Pfizer was where Pedro Lichtinger learned about pharmaceutical marketing from people who did some amazing things. For starters, New York-based Pfizer (NYSE: PFE) turned an old-school antifungal medicine into a $1.6 billion cash cow. Now as the CEO of San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR) Lichtinger is borrowing some ideas from that experience, looking to make the most of his company’s new antibiotic.

Optimer won FDA approval last May for its first marketed product, a twice-daily pill called fidaxomicin (Dificid). That drug is designed to fight a bug called C.difficile that causes diarrhea so severe it can kill patients, especially frail elderly people. It is a common problem in hospitals. The company got off to a respectable start, generating about $24 million in gross sales in its first six months. But the market for treating this pathogen, after it has been diagnosed in a hospital lab, isn’t huge. Optimer can expect to generate about $153 million in U.S. sales in 2015, according to analyst Eun Yang of Jefferies & Co.

So to get the biggest possible bang out of this new molecule, Optimer is thinking about not just treating “C.diff,” but preventing it. Like Pfizer did with fluconazole (Diflucan), Optimer sees a long-range future in which physicians will prescribe the product as part of a standard regimen as a preventive medicine for patients who are at high risk of getting C.diff and who are likely to face a lot of suffering and high-cost hospital interventions if they get the bug. The initial plan is to start with a clinical trial to prove the Optimer’s drug can help prevent that problematic result in patients undergoing bone-marrow transplants.

If this preventive strategy works, then Optimer’s new medicine could be used by up to 20,000 patients a year who undergo such transplants. Given that the drug is currently priced at $2,800 for a typical 10-day course, and it is likely to go up over time, so it could possibly add another $230 million to $380 million in annual sales by 2020, Lichtinger says.

“I came from Pfizer where this concept was applied to Diflucan, where years ago, it was the first major antifungal applied for prophylactic use,” Lichtinger says. “It’s still used today as a generic. I saw that drug go from a relatively small drug into a $1.6 billion drug as a result of this prophylactic approach.”

He was quick to add that he’s not forecasting Optimer’s drug will approach that rarefied sales figure, but he does add there is a wide variety of other patient groups that could benefit from getting preventive C.diff treatment, such as vulnerable patients undergoing heart or liver transplants, certain cancer patients, or those on ventilators in hospital intensive care units. “The opportunity is certainly even bigger than with the primary C.diff indication,” Lichtinger said during an interview earlier this month at the JP Morgan Healthcare Conference in San Francisco.

Bone marrow transplants seem like an obvious place … Next Page »

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Wall Street didn’t give Affymax much of a chance at success today in front of an FDA advisory committee, but the Palo Alto, CA-based company clearly proved its skeptics wrong.

Affymax (NASDAQ: AFFY) received a 15-1 positive recommendation from an expert panel of FDA advisors today, who said the benefits of its experimental anemia drug outweigh its risks to the heart. The FDA isn’t required to follow the advice of its advisory panels, although it usually does, especially when the vote is so lopsided in favor of a new product being allowed on the U.S. market.

Many investors wrote off Affymax in June 2010, as I described in a feature as a couple of weeks ago ahead of this important FDA advisory meeting. That’s because a quartet of pivotal clinical trials that enrolled 2,600 patients showed that kidney patients who aren’t yet on dialysis had an increased rate of heart-related serious adverse events—such as heart attack, stroke, congestive heart failure, and death—when they got the Affymax drug instead of the usual treatment from Amgen. About 21.6 percent of patients on the Affymax drug had those serious adverse events, compared with 17.4 percent on the Amgen drug.

But Amgen’s drug has been associated with some well-documented safety issues as well, and Affymax’s drug, peginesatide, showed comparable safety and effectiveness in trials that strictly limited enrollment to patients on kidney dialysis. When the total set of evidence was considered, FDA staff said that some of the patients on the Affymax drug may have had worse outcomes because they were sicker when they entered the studies. The FDA has a deadline of March 27 to complete its formal review of the Affymax drug, and if it gives the green light, then peginesatide will be the company’s first marketed product, and the first drug ever to directly challenge Amgen’s 22-year monopoly in treating anemia of kidney dialysis patients.

Affymax hasn’t yet settled on a pricing strategy for its anemia drug, but CEO John Orwin suggested in an interview last month that his company could be in a position to compete by offering a lower-priced, fewer-hassles, yet highly effective alternative. This will be one of the key dynamics to watch as Affymax gets closer to its FDA decision date, and it will be fascinating to see what Amgen does, if anything, to respond.

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Dendreon has never lifted a finger to develop any new drugs for hepatitis C, but now the Seattle cancer drug developer is getting $125 million in cash for its stake in the emerging market for the chronic liver infection.

The company (NASDAQ: DNDN) said today it made the money by selling off the rights to its royalty stream related to boceprevir (Victrelis), a new hepatitis C drug. Dendreon sold the royalty rights to CPP Investment Board.

While Dendreon has always invested its time and money in developing cancer drugs, it obtained the hepatitis C intellectual property through its 2003 acquisition of San Diego-based Corvas International. Corvas had licensed its IP to Schering-Plough, which used it in part to develop boceprevir, a protease inhibitor for hepatitis C. Schering-Plough is now owned by Merck, and Merck started generating revenue from the intellectual property in May when it won FDA approval of the new drug. Dendreon didn’t disclose what percentage it gets from worldwide sales of Victrelis, but the company said it collected $2.9 million in royalties from Merck in the three-month period that ended Sep. 30, according to its most recent quarterly report.

“The sale of the Victrelis royalty interest allows the company to strengthen our cash position, and enables us to further invest in our core business initiatives,” said Greg Schiffman, Dendreon’s chief financial officer, in a statement.

Dendreon certainly has found itself in a position where it needs to scrape together cash any way it can. The company is on track to fall way short of the $350 million to $400 million sales forecast it had this year for its lone marketed product, sipuleucel-T (Provenge) for prostate cancer. The sales shortfall prompted Dendreon to lose more than 60 percent of its market valuation, and prompted Dendreon to cut 500 jobs back in September. Despite the cost cuts, the company still burned through $106 million of cash in the most recent quarter. It had $568 million in cash and investments left in the bank at the end of September.

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When the Institute of Medicine (IOM) released its report on chronic pain late last month, medical device makers cheered.

“A landmark report,” a Boston Scientific press release gushed.

“Chronic pain is a major public health issue, and we applaud Congress [and] the IOM…for their thoughtful recommendations,” Medtronic senior vice president Tom Tefft said in a statement.

Mandated by President Obama’s healthcare reform law, the IOM report laid out ways for the country to improve research and treatment of chronic pain, a condition that affects 116 million Americans.

So why such a big deal to medical device companies?

First, let’s start with the obvious. Pain management, through neuromodulation devices that shoot electricity into the nervous system, has become big business for medical device industry, especially its Big Three: Boston Scientific, Medtronic, and St. Jude Medical. Any high profile report that highlights a potential market of 100 million-plus patients is a good thing for those companies, especially as sales in core devices like pacemakers and implantable cardioverter defibrillators (ICDs) slows considerably.

Take Boston Scientific, based in Natick, MA. Neuromodulation was one of the few bright spots for the company in an otherwise dismal fiscal 2010. Sales of neuromodulation devices, including Precision Plus spinal cord stimulation (SCS) therapy, rose seven percent to $304 million from 2009 while cardiac rhythm management sales (pacemakers and ICDs) dropped 10 percent to $2.1 billion.

Medtronic, headquartered in Fridley, MN, has high hopes for its RestoreSensor SCS device, set to launch in the United States the first quarter of fiscal 2012. The company estimates a potential worldwide market of $1 billion for the device, which can adjust the amount of electricity it shoots into the spine depending on the patient’s position (walking, standing, lying down).

And earlier this week, St. Jude Medical, based in Little Canada, MN, said the Food and Drug Administration approved a limited release of its Epiducer lead (wire) system for SCS therapy. The system allows doctors to insert multiple leads into patient through one entry point.

But the IOM report is noteworthy for two other reasons.

First, the report declares chronic pain to be a “significant public health problem.” While this may seem fairly … Next Page »

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Stryker has not been shy about shopping for acquisitions of late. Last year, the Kalamazoo, MI-based company bought Boston Scientific’s neurovascular unit for a cool $1.5 billion, its most high profile (and expensive) deal in recent memory.

But I’d argue Stryker’s most significant purchase of late occurred in 2009 when the medical device maker bought Ascent Healthcare Solutions for the relatively small sum of $525 million.

Why? Ascent is one of the nation’s largest recyclers of single-use medical devices and the natural scourge of new medical device makers like…Stryker. In this corner of the medical device business, companies like Ascent and SterilMed take previously used devices like ultrasound catheters and compression sleeves, spruce them up, and sell them back to hospitals. That process, known in the trade as reprocessing, obviously cuts into sales of original device manufacturers. Why buy a new catheter when you can buy an almost-good-as-new-one for half the cost?

A cynic at the time might have theorized Stryker’s purchase of Ascent was a ploy to exterminate a pest from the market. Stryker says its motive was quite the opposite.

“I’m not saying it was ‘if you can’t beat them, then join them,’” says Marci Kaminsky, Stryker’s vice president of communications and public policy. “We saw it as a burgeoning industry that we would like to be a part of.”

In some ways, Stryker’s embrace of a business it has long opposed speaks volumes to not only the growing popularity of reprocessors but also the shifting healthcare landscape bedeviling the broader medical device industry.

By some estimates, reprocessors generate $250 million to $500 million a year in sales, a small, but fast-growing slice of the overall medical device pie. A 2009 report by GlobalData estimates the reprocessing market will generate a 9 percent annual growth rate and hit $1 billion in sales by 2015.

Faced with a weak economy, hospitals are trying to control costs by shunning shiny new devices in favor of less expensive reprocessed products, analysts say.

“The economic recession has played its part in boosting the reprocessing industry,” the GlobalData report says. “Dwindling cash reserves have pushed hospitals and clinics towards tightening hospital spending. In the U.S., it has now become the norm for hospitals to reprocess [devices]- with some level of processing now being undertaken in 70 percent of hospitals nationwide.”

Understandably, medical device makers are not too pleased. Though reprocessed devices are typically … Next Page »

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WTF!

You can forgive medical device investors and CEOs if they’ve uttered that not-so-family-friendly acronym during the last year or so.

First, the Food and Drug Administration signals it will likely tighten restrictions on the popular 510(k) regulatory program, which allows device makers to quickly develop new products that are slightly better or different than previous generations. Then Uncle Sam slaps the industry with a 10-year, $20 billion tax to help pay for healthcare reform. Politicians on both the right and left predict Medicare will soon start paying less than it does today for certain medical devices.

Compare this with the relative love the feds have bestowed on the drug industry. On the eve of the State of the Union address, Obama Administration officials announced the creation of a $1 billion drug development center to speed the commercialization of therapies. This comes on top of the $1 billion in tax credits the federal stimulus program gave biotech startups last year.

So what has happened?

It was only a few years ago that the public demonized Big Pharma as greedy institutions that opposed the sale of generic drugs to protect their multi-billion dollar profits. Now the medical device industry seems to be bearing the brunt of rage from Washington DC.

There’s no one simple answer. But the shift in fortunes can be traced to a number of factors, including healthcare reform, the erosion of the business model underpinning Big Pharma, and political ineptitude from the medical device industry.

YOUR TURN—The FDA tends to regulate by crisis. For the medical device industry, that crisis was Sprint Fidelis, the ultra-thin wires that connect implantable cardioverter defibrillators to the heart.

In 2007, Fridley, MN-based Medtronic issued a worldwide recall of … Next Page »

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The holiday left a void of sorts in San Diego’s life sciences news, or maybe everybody is prepping for J.P. Morgan’s big biotech conference in San Francisco next week. Either way, we’ve got the latest update here.

—Luke profiled John Mendlein as a life sciences jack-of-all-trades who made his name as a CEO in 2007, when he sold Waltham, MA-based Adnexus Therapeutics to Bristol-Myers Squibb for more than $500 million. Mendlein, who is a surfer, scientist, lawyer, and biotech executive, is now a “parallel entrepreneur.” He’s a hands-on board member at three San Diego biotech startups pursuing big ideas: Fate Therapeutics, aTyr Pharma, and Alevium Pharmaceuticals.

—Pfizer agreed to pay $14 million to Santaris Pharma, the developer of RNA-based therapies in San Diego and Denmark, to continue development of drugs that target ribonucleic acid, a new avenue of research. Santaris might get as much as $600 million if it is able to meet certain research milestones, as well as royalties on as many as 10 products Pfizer may develop over time using its RNA technology.

—A report by Thomson Reuters and the National Venture Capital Association counted 72 venture-backed IPOs during 2010—including initial public offerings for San Diego’s Trius Therapeutics and Zogenix. Healthcare-related IPOs accounted for 11 percent of all 154 IPOs that took place over the past 12 months, according to Renaissance Capital, which tracks all types of IPOs.

—Even though the 17 new biotech issues that debuted on the U.S. market in 2010 were plagued by lackluster receptions (selling fewer shares well below the pricing range), biotech guru Steven Burrill predicts that at least 25 biotech IPOs, possibly more, will be completed in the US in 2011. Burrill, a California biotech specialist, venture capitalist, and keynote speaker, also says he sees no slow down in Big Pharma’s appetite for biotech partnering.

—The final numbers on drugs approved … Next Page »

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We saw first-hand the increasing convergence of advanced information technologies and the life sciences here in San Diego last week. The trend was evident in the formation of a new institute for wireless healthcare, and in a roundtable discussion about personal medicine at UC San Diego that highlighted the need for easy access to electronic health records. Those stories, and the rest of the region’s BizTech news, below.

San Diego is now the home of a new medical research institute that specializes in using wireless sensors and technologies to advance health care. With $45 million in funding from the Gary and Mary West Foundation announced last week, the West Wireless Health Institute will test the use of wireless devices in clinical research to help prevent, diagnose, monitor, and treat conditions ranging from Alzheimer’s to heart disease and obesity.

San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) said a late-stage clinical trial of its drug lorcaserin met a key criteria for weight loss drug candidates set by the U.S. Food and Drug Administration. But investors were underwhelmed by the results, which showed that patients on the drug lost only about 3.6 percent more body weight than patients on a placebo. Arena still has two more clinical trials to complete, however, before seeking FDA approval.

Human Genome pioneer J. Craig Venter told scores of venture investors that Synthetic Genomics, the San Diego startup he co-founded, has engineered a species of microbes to “eat” coal and produce methane gas. With interest rising in San Diego’s emerging cleantech cluster, Venter said he’s close to making an announcement about demonstrating the technology on a larger scale.

The U.S. Department of Health and Human Services sponsored a roundtable discussion about personalized health care at UC San Diego as a way to map future funding and research priorities through 2020. But that future could arrive sooner, as the federal government plans to spend more than $19 billion on electronic health records.

Genoptix (NASDAQ: [[ticker;GXDX]]) founder and CEO Tina Nova told Luke her company has become profitable by filling a gap among laboratory testing services. Genoptix operates a specialized facility that provides a comprehensive package of diagnostic tests for cancers of the blood.

Technology developed under a Pentagon program enabled San Diego’s Avaak to develop a commercial product for home or business monitoring that will be released … Next Page »

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DOE Plan Would Cut Emissions from Buildings

The U.S. Department of Energy says that, with proper building techniques and renewable energy installations, a majority of commercial buildings could reach zero emissions of greenhouse gases within 20 years. Now the DOE is kicking in $15 million to give companies access to its scientists and engineers to help achieve that goal, Ars Technica reports. The plans apply both to new buildings and to the retrofitting of existing structures.

Software Tracks Stolen Laptop but Hides Owner

Security experts are always concerned about the theft of laptop computers, which have led to both national security breaches and the theft of private financial information. There’s software available to keep track of where a laptop is, but privacy advocates worry that it can also be used to spy on the laptop’s owner. Now, Technology Review tells us, encryption specialist Tadayoshi Kohno of the University of Washington has developed software that tracks a laptop only after it’s been stolen, thanks to the use of an encryption key that only the rightful owner can unlock.

Click It Before You Tick It

Better buckle up on Election Day. A study in the Journal of the American Medical Association says traffic deaths tend to go up on Election Day, with an average of 24 more fatalities than on other Tuesdays in October and November. According to the Associated Press, the researchers cited, as possible reasons, people rushing to get to polls before and after work, driving on unfamiliar roads, and being distracted by thoughts of the choice they had to make. (The study did not examine whether despair at the prospect of the wrong guy winning played a role.)

Wind Turbines Not Bad for Birds, Study Finds

Wind turbines do not drive away birds from an area, according to a study by Newcastle University in England. The researchers measured the population density of 23 bird species at different distances from the turbines and found that the machines made no difference, Reuters reports. The one bird that is apparently affected, however, is the pheasant.

U.S. Lags in Broadband Growth

The U.S. has the largest raw number of subscribers to broadband Internet connections, but China will soon surpass it, and Europe has faster growth, according to an analysis by the research firm Point Topic. GigaOm reports that Germany and the United Kingdom have the fastest subscription growth, and about 26 percent of Belgium’s citizen have broadband connections. China, by contrast, hasn’t yet hit 6 percent of its 1.32 billion population.

Google Tells You Where to Vote

Google, which seems to have a hand in everything these days, is hoping to help get out the vote in the presidential election. As the company says on its public policy blog, its U.S. Voter Info Guide is already up and running in Ohio, which has started early voting, allowing people to type in their home address and find out where to register and where to vote. Google hopes to have the information available for all 50 states by the middle of this month.

New Flu Test Speeds Results

If a deadly new strain of flu emerges, public health officials can be right on top of it, now that a faster genetic test for flu strains has been approved by the Food and Drug Administration. The Los Angeles Times reports that the test can identify a strain of the flu within four hours, instead of the four days required by older tests. Between 20 and 30 state laboratories should be ready to perform the test by the end of the year.

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National Academy Advises Candidates on Science

The National Academy of Sciences has issued a report advising the presidential candidates on how to deal with science-related issues. According to Ars Technica, the NAS says that most major issues for government, including climate, healthcare, and intelligence gathering, have some science and technology components. The group is calling for the next president to appoint a personal science advisor in his early days in office.

Obama Reveals Science Advisors

Democratic presidential candidate Barack Obama is right on top of the science advisor issue. The campaign told Wired that the candidate is getting science advice from five noted scientists, including Nobel laureates Harold Varmus and Peter Agre. The magazine says Republican nominee John McCain has ignored repeated requests to identify his science advisors.

Software Teases Out Campaign Spin

Obama is a master of political spin, while McCain gave it to them straight during his convention speech, according to a computer scientist who claims his software can detect spin in political speeches. New Scientist reports that David Skillicorn of Queen’s University in Kingston, Ontario, Canada, has developed an algorithm to analyze word usage in a speech. Among his assumptions: “I” is more honest than “we” and action verbs tend to indicate greater levels of spin.

FDA Issues Rules on Genetically Altered Animals

The Food and Drug Administration is issuing regulatory guidelines on the genetic engineering of animals, which experts say should help spur development in a potentially huge field. The Washington Post says the rules will let biotech companies know what the FDA expects to know about the development of bioengineered animals, from which snippets of DNA are being inserted into their genome to what is done with their bodies when they die. Biotechnologists hope to improve animals for food, as well as use them to produce medically useful substances.

Rural America Lagging in Broadband Access

Individuals and businesses in rural parts of the country are stuck with slow dial-up connections to the Internet because access providers don’t find it economically feasible to provide broadband access in sparsely populated areas, BusinessWeek reports. Only 38 percent of households in rural America have high-speed Internet connections, compared to 57 percent in cities and 60 percent in suburbs. Now a group called Connected Nation is trying to boost broadband availability, following the model of old rural electrification programs.

U.S. Exports Harmful E-Waste, Report Finds

Your old computer monitor may be contributing to pollution in Asia, according to a report from the federal Government Accountability Office. The GAO report found that many U.S. electronics recyclers are shipping cathode ray tubes overseas in violation of Environmental Protection Agency rules, and that other potentially toxic electronic waste is not even regulated, PC World reports.

Chemists Promise Photosynthesis in Lab as Fuel Source

Chemists are working on an artificial version of photosynthesis that could be used to split water into oxygen and hydrogen, which could then be used to power fuel cells. Nature says they’re optimistic—one MIT professor guarantees he’ll have a device for cheaply producing hydrogen in less than five years. A cheap source of hydrogen could revolutionize energy supply the professor, Dan Nocera, claims.

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FDA Approves Intel Health Guide

Microprocessor-maker Intel is getting into the high-tech health business: its Health Guide has won approval from the Food and Drug Administration. The device records vital signs and allows for videoconferencing with doctors or nurses in remote locations. Daily Tech says Intel is marketing the device to nursing homes and care centers, and also expects that chronically ill people who live in their own homes might purchase the Guide.

Organic Dyes May Lead to Cheaper Solar Panels

In an effort to make solar cells more affordable, researchers at the Massachusetts Institute of Technology have developed a set of organic dyes that can be coated onto glass to concentrate sunlight for photovoltaic cells underneath. Technology Review says the dyes help collect sunlight and channel it to the cells, much like a fiberoptic cable directs light. The lead researcher, Marc Baldo, says this technique could lead to solar power that is cheaper than coal.

Whales’ Tails May Produce More Wind Power

Studying the mechanics of the fins and tails of whales and dolphins could lead to better-designed wind turbines, Discovery Channel tells us. Researcher Frank Fish of West Chester University in Pennsylvania has been modeling the aerodynamic properties of fins. He finds that adding bumps to a turbine, like those along a humpback whale’s fin, allows it to capture more wind without stalling.

Nanotubes May Make Artificial Photosynthesis Possible

Scientists would love to be able to emulate what plants do so easily – turn sunlight into chemical energy. Now, New Scientist says, researchers have found that carbon nanotubes can mimic an important step in the process, involving the transport of multiple electrons, that scientists haven’t been able to replicate. Artificial photosynthesis could be used to efficiently produce hydrogen for fuel cell vehicles, and even to remove some carbon dioxide from the atmosphere.

FCC to Test White-Space Devices

High-tech companies would love to use portions of the electromagnetic spectrum that are set aside for television broadcasts (but not being used) for various mobile communication devices. The Federal Communications Commission has yet to issue regulations for this so-called white space. But according to CNN, the FCC says it will begin testing prototype devices from Microsoft, Motorola, and Philips next week.

GOP Seeks to Build its Platform on Facebook

The Republican Platform Committee has launched a website and a Facebook application to solicit public input on its party platform. TechCrunch points out that this may just be a ploy to collect email addresses and solicit donations, but that if the group is sincere, they could start a real public dialogue. No word on whether their Facebook presence will allow you to hug, tickle, or throw a sheep at John McCain.

IBM Wants to Promote “Smart-Grid” Applications

IBM is in the process of creating communications protocols and data formats for so-called “smart grid” devices, inventions designed to make the public electrical grid more flexible and reliable. For instance, a homeowner may have a device connected to an air conditioner that turns up the temperature setting if power demand on the grid becomes too great. CNET News reports that IBM is hoping a common set of standards will make the creation of such devices easier for startup companies.

Mini Cooper Goes Electric

BMW has announced it will start producing an electric Mini Cooper. Motor Trend reports that testing of the vehicle will take place over the next 12 to 18 months. The automaker has not announced what kind of electric engine the Mini Cooper will use.

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