The FDA felt the heat in the 1990s when AIDS activists marched in the streets, shouting about how bureaucratic foot-dragging meant that patients died while waiting for approvals of experimental drugs. The FDA listened. It started clearing more new drugs for sale, and completing safety and effectiveness reviews faster than before.

Now it’s venture capitalists, and their industry friends on Capitol Hill, who are on the move, applying pressure behind the scenes to try to get the same result. Done right, this could be a healthy way to keep the FDA on its toes and allowing valuable new products on the market while protecting public health. But if the lobbyists and their allies in Congress overreach, I worry that this could hobble the agency and turn the pharmaceutical and medical device industry into a lightly-regulated Wild West (remember how that turned out for financial services in 2008?).

The effort to shake up the FDA is still in its early days, and it’s way too soon to say how it will turn out. But it is progressing, and this time the central battleground is in medical devices, and the rallying cry is for saving U.S. jobs.

The argument from the National Venture Capital Association and medical device trade groups is that the FDA, stung by high-profile safety controversies in recent years (think cardiac stents, Vioxx, Avandia), has become so fixated on risks of new products that it is stifling innovation in an industry where the U.S. has a competitive edge. FDA reviews of new medical device applications in particular, the VCs say, have become maddeningly slow, expensive, opaque, and unpredictable. The situation has gotten so bad that U.S. investment in medical technology is declining, companies have been testing and marketing their products in Europe first, and now jobs and operations are moving to Europe.

None of these arguments are new, but for the first time in a long time, I’m picking up signs that VCs and industry groups might get their way at the FDA.

“I do think the pendulum is going to swing back for us,” says Ross Jaffe, a managing director at Versant Ventures in Menlo Park, CA. “Back in the ’90s, the FDA got bogged down and it took pressure from AIDS activists and Congress to go back toward a middle-of-the-road path. Now it’s become too risk-averse. It will take pressure from industry and Congress to get it back to a middle ground.”

Both Democrats and Republicans in Congress, as well as the White House, are paying attention, Jaffe says. Leaders in the biotech drug business are making similar arguments, too, he says. “Congress is getting interested because there’s a sense that innovation is moving overseas. And there are implications for jobs.”

Ross Jaffe

Most of the industry’s self-serving arguments about the need to reform FDA regulation have gone nowhere in the past, partly because they were based on anecdotal horror stories. This time, the industry has been offering more data to back up its claims. It appears to be working.

Back in November, prominent medical device entrepreneur Josh Makower released an industry-supported survey of 204 medical device companies that has become frequently cited. About 85 percent of respondents said European regulators were predictable, compared with 22 percent who said that about the FDA. Companies that spoke to the FDA about running a clinical study for a low-to-moderate risk medical device, through what is known as the 510(k) regulatory pathway, said it took an average of 31 months to get their device approved in the U.S., compared with seven months for comparable applications in Europe. For higher-risk devices, it took 54 months here, and 11 months in Europe. It now costs about $31 million to take a low-to-moderate risk medical device application through the FDA approval process, and $94 million for a higher-risk application with more novel products.

The time, expense, and risk of medical device product development no longer justifies investment in an industry where half of all reported exits are worth less than $100 million, according to the Makower report.

Two months later, PricewaterhouseCoopers weighed in with another report, which said the U.S. is still No. 1 in medical devices, but that the nation’s leadership is eroding.

The FDA appears to be listening. In February, Jeffrey Shuren, who heads the FDA center for review of medical devices, announced the agency proposed an “innovation initiative” to speed up reviews of new medical technology to enable safe and effective innovations to reach the market faster.

Shuren’s explained the need for this initiative in terms that are quite friendly to the industry.

“We must assure that our oversight doesn’t stifle innovation—but rather, … Next Page »

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Columbia, MD-based W.R. Grace & Co said today it has entered into an acquisition agreement with Albany, OR-based Synthetech, to purchase the chemical manufacturer for approximately $19.2 million. Synthetech manufactures fine chemicals, specializing in organic synthesis, biocatalysis, and chiral technologies, for use in the pharmaceutical and biotechnology industries. Its products are used in drugs to treat cancer, cardiovascular issues, AIDS, and other diseases. W.R. Grace says the company will be integrated into its specialty technology business, providing it with manufacturing capacity for specialty single-site and polypropylene catalysts used to make plastics, and expanding its discovery science offerings to include the pharmaceutical sector. Synthetech currently has 63 employees divided between the Oregon facility and an R&D location in San Diego.

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Daktari Diagnostics is finding more support from both nonprofit and for-profit investors to make monitoring the health of HIV patients easy and cheap. The Cambridge, MA-based  startup has added $820,000 to its Series A round this month as it prepares to begin its first clinical trials this summer with its inexpensive technology for measuring an indicator of HIV patients’ health, company CEO Bill Rodriguez says.

The new funding boosts the firm’s first round of financing from $2.88 million to $3.7 million, which includes funding from Boston-area backers such as Hub Angels, Launchpad Venture Group, Mass Medical Angels, Norwich Ventures, Partners Innovation Fund, and individual investors. Separately, the firm has received about $600,000 from The Bill & Melinda Gates Foundation, a prominent Seattle-based nonprofits. And PATH, a global health organization based in Seattle, is funding Daktari’s first clinical trial of its diagnostic for HIV patients in Seattle this summer, Rodriguez says.

Daktari (a Swahili word for doctor) aims to fill an important gap in HIV treatment, initially in developing countries. While antiviral drugs for HIV are widely available in developing countries of Africa and Asia, patients in remote villages often lack access to labs where routine blood tests are done to gauge the strength of their immune system against the virus. So Daktari is working on an inexpensive system that can be easily used almost anywhere, without needing lab technicians to prepare blood samples with pipettes or expensive equipment as in existing tests.

Rodriguez—a physician who served as medical chief for former President Bill Clinton’s … Next Page »

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This week I spoke with veteran biotech executive Una Ryan at her office about her strategy for raising money to advance the cause at the Harvard spinout Diagnostics For All. So it was no surprise to spot her just a few hours later at the McGovern Institute for Brain Research at MIT, networking with accomplished academics and powerful industry types.

Ryan, who began work as CEO of the nonprofit diagnostics firm in early January, needs to network to execute her plan to begin providing its paper-based diagnostic tests to patients in poor countries by the end of this year, because it’s going to require a lotmore money than the two-year-old firm has in the bank today. The good news is that the firm’s co-founder, renowned chemist George Whitesides, along with his collaborators, have finished much of the engineering required to manufacture the nonprofit’s postage stamp-sized devices cheaply and easily. (The nonprofit also gained early acclaim for being a 2008 winner in the prestigious MIT $100K Entrepreneurship Competition.)

Despite the low cost of the technology, it’s going to cost between $2 million and $5 million to begin providing the firm’s diagnostics to the developing world, in part because its products will need additional testing and operational support. It’s an urgent matter, too, since the firm’s tests could catch signs of lethal liver damage in hundreds of thousands of HIV/AIDS patients in poor countries whose medications can have undiagnosed side effects. There are also opportunities to expand use of the technology for patients with diseases such as tuberculosis, malaria, and diabetes.

Therefore, Ryan is leading a multi-pronged effort to raise money at the firm; there is a link on its website where people can make donations online. “It worked for … Next Page »

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In remote villages in Africa, clinics are struggling to deliver timely blood tests to help doctors determine the best way to treat HIV patients. But Bill Rodriguez, a Harvard-trained physician, through his new startup Daktari Diagnostics, is working on a handheld device that could someday perform blood tests for HIV patients virtually anywhere within a few minutes.

Cambridge, MA-based Daktari has generated buzz for its technology and social cause from a bevy of Boston-area backers that have invested a total of $2.8 million to complete its Series A round of financing, says Rodriguez, the co-founder and CEO of startup told me in his first in-depth interview about the company. (We wrote a short story last week that the one-year-old startup had raised $2.5 million, based on regulatory filings, but the firm now says it has raised more money than that.) The Boston-area investors in the startup—a few of which we reported last week—include Norwich Ventures, Partners Innovation Fund, Hub Angels, Mass Medical Angels, Launchpad Venture Group, and Boston Harbor Angels.

Daktari (a Swahili word for doctor or caregiver) has a goal with of producing both social and economic benefits. Rodriguez, who was previously chief medical officer of the William J. Clinton Foundation, said that millions of HIV-positive patients in the world aren’t receiving regular tests that measure the number of blood cells with CD4 markers on their surface—a key indicator of a patient’s immune system strength that can inform a doctor’s decisions on how aggressively to treat HIV. Part of the problem is that the blood tests to get CD4 counts typically must be performed by expensive, bulky instruments called flow cytometers. It’s also difficult to obtain and handle the blood samples because many HIV patients live in remote areas.. Daktari may have a solution: a handheld diagnostic device designed to for use in any setting, without having to manually transfer blood with pipettes or other manual steps.

Some serious players in diagnostics and innovation circles are affiliated with Daktari, including Stan … Next Page »

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Seattle’s biotech community used to be among the top-ranked in the nation. But as some 2,500 layoffs have piled up in the local biotech sector since 2002, Seattle has tumbled in the rankings. We need to face up to this fact first, before we can think seriously about how to get back on our feet as one of the world’s top life sciences clusters.

First, here’s the hard reality. A 2004 Brookings Institution study ranked Seattle ninth out of nine regional life sciences clusters when ranked by the number of companies with more than 100 employees. Later studies, however, put our region on an even lower rung: A 2006 Ernst & Young report ranking the state by the total number of public and private biotech companies, put Washington next to last in a field of 16 states and Canadian provinces, just ahead of Connecticut and after Alberta, Canada. (Granted, these reports are apples and oranges, but no matter how you look at it, the picture isn’t looking good.)

Of course, biotech is suffering everywhere, not just in Seattle. Almost half of the 370 publicly traded biotech companies will run out of cash in the next six to 12 months, according to the Biotechnology Industry Organization. Only about 10 percent of the companies in the industry are cash-flow positive, BIO says.

Big Pharma, as has been widely reported, is also in big trouble. Wyeth, Bristol-Myers Squibb, Pfizer, AstraZeneca, Eli Lilly, Merck, GlaxoSmithKline and others have recently announced large cutbacks in their ongoing research programs. Upcoming patent expirations on their blockbuster drugs, coupled with the fact that they must continue their growth rates to keep Wall Street happy, has put them under tremendous financial pressure. The good news is this: their marketing-driven mantra of the past two decades is slowly giving way to an enlarged scientific and medical focus.

They really have no choice. Much of the low hanging fruit has been picked off of the Obvious Biological Targets tree, leaving them to search out new and unfamiliar vistas to expand their operations. In the case of some drugs that are currently used to treat diseases, genetic factors have been identified that regulate which individuals will respond favorably, and which will not respond at all. Similarly, the ability to look for genetic changes at the molecular level has led to a deeper understanding of the mechanisms that cause diseases. What used to be thought of as a single disease entity is now understood to be an amalgam of distinct disease processes. Each of these disease subgroups may require unique therapeutic interventions. This fragmented targeting of diseases both decreases the size of treatable patient populations while making it more likely the treatment will be effective.

So what can Seattle contribute to this changing industry, to once again become a top-tier biotech city? I think the major factor working against us is a lack of “critical mass” of scientists and experienced managers at all levels. When biotech employees get laid off in Seattle, there is a significant shortage of open positions (which are often very highly specialized) at other local companies. As a result, these individuals must either leave town or change their career focus. A recent scan of the WABio website showed a total of only 50 life sciences job openings in the region. These 50 jobs are not just for biotech companies, but include academic institutions, medical device companies, and contract organizations. Given that there are approximately 71 drug development biotech companies in the Pacific Northwest, that is a minimal amount of hiring going on. This lack of critical mass makes it more difficult to initially attract employees to our region, because people in this industry know that they could lose their job any time, and then find it extremely difficult to find another comparable job in the local community. This is especially true as one gains know-how and rises up the career ladder, since there are fewer positions available for those in top-level jobs. Thus, the most experienced people are the ones who are least likely to be retained locally.

I would like to put forth two proposals, which are not mutually exclusive, that if implemented would help to create a more stable base of biotech jobs here in the Puget Sound region.

Proposal 1 – Use tax breaks or some other forms of financial incentive to convince Big Pharma or Big Biotech that they want to have a beachhead here in Seattle. This would certainly help to create a semi-permanent “base” of stable jobs. Amgen thought it was a good investment to keep a research group here after they acquired Seattle-based Immunex. The Danish drugmaker Novo Nordisk has recently announced that they are setting up a research group here in Seattle (eventually providing 80 jobs) to take advantage of our local research expertise. Massachusetts just had a meeting in the San Francisco Bay Area whose goal was to either get companies to relocate to their state, or at least consider adding satellite research groups there. Let’s see if we can get other big companies to come on board as well. Because they realize they need to revitalize their R&D operations, they know it’s in their interest to be nearby talented academic researchers like the ones we have in Seattle.

Having said that, there are no guarantees, however, that these types of “branch offices” will stay around. … Next Page »

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Billerica, MA-based Millipore (NYSE: MIL), a maker of equipment for life-sciences research and pharmaceutical manufacturing, says it will acquire Guava Technologies of Hayward, CA, under an agreement announced today. Millipore says it will pay $22.6 million for Guava, which makes flow cytometry and cell assay systems, including systems for counting CD4 T-cells in HIV/AIDS patients.

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Not many people in the world have played a leading role in delivering 23 new drugs and vaccines to the U.S. market. Bennett Shapiro is the only person living in Seattle who can say it.

Shapiro, 69, spent the first chapter of his career as a biochemist at the National Institutes of Health, followed by a 20-year run at the University of Washington. He left the chairmanship of UW’s biochemistry department in 1990 to become a leader at Merck. He was executive vice president of basic research during a golden age for the company, and oversaw the emergence of the ill-fated pain reliever Vioxx, and a vaccine to prevent cervical cancer, Gardasil. When he left, he was in charge of global in-licensing, where it was his job to identify the most exciting biomedical research in the world happening outside of Merck and bring it in.

He rarely does interviews, but I spoke with Shapiro in a fascinating 45-minute phone conversation last week while he was in New York. The point wasn’t to reminisce. It was to get up to speed on all the leading-edge science Shapiro has his fingers on right now. For starters, he’s a partner with one of Boston’s leading life sciences venture firms, Puretech Ventures. He’s also on at least a dozen boards to lend his advice to a younger generation of scientists and entrepreneurs at places like Celera, Fate Therapeutics, Ikaria, and the Mind & Life Institute.

“This is a wonderful time in life for me, having both experience and energy,” Shapiro says. “I try to be useful. That’s the name of the game in life.”

If you look carefully at which organizations Shapiro has joined, it shows he has omnivorous interests in a wide variety of life sciences. He has a view of more precise genetic diagnostics (Alameda, CA-based Celera), adult stem cell therapies (San Diego-based Fate), and hibernation-on-demand that could save people from bleeding to death (Ikaria, which has significant operations in Seattle). Another company, Tel Aviv, Israel-based Vascular Biogenics, is developing a novel pill to tamp down the inflammation that causes heart disease to turn deadly. He also has a taste for global health, through the nonprofit Geneva, Switzerland-based Drugs for Neglected Diseases Initiative, which has developed two new drugs for malaria in Africa as well as Asia and Latin America, with only about $70 million of investment. The drugs cost 25 cents for kids, and 50 cents for adults, he says.

I get the impression that a few more Seattle companies would like to tap into Shapiro’s experience more of the time, but he’s careful about how he doles it out. Carl Weissman, president of the Seattle-based startup incubator Accelerator, said that Arch Venture Partners’ Bob Nelsen has had the most success getting Shapiro to lend his advice to young companies. “Ben’s years of experience in developing drugs is not something you find in very many people in Seattle. There aren’t many people around here hanging out at Starbucks who have experience of taking 20 drugs onto the market,” says Weissman, who served with Shapiro on the board of Cambridge, MA-based Elixir Pharmaceuticals.

All this activity requires that he spend a lot of time on airplanes, but Shapiro still spends about one-third to one-half of his time at a waterfront home in Seattle’s Magnolia neighborhood. It’s a refuge, with inspiring views of Puget Sound and the Olympic Mountains, where he likes to read and host friends for dinner. He still skis and hikes in the Cascades, and says one of his favorite things to do is sail on the Sound by the San Juan Islands. “I love Seattle,” he says.

While he was at the UW, Shapiro told me, he never thought he’d leave Seattle. When Merck came calling, he said he had “leftist” ideas about price-gouging pharmaceutical companies, and he wasn’t very interested. “I didn’t think working in the pharmaceutical industry would be a noble undertaking,” he says. … Next Page »

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Nobody ever accused Bruce Montgomery of being a mealy-mouthed, politically-correct businessman. On Microsoft’s own turf, he offered some free advice last night about what to do with an extremely messed-up healthcare IT industry.

“If Microsoft really wants to own the world, create a standardized electronic medical records system and give it away for free the first five years. Then start charging,” said Montgomery, a senior vice president at Gilead Sciences, the world’s largest maker of AIDS medicines, in an event hosted by the Washington Biotechnology & Biomedical Association last night at the Microsoft campus in Redmond.

The problem is that every hospital is using different programs that don’t talk well to each other. Some of these, including one called SAS that’s been favored by the FDA (and universally loathed by pharma companies, from what I gather), deserve to be put out of their misery, Montgomery said. “Put SAS out of business,” Montgomery said. Get some “code monkeys” to work on a modern user interface, he added, and, “You could put them out of business in a week.”

This naturally generated a few laughs, and probably a few nervous ones, at the software company with a troubled history of anti-competitive behavior. Microsoft didn’t make any bellicose statements about world domination last night, but the company clearly has its sights on a big opportunity to make hospitals, pharmaceutical companies, and drug regulators drop their old habits of using paper records and clunky old proprietary programs, in favor of something easier to use and more efficient that captures a patient’s medical records in the doctor’s office, or in clinical trials of experimental drugs.

Zachary Hector, Microsoft’s worldwide pharma industry solutions manager, laid out the broad vision with a slick TV commercial at the beginning. It depicted a young woman who’s pre-diabetic, going for a run, carrying around a PDA-type device that monitored her blood sugar in real-time. The information would be relayed to her doctor, and automatically channeled into a database along with records from other patients in a clinical trial. Later, while going about her everyday chores, the woman would carry a credit card with a fingerprint scanner, which she could stick into an ATM like device to order a diabetes medication.

“Patients are taking more control over their health because of the Internet,” Hector said.

Patients want this kind of predictive information, he said. Market research shows patients care about wellness, prevention, fitness, early detection, disease avoidance, and preventive medicine, Hector says. The age of one-size-fits-all blockbuster drugs like Pfizer’s atorvastatin (Lipitor), which generated more than $12 billion in sales last year, is coming to a close as its patent protection will be dead in 2011. In a world where entire human genomes can be sequenced for as little as $5,000 next spring, a deluge of information is coming about tiny variations in the 6-billion letter string of DNA. Enormous research is being done on how those variations might affect the way certain individuals respond to certain drugs. … Next Page »

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There’s a way to buy prescription drugs for 50 percent off that’s perfectly legal, but requires so much red tape that few people know how to take advantage of it, or even know about it. Except for Wellpartner.

This company is a Portland, OR-based mail-order pharmacy that I learned about several weeks ago during a meeting with a couple of its investors, Joe Piper and Hans Lundin of Seattle-based Integra Ventures. I had never heard of the federal program known as 340B, in which clinics that care for poor people can buy top-selling medicines like Pfizer’s atorvastatin (Lipitor) at half of the average wholesale price that private insurers get charged. Wellpartner’s ability to help clinics get access to these cheap drugs was part of the reason it raised $16 million in August from Burrill & Co., Credit Suisse, Seattle-based Buerk Dale Victor, and Integra. I followed up with Wellpartner CEO Mike Wright and marketing head Robert Judge to learn more about how this works.

One of the key strategies at Wellpartner is to help clinics that serve the poor quit paying full price. With hardly any notice, it has become the nation’s leading provider of prescription medicines through the 340B program. This program started in the early 1990s, through an administrative rule passed by the Centers for Medicare and Medicaid Services, Judge says. It’s meant to provide a supply of meds to federally qualified health centers that now serve as a safety net for more than 17 million people in more than 6,000 facilities around the country. The problem is that many pharmacies that serve the clinics don’t participate in 340B, because red tape dictates that inventory and accounting of these supplies be kept completely separate, to prevent anybody with a solid income from pulling shenanigans to get their drugs for half-off, Wright says.

“Not everybody is scrupulous about these things,” Wright says.

Wellpartner has developed a way around this. Since 2005, it has managed the inventory for community pharmacies who want to place orders for qualified patients, and the pharmacy doesn’t have to keep its inventory separated, Wright says. What this means is that poor patients who need, say, an AIDS medicine like Gilead Sciences’ emtricitabine and tenofovir (Truvada) will have to make much lower co-payments on a cheaper drug, and therefore, they are more likely to follow doctors’ orders to take it consistently, Wright says.

“If you stop taking your meds, your next step can be the mortuary,” Wright says.

Oregon Health & Science University in Portland has a federally qualified health clinic that can buy these cheap drugs, and other clinics tend to be in highly urban or rural areas, or serve Indian tribes, Wright says. Wellpartner makes its money on the prescription orders through transaction fees, Judge says.

The pharmaceutical companies don’t exactly advertise this on TV or anywhere else I’ve seen. … Next Page »

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The Scripps Research Institute, the La Jolla, CA-based nonprofit research center, said today it will establish, along with the International AIDS Vaccine Initiative, the world’s first research center devoted to studying neutralizing antibodies against HIV. The International AIDS Vaccine Initiative will invest $30 million over five years in the center at Scripps, to house teams of scientists from multiple disciplines who will study how to generate broadly neutralizing antibodies against the HIV virus.  Scripps president Richard Lerner called it “the toughest challenge facing AIDS vaccine researchers today,” in a statement.

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