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Biotech Roundup: Politics, Defense, and Entrepreneurship

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Surf's Up! (Where's my wetsuit?!?)

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For only the second time in the Bush presidency, the FDA looks to have a chance at effective adult supervision. Last week's rumors were made official this week with the nomination of current FDA interim head Dr. Andrew von Eschenbach to the post of FDA Commissioner. I thought the real issue for his nomination would be his former unwillingness to give up his post at the National Cancer Institute or the perceived conflicts of interest in regulating drugs he helped develop.

Instead, it's the same old garbage inside the beltway. Senators Clinton and Murray vowed to hold up von Eschenbach's nomination because the Bush Administration lied to them about sending the Plan B contraceptive through the FDA for a science-based review leading to its availability as an over-the-counter medication. They're ticked and aren't likely to allow Dr. von Eschenbach's nomination to go forward until the drug is finally passed out of the FDA.

Essentially, the argument is that the FDA shouldn't have politicized the drug approval process. So Senators Clinton and Murray are protesting the politicization of the Plan B approval process by… politicizing the FDA process.

Regardless of your view on the Plan B drug, what these two politicians are doing is holding cancer patients hostage in favor of a different constituency. The completely failed multi-year "leadership" of veterinarian Lester Crawford is most notable in the sorry state of affairs on how we approve drugs for the treatment of cancer. Dr. von Eschenbach will fix that, but he can't until he's approved.

The longer this political nonsense continues, the more cancer patients get hurt.



Schering AG sweepstakes

Merck KGaA, not to be confused with US-based Merck (MRK), announced a hostile bid for Schering AG (SHR) this week (not to be confused with US-based Schering Plough (SGP)). Nice bid at about $91.80/share, but Schering AG said it was too low. That's probably old news to you.

What most people missed, unless they subscribe to StreetAccount.com's excellent service, is a Reuters blurb saying Schering AG's "first-choice option" to defend against the bid would be to acquire companies. Setting aside the logic of that for a second, it's further fuel for the biotech acquisition fires.
What most people missed, unless they subscribe to excellent service, is a Reuters blurb saying Schering AG's "first-choice option" to defend against the bid would be to acquire companies. Setting aside the logic of that for a second, it's further fuel for the biotech acquisition fires.

We're familiar with Schering AG's approach from our coverage of Sonus Pharmaceuticals (SNUS). Schering AG swooped in at the last minute and won a competitive negotiation for a partnership for Sonus Pharma's TOCOSOL paclitaxel drug. Schering AG actually abandoned a partnership for a $50-60M drug that was already approved in their home country of Germany (Praecis' (PRCS) prostate cancer drug Plenaxis) to free up money for their bid on Sonus Pharma's drug.

That taught us that Schering AG is not afraid to be aggressive. With operations in place throughout the US, including 300 people a stone's throw from Sonus Pharma's headquarters, we see few barriers to Schering AG being aggressive acquirers using their ~$100/share stock as currency.



Lilly turned back for ovarian indication

Eli Lilly's (LLY) NDA for their chemotherapy drug Gemzar was turned back early this week by the FDA's Oncologic Drugs Advisory Committee (ODAC). This was an odd decision by ODAC, though not completely unexpected.

Oncologists, by custom and training, have always focused on objective response rate – the number of patients who have their tumors shrink by 50% or more. Most chemotherapy drugs were approved on the basis of their ability to shrink tumors.

Recently, we've learned two things about objective responses: (1) you can extend survival without shrinking tumors; and (2) shrinking tumors doesn't always extend survival. Oncologists are having a hard time integrating these two facts with their pre-existing biases, so consistent interpretations of trial results are sometimes hard to come by.

A related concept is that of progression-free survival (PFS). As long as your tumor doesn't grow past a largely arbitrary 25%, you are considered to not have progressed. Once again, we've learned that there is value in slowing the growth of a tumor. Some of the newer drugs don't stop the initial growth because they take some time to work, but they provide long-term protection by either slowing the growth above 25% or by preventing additional tumor sites to appear.

At this ODAC panel, Gemzar showed a statistically significant benefit on PFS. However, there was no statistically-significant benefit on overall survival. ODAC turned the drug application down, saying they weren't convinced.

Our favorite quote from the meeting was from the former chair of the ODAC panel, Stacy Nerenstone: "I really feel very strongly this drug is active in ovarian cancer." This was just before she voted against approving the drug.

While we can see ODAC's point here (why make a patient go through chemotherapy if there is no overall survival benefit), the logic used to get there is the direct result of ODAC operating too long without firm adult supervision (see von Eschenbach story above).



Cannon Beach

Not to make you jealous or anything, but our Entrepreneur's network is converging on Cannon Beach, Oregon today for our 2nd Annual Entrepreneur's Retreat. In addition to enjoying a keynote by our own Todd Harrison, the relaxed schedule and fabulous location offer stressed-out entrepreneurs a chance to recharge their batteries with a group of great people who truly get what it's like to run or work in a start-up.

Time to punch the clock on the market, put on the raingear, and go frolic on the beach. Sure, it's like 45 degrees and raining sideways, but I'll take frothy surf for a frothy market most days. Feel free to call me crazy…


Positions in SNUS, PRCS

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