a doc to treat – From Massachusetts to Colorado, there’s an increasingly acute shortage of primary-care physicians. In Massachusetts, where the nation’s only universal healthcare plan is gearing up, hundreds of thousands of newly insured individuals are having trouble finding doctors. According to this report, new patients wait an average of 52 days to see an internist or family doctor for a routine visit, and with up to 500,000 people set to get insurance this year, the head of the Massachusetts Medical Society is predicting a crisis of healthcare access. There’s more here and here, just for starters. Google “Massachusetts doctor shortage” for much more.

Things aren’t much better elsewhere across the country. In Colorado, a new report finds that close to a third of the state’s primary-care docs are 55 and over, and that relatively few younger docs are entering the field to replace them. (See the PDF report itself here.) Meanwhile, those on the lowest rungs of the economic ladder are also finding it increasingly difficult to get treatment because so many doctors have either stopped accepting Medicaid patients or severely limited their numbers. The WSJ Health Blog has more, including another post about two Illinois clinics sued by the state for allegedly colluding to stop seeing new Medicaid patients.

The reason for the doctor shortage is actually pretty simple: Salaries are much, much higher in specialties such as surgery and radiology than they are for your workaday general practitioner — sometimes by a factor of two or more, the NYT reports — and the workload is often less. Primary-care physicians also perform fewer complex medical procedures, which limits the reimbursement they can seek from insurers or Medicare.

The rest is pretty much just supply and demand — and a useful reminder that real fixes for the nation’s busted healthcare system are going to demand some fairly dramatic changes. Some radicals like Alan Garber, a Stanford healthcare expert quoted in the NYT, would like to see doctors paid fixed salaries and bonuses based on how healthy they keep their patients, which would level the playing field among physician specialties and create incentives to treat and prevent illness instead of just treating it with the most expensive procedures available. Just imagine how excited the American Medical Association would be about that.

States can’t do healthcare reform alone – While we’re on the subject, this piece by Ezra Klein in the Washington Monthly makes a compelling argument that states can’t provide universal healthcare on their own. It’s a complex argument, but much of it boils down to the fact that states typically can’t sustain the heavier healthcare costs brought on when recessions throw more people out of work and the health insurance they get from employers. Klein notes the “cruel irony” that state healthcare spending typically gets cut during downturns, just when people tend to need government help the most. Only the federal government, he suggests, has the resources to maintain and even expand healthcare programs when times get tough. (For the internecine warfare that broke out among liberal progressive bloggers shortly after Klein’s article was published, see here, particularly the comments.)

First thing, we kill all the ad salesmen – Although free-market types like to talk about drug advertising as providing a “useful source of information” to consumers, the reality is a lot more complex. Advertising essentially creates demand for many drugs, leading patients to visit their doctors waving magazine ads or asking about “the little purple pill” (a fantastically effective campaign earlier this decade for the heartburn drug Nexium). Needless to say, very little of this has anything to do with keeping people healthy, and quite a lot to do with boosting drug sales.

Over at BrandweekNRX, Jim Edwards pens a farewell post offering 10 drug-advertising reforms that would do a lot to make pharmaceutical-marketing programs more informational and less manipulative. With Congress having apparently passed on letting the FDA regulate drug ads more thoroughly, though, the odds of any of these idea passing into law seems remote at best.

Additional oddball note: Jim’s replacement at BrandweekNRX is none other than Peter Rost, former Pfizer marketing exec-turned-scathing critic of the industry that once paid him. Rost has an odd sense of humor and can certainly carry on at times, but he’s entertaining, muckraking, and always worth a read.

Hospitals as charity cases? – One of the tradeoffs involved in running a hospital as a nonprofit entity, a status that grants some pretty hefty tax breaks, involves providing charity care to the indigent. It turns out, though, that many hospitals are pleading poverty themselves. A recent IRS report, noted in the WSJ Health Blog, found that nearly a quarter of nonprofit hospitals spent less than one percent of their revenue on care for the disadvantaged, while half spent less than three percent. Now moves are afoot in Congress to require nonprofit hospitals to devote at least five percent of revenue to charity care. For more, follow the link.

Briefly noted:

• Congress is struggling to increase funding for a federal program that insures poorer kids, against a veto threat from President Bush. The NYT and the WSJ Health Blog have more.
• A severely brain-damaged man regained his speech after treatment with pulses of electric current, the NYT reports.
• Medicare relaxed proposed guidelines that would limit the use of anemia drugs like Amgen’s Aranesp in cancer patients, after safety problems emerged; Amgen promptly challenged the watered-down guidelines.
• Researchers reported finding a genetic link to multiple sclerosis; surprisingly, there’s also one for “restless legs syndrome,” which some cynics considered a pharmaceutical-company invention.
• Older docs square off with their younger colleagues — and academics, patients, and others — over whether it’s a good idea to limit the work hours of notoriously sleep-deprived residents in comments at the WSJ Health Blog.

NeurAxon, a Waltham, Mass., biotech developing new pain drugs, named Lawrence Bloch as its new CEO. Bloch was previously chief financial officer of NitroMed, a company best known for BiDil, the first drug approved specifically to treat heart disease in African-Americans. BiDil sales haven’t really taken off, and NitroMed’s stock has fallen considerably since its recent high in February. Bloch left his position at NitroMed almost a year and a half ago.

Amira Pharmaceuticals, a San Diego biotech focused on inflammatory disease, appointed Robert Baltera as its first CEO. Baltera previously worked at Amgen in a number of positions, ranging from his start as a research associate to vice president of corporate and contract manufacturing. Interestingly enough, one of his career highlights at Amgen was leading the team that won approval for the company’s arthritis drug Kineret, which underperformed so badly that Amgen doesn’t even list it on its Web site.

Alan Levy, the founder of Northstar Neuroscience, joined Frazier Healthcare Ventures as a venture partner. Northstar raised $112 million last year in a public offering. The Seattle Post-Intelligencer’s John Cook has more.

Global Life Science Ventures, a VC firm in Munich, promoted Stephen McCormick to managing director.

Amgen suddenly has a voracious appetite for startups. In its second deal this week, the biotech giant acquired Cambridge, Mass., biotech Alantos Pharmaceuticals for $300 million in cash. (The release is here.)

Founded in Heidelberg, Germany in 1999, Alantos changed its name from Therascope in 2003 and moved to Cambridge in 2004. The company develops traditional “small molecule” drugs — that is, therapies that can be delivered as pills rather than shots — for a variety of conditions; its lead candidate is a novel type of diabetes drug called a DPP-IV inhibitor now in early-stage trials. Should it succeed, that drug seems likely to face significant competition; Merck’s DPP-IV inhibitor Januvia is already on the market, and several other pharmas and biotechs are pursuing their own.

According to VentureWire (subscription required), Alantos’ backers included Oxford Bioscience Partners, SV Life Sciences, Heidelberg Innovation, Ventech and ABN Amro. It has raised a total of $47 million, making this a nice payday for the company’s European investors.

Following Amgen’s $420 million acquisition of Ilypsa, that makes $720 million the big biotech has dropped on startups this week — a substantial sum by any measure. Last fall, Amgen also acquired Mountain View, Calif.-based Avidia for up to $380 million, so that’s well over $1 billion it has committed to startup acquisitions over the past nine months.

The mini-spree marks a recent departure for the biotech, which over the past five years has tended to acquire other public biotechs with marketed or late-stage products such as Immunex, Abgenix and Tularik. It suggests that Amgen is feeling some pressure to refill its pipeline, although since the payoff is still likely some time away, it likely isn’t related to the company’s recent problems with its anemia-drug franchise or its new colon-cancer drug Vectibix.

Biotech powerhouse Amgen agreed to acquire Santa Clara, Calif.-based Ilypsa, a developer of drugs to treat complications of kidney disease, for $420 million in cash, roughly ten times what the company had raised in venture capital. The company’s release is here.

The high price could mean Amgen had to win a bidding war for Ilypsa, since one of the startup’s main investors was none other than the venture arm of Amgen archrival Johnson & Johnson.

Ilypsa has focused on drugs that can help prevent mineral buildups in the blood that result when the kidneys’ filtering system starts to go awry. The company’s lead drug candidate, ILY101, is designed to prevent dangerously high blood levels of phosphorus, a condition known as hyperphosphatemia, by binding to phosphorous in the digestive tract and preventing its absorption into the body. ILY101 is currently in mid-stage human testing. Other candidates in Ilypsa’s pipeline include similar binders for potassium and sodium.

Amgen, whose best-selling drugs are a family of anemia treatments often used in place of blood transfusions in kidney patients, has shown off-and-on interest in treatments for other complications of kidney disease. In 2004 it launched Sensipar, a drug it licensed from NPS Pharmaceuticals in 1996 that treats elevated levels of parathyroid hormone and calcium in kidney patients. Annual sales of the drug, however, haven’t yet topped $100 million.

Ilypsa, formerly known as Symyx Therapeutics, had previously raised $46 million in venture capital, according to VentureWire (subscription required). That includes what the company originally described as an $8 million first round in 2003 and a $36 million second round in mid-2005.

From VentureWire:

Sprout invested in a $10 million Series A round in 2003 alongside 5AM Ventures. The company went on to raise a $36 million Series B round in 2005, that included Sprout, 5AM and new investors CMEA Ventures, Delphi Ventures, Johnson & Johnson Development Corp., Mediphase Venture Partners and U.S. Venture Partners.

More genetic links for breast cancer – Whole-genome association studies that tease out links between minute genetic variations and the likelihood of disease are definitely building momentum. Over the last several days, researchers reported six new variations that increase the risk of breast cancer for women who have inherited them. (For background, see this Boston Globe piece or my recent take on the subject.) It’s now conceivable that scientists may soon have an excellent handle on the genetic contributions to this particular disease.

As with any much-hyped medical discovery, however, the caveats here are almost as important as the headlines. These findings aren’t going to be translated into new diagnostic tests, much less treatments, any time soon. That’s largely because no one has yet figured out why these particular genetic changes should affect a woman’s cancer risk. And that, in part, stems from the fact that these variations aren’t mutations in identifiable genes, just alterations in stretches of DNA — regions sometimes unkindly called “junk DNA” — whose function is unknown.

In fact, these findings are purely statistical conclusions drawn from analyses of large groups of people and their genomes. While it seems unlikely that they’re simply spurious correlations — among other things, the number of research teams confirming each others’ findings argues against that — odder things have happened on the frontiers of science. Nick Wade of the NYT has more.

Dire straits for diabetes drug – A little more than a week ago, the New England Journal of Medicine published cardiologist Steve Nissen’s analysis suggesting that the heavily prescribed diabetes drug Avandia may boost the risk of heart attacks by roughy 40 percent. Nissen himself acknowledged that his paper — a “meta-analysis” that drew conclusions by pooling data from several dozen different clinical trials, a frequently used but often controversial technique — wasn’t conclusive, and a variety of his critics ranging from Avandia’s maker, GlaxoSmithKline, former FDA official Scott Gottlieb and the editors of the U.K. medical journal the Lancet (PDF) have argued that the medical community should wait for the results of a large clinical trial that won’t produce data for another year or two.

Since then, however, Republican Sen. Charles Grassley has accused the FDA of reaching the same conclusion internally but without taking any action; GSK warned that the large Avandia trial everyone is waiting for may be jeopardized because patients concerned about the drug’s safety are bailing out; and early indications suggest that ordinary patients may be doing likewise. It’s a huge disaster for what had been a $3 billion-a-year drug, and one that could have been mitigated if GSK and the FDA had been more open about potential safety problems early on. Because there’s no question that an important cost-benefit question — that is, whether diabetics benefit more from the blood-sugar control Avandia makes possible than they put at risk with the potential higher risk of heart attacks — has been lost in the furor.

Chinese drug official sentenced to death – Think FDA officials have it tough these days? Yesterday, the Chinese government sentenced its former top food and drug official, Zheng Xiaoyu, to death for taking $850,000 in drug-company bribes to overlook fake or defective medicines and food products.

Man Bites Dog Watch: Biotech CEO says drug prices are too high – Elan Pharmaceuticals CEO Kelly Martin appears to have broken one of the industry’s taboos by arguing that the common practice of charging all the market will bear for new biotech drugs — the very reasoning that has led to drugs for rare genetic diseases that cost $200,000 a year — is “unsustainable.” While there’s not enough detail in this interview snippet from the Financial Times (via Forbes) to know exactly what Martin means by this, it certainly sounds as if Elan might be edging toward some kind of slightly more rational pricing policy — or at least acknowledging that Medicare and private insurers aren’t likely to continue paying through the nose forever. Too bad some people seem to think that Elan might make a tasty takeover target for Big Pharma, whose own addiction to high prices hasn’t shown much evidence of waning.

Amgen’s woes continue to mount – From bad to worse to… even worse, I guess. Last week, experts at the European Union’s drug regulator recommended against approval of Amgen’s colon-cancer drug Vectibix, saying its benefits didn’t outweigh its disadvantages. Vectibix has hit a number of snags recently, including a halted clinical trial in which a combination of Vectibix and Genentech’s Avastin appeared to worsen patients’ odds of survival. The London-based European Medicines Agency was also concerned that evidence suggesting that Vectibix slows the progression of cancer was weak.

Separately, the EU gave preliminary approval to Roche’s Mircera, a potential competitor to Amgen’s best-selling anemia drugs Epogen and Aranesp. Mircera’s U.S. approval has been delayed and Amgen has sued Roche for patent infringement in any case, but seeing a competitor edge closer to the starting line can’t be good news for the beleaguered biotech. The LAT has more; so does Pharmalot.

Odds and ends from around the Web – A collection of quick takes on interesting items that might warrant a deeper look down the line:

• Ten years after Bill Clinton launched a drive to find an AIDS vaccine within a decade, the goal is nowhere in sight (Scientific American)
• Dendreon, still reeling from the FDA’s decision to postpone approval of its prostate-cancer vaccine, cuts staff by 18 percent (AP via Forbes)
• Medicare announced it won’t reimburse for artificial disks used as alternatives to spinal fusion, at least in patients 60 and older, dashing the hopes of medical-device makers (NYT)
• A California doctor’s group has begun posting its prices for straightforward procedures in an attempt to ward off competition from inexpensive walk-in medical clinics (LAT via the Merc)
• Medical researchers have teamed up with hedge-fund managers to offer a $1 million prize for the best new ideas in cancer research (Reuters)

ProCertus BioPharm, a Madison, Wis., company developing drugs to minimize the side effects of radiation and chemotherapy, raised $2.3 million in a first round of financing. The company will use the money to begin human tests of products such as DermX, which is supposed to prevent radiation-therapy induced dermatitis.

The round was led by Venture Investors, a significant Midwest-based healthcare and IT venture firm. Existing investors including the Novartis Venture Fund also joined the round.

These are serious players who presumably don’t throw their money around lightly, so it’s probably not wise to draw too many conclusions from ProCertus’ kitschy Web site, which is not only outdated (it refers to clinical trials planned for 2006 that apparently haven’t yet started) but inaccurate (it states that there are no competing products for treatment or prevention of cancer-treatment induced hair loss, dermatitis, or mucositis, a claim with which the folks at Amgen would presumably take issue).

The company’s announcement is here.

Is the bell tolling for EPO? – The news keeps going from bad to worse for the wonder drugs of biotech — the anemia treatments known as ESAs or EPO, shorthand for “erythropoiesis stimulating agents” and “erythropoietin,” respectively. Earlier today, an FDA advisory panel recommended new warnings for the drugs, which stimulate the production of oxygen-carrying red blood cells, as well as fresh clinical studies on their safety. Recent studies in kidney-dialysis patients linked higher doses of ESAs to heart problems and strokes, while studies in cancer patients treated for chemotherapy-related anemia have suggested that the treatments don’t improve patient survival, and may even cut lives short — possibly by encouraging tumor growth.

New restrictions, which the panel didn’t spell out, could put a serious crimp in ESA sales, which currently amount to billions of dollars for Amgen and Johnson & Johnson. The two companies have also been taking a public-relations battering in terms of how they promote the drugs. Yesterday, the NYT ran a front-page piece that detailed how rebates offered by Amgen and J&J encourage doctors to overuse the drugs, and today the WSJ followed with a look at whistleblower allegations that J&J boosted EPO sales by pushing higher-than-approved doses.

It’s worth remembering that while the storm is currently walloping industry giants like Amgen and J&J, plenty of smaller biotechs that have staked their hopes on getting into the anemia-treatment game could eventually be affected as well. These companies include Affymax, FibroGen and Neose. Only Affymax is public; another potential ESA competitor, GlycoFi, was acquired by Merck last year.

First embryonic stem-cell trial edges forward – By early next year, Geron plans to be injecting recent spinal-injury patients with nerve cells grown from embryonic stem cells, in hopes of regenerating damaged nerve pathways. This trial was supposed to be underway already, but last year the FDA requested more animal data for safety purposes. Geron CEO Thomas Okarma says the treatment will have been tested in 2,000 animals before it ever reaches humans. The FT’s Clive Cookson has the story.

Aggressive treatment leads to worse “quality of death” in cancer patients – File this one under things you already knew but didn’t want to think about. A study of 243 advanced cancer patients revealed that a greater number of aggressive treatments — including the use of ventilators and non-palliative chemotherapy — in the last week of life was associated with greater physical and psychological distress and a lower chance of dying in a preferred location (often home). Money quotes:

[Said study lead author Gabriel Silverman:] “These results suggest that when patients are actively dying, the use of aggressive treatments should be considered with caution and only pursued with the full understanding of patients or their surrogate decision makers.

[...]

“As a doctor, if I had a patient or family who wanted aggressive, life-sustaining care toward the end of their life, I would view it as a red flag warning of patient or caregiver distress,” Dr. [Robert] Arnold [of the University of Pittsburgh] concluded. “Often patients and their families are suffering, sad, or distressed at the end of life, and when dying occurs in medical settings they may hope that aggressive treatment will help the suffering, but often it doesn’t.”

Tau gets a little respect – For the past decade or so, Alzheimer’s researchers have concentrated their attention on beta amyloid, the protein that clumps around neurons in “tangles” visible in the autopsied brains of many — though not all — Alzheimer’s patients. Now comes evidence that a dark-horse protein called tau may also bear some responsibility for the disease. Researchers reported last week in Science that they reversed memory loss in mice by tinkering with their genes to produce lower levels of the tau protein. It’s heartening to see competing theories getting some attention in the Alzheimer’s community, which has had an unfortunate tendency to shun researchers who strayed from the majority opinion, but don’t expect beta-amyloid supporters to give much ground until they have to. That might be soon, as a new batch of drugs designed to block formation of beta-amyloid tangles should begin reporting data from human trials later this year.

New genetic heart-disease link – Another whole-genome association study has identified a new genetic variation that appears to increase heart-attack risk by 60 percent in European populations. The catch is that the variation doesn’t appear to be associated with any known gene, and instead exists in the long stretches of non-coding, or “junk,” DNA, meaning that no one has any idea why it should have any effect on heart-attack rates. The NYT has more.

Stem-cell researchers make like Willie Sutton – Near the end of this otherwise unremarkable account of a talk by James Thomson, the Wisconsin researcher who first isolated and grew human embryonic stem cells, comes this interesting nugget: Thomson will open a “satellite laboratory” on the UC Santa Barbara campus for stem-cell collaborations with UCSB researchers. Coincidentally enough, having a presence in the state might also qualify Thomson for funding by California’s $3 billion stem-cell program. Willie Sutton, you’ll recall, is the outlaw who once proclaimed that he robbed banks “because that’s where the money is.” Some sentiments, it seems, are universal.

Hypocrisy in the generic-biologics fight? – The prospect of legislation that clears a path for “generic” versions of expensive biotech drugs appears to have dimmed significantly. But biotech consultant and blogger David Williams — no fan himself of the push for “biogenerics” — notes that biotech companies and their lobbyists may be shooting themselves in the foot when they argue that biogenerics could never be “identical” to branded products now on the market. It’s worth reading his entire post — it’s not long — but the gist is that changing the manufacturing process for name-brand biotech drugs, which happens all the time, opens up the same “equivalence” issues that BIO and its allies find insurmountable where biogenerics are concerned. The main difference is that name-brand manufacturers can handle the issue with short, inexpensive “bioequivalence” trials — but they insist that biogenerics must undergo expensive, full-blown clinical testing to assure their efficacy and safety. If the biogenerics issue heats up again, don’t be surprised to see this argument make a comeback.

Surgical robots in space, stem cells in rodent eyes – These are just two interesting stories from the San Jose Mercury News I haven’t yet had a chance to mention. Last Sunday, the Merc ran this piece on efforts to automate surgery, with the ultimate goal of building robots that could operate on astronauts in space or soldiers on the battlefield. Far off and far out stuff. Similarly, this piece outlined the possibility of growing new blood vessels using an early and highly regenerative stem cell called a hemangioblast. Ultimately, these fast-growing cells could one day regrow blood vessels in the heart, eyes or limbs that were damaged by injury or disease.

Yesterday, the Supreme Court handed down a patent decision (PDF) that makes it easier to deny or challenge a patent that seems “obvious” to a patent examiner or a court. This decision has already been hailed by the technology industry, which has lobbied hard for legal changes that would limit inventors’ rights somewhat in order to discourage “patent trolls.”

The biotech and pharma industries, by contrast, could find themselves in more of a pickle. Reinterpretation of the “obviousness” standard — in which the Supremes rejected a “narrow, rigid” definition adopted years ago by a lower court — may make it far more difficult to patent new generations of existing drugs, particularly if the newer products amount to little more than “extended release” forms that allows people to take pills or shots less frequently. For instance, last year the Court of Appeals for the Federal Circuit rejected a patent for an extended-release form of an Alza incontinence drug as obvious — and that was under the old, now-rejected, standard for “obviousness.”

Ultimately, though, it’s not clear to me that this decision presents a huge problem for biotech. (Pharma, which leans a lot more heavily on the extended-release dodge in order to effectively extend patent lifetimes, is another question entirely.) With only a few exceptions — the Amgen drugs Aranesp and Neulasta, for instance, or various forms of quick-acting or long-lasting insulin — biotech has relatively few “next generation” products, and in general has lot more leeway to produce “innovative” follow-on products that do much more than simply stick around longer in the bloodstream. (Such as, for instance, by boosting the affinity of an antibody so that it sticks to its target much more tightly, or altering its structure so that it is less likely to trigger an unwanted immune reaction.)

On the other hand, yesterday’s case is this third in recent months to limit the rights of patent holders. In those previous cases, the Supreme Court made it more difficult to obtain an injunction against an alleged infringer and easier to challenge a patent without first violating it. Taken together, the three cases could produce some unexpected fireworks in the industry, albeit ones that are likely to go off in slow motion in coming months and years.

For more comment, check out Aaron Barkhoff’s thoughts on his Orange Book blog, those of Dennis Crouch at Patently O, and comments from various patent-law attorneys in this Legal Times piece.

Amgen’s anemia rollercoaster — Biotechnology titan Amgen may have dodged a bullet when a study released Thursday showed that its anemia drug Aranesp didn’t shorten the lives of patients, after several other studies had suggested the opposite. But its anemia franchise isn’t out of the woods yet. A Wednesday report in the Journal of the American Medical Association revealed that for-profit dialysis clinics prescribe far higher doses of anemia drugs to their patients than do their non-profit counterparts, suggesting a profit motive behind the overuse of drugs that have been linked to cardiovascular problems at high doses.

Now it appears that Congress may weigh in: The WSJ quotes Rep. Fortney “Pete” Stark, a California Democrat, calling for changes in Medicare reimbursement to eliminate any incentive to overuse the drugs, which stimulate production of the red blood cells that carry oxygen.

More on “generic” biologics — Here are two takes on the move to allow copycat versions of biotech drugs that I neglected to mention in yesterday’s post on the subject. Writing at Forbes.com, Scott Gottlieb — former FDA deputy commissioner for medical and scientific affairs, now a pundit at the neoconservative American Enterprise Institute — makes the counterintuitive argument that copycat biotech drugs will speed the development of new drugs, even if they’re just simply improved versions of older ones.

Meanwhile, pharma/biotech consultant David E. Williams dismisses the biogenerics push as “a bad bill that deserves to die” on his Health Business Blog, but suggests that Congress could adopt a more straightforward solution: Simply mandate price cuts on biotech drugs once their patents expire. It’s such a wacky but weirdly intriguing idea that I can’t even tell if it makes sense, but I certainly doubt that Congress could muster the political will for such a naked exercise of government power — it simply violates too many current assumptions about the usefulness and necessity of markets.

Stem cell divisions — The president of California’s $3 billion stem-cell research program resigned abruptly on Tuesday, citing both health concerns (a recent diagnosis of prostate cancer) and tensions between patient advocates and biomedical academics over plans to spend up to $300 million on new research facilities. Zach Hall’s departure will now come earlier than expected — he’ll depart at the end of April instead of the end of June — but plans to name a successor are already underway. Despite his title, Hall wasn’t the head honcho of the California institute; that honor is reserved for Robert Klein II, chairman of the inaptly named Independent Citizens Oversight Committee, who is also rumored to have clashed with Hall more than once. David Jensen of the estimable California Stem Cell Report has all the details.

Dollars for doctors (and everyone else) — Why does U.S. healthcare cost so much? The economics blog Marginal Revolution hosted a fascinating debate on the subject earlier this week, prompted by Tyler Cowen’s capsule review of a new book by Maggie Mahar titled Money Driven Medicine. The argument is too complex to do it much justice here; the best summary I can make without writing an essay myself is that the entrepreneurial instincts of doctors and medical-technology suppliers (including drug companies), combined with weak resistance from desperate patients, leads to market failure, including drastic overuse — and misuse — of medical services. Don’t miss Mahar’s contribution to the Marginal Revolution debate in comments. Two other takes on the book are here and here.

In a similar vein, this post from the group blog Health Care Renewal aims to explain why so many academic researchers seek out funding from pharmaceutical and biotech companies these days. Turns out it’s not just the greed of companies eager to co-opt paragons of the ivory tower; instead, blogger Roy Poses suggests that university incentives similar to the ones that motivate car salesmen are at fault. Definitely worth a read if the question has ever crossed your mind.

Research odds and ends from the week that was:
• Scientists discovered a gene that appears to be key to “self-renewal” in both embryonic and adult stem cells.

• Surgeons are exploring ways of conducting minimally invasive procedures using “natural openings” in the body such as the mouth, the rectum or the vagina.

• Take that, white supremacists: Physical anthropologists now believe that European skin only lightened up 6,000 to 12,000 years ago, suggesting that “our European ancestors were brown-skinned for tens of thousands of years” prior to that. The link is subscription-only, so here’s a brief snippet of the Science news article:

Researchers have disagreed for decades about an issue that is only skin-deep: How quickly did the first modern humans who swept into Europe acquire pale skin? Now a new report on the evolution of a gene for skin color suggests that Europeans lightened up quite recently, perhaps only 6000 to 12,000 years ago. This contradicts a long-standing hypothesis that modern humans in Europe grew paler about 40,000 years ago, as soon as they migrated into northern latitudes. Under darker skies, pale skin absorbs more sunlight than dark skin, allowing ultraviolet rays to produce more vitamin D for bone growth and calcium absorption. “The [evolution of] light skin occurred long after the arrival of modern humans in Europe,” molecular anthropologist Heather Norton of the University of Arizona, Tucson, said in her talk.