San Diego’s biotech news picked up in pace following the Thanksgiving holiday, with Phenomix announcing a major partnership, Santarus benefitting from FDA approval of its over-the-counter heartburn drug, and Receptos getting a VC infusion. Our Xconomy post-holiday news feast is ready, so come and get it:

—After forming a partnership last year with New York-based Forest Laboratories, San Diego’s Phenomix says Italian pharmaceutical company Chiesi Farmaceutici has agreed to help commercialize its diabetes drug in Europe and elsewhere. Chiesi has agreed to pay Phenomix as much as $163 million if all milestones are met, including $28 million in near-term cash and equity.

—Prominent algae biologist Stephen Mayfield, a co-founder of San Diego’s algae-to-biofuels startup Sapphire Energy, told Denise that algae could become just as important to the biotech industry as it is now with the renewable energy industry. Mayfield, who also founded Rincon Pharmaceuticals, showed earlier this year that algae could be used to produce an anti-anthrax antibody—and other projects are testing the feasibility of using algae to produce anti-tumor drugs and even a malaria vaccine.

—San Diego’s Santarus (NASDAQ: SNTS) said the FDA approved a request by its corporate partner, the Schering-Plough unit of Merck, to start selling an over-the-counter version of its heartburn drug omeprazole (Zegerid). Approval of the lower-dose version of the heartburn drug means that Santarus can collect a $20 million milestone payment, and is eligible to get additional payments based on sales.

—Receptos, a San Diego-based biotech with a new way of taking the guesswork out of drug discovery, is the recipient of $25 million in venture capital from Arch Venture Partners, Flagship Ventures, Lilly Ventures, and Venrock Associates. Receptos also got something else from Venrock: Bill Rastetter, a Venrock partner who was the CEO of Idec Pharmaceuticals before it merged with Cambridge, MA-based Biogen, has joined Receptos as CEO.

—San Diego-based Ocera Therapeutics may have a drug for treating hepatic encephalopathy, a complication among people with cirrhosis of the liver that causes ammonia levels to build up in the bloodstream, eventually causing cognitive disorders. The company has raised $62 million in three rounds of financing from a group of prominent VC firms—including Domain Associates, Sofinnova Ventures, InterWest Partners, and Thomas, McNerney & Partners.

—Luke has been extremely enthusiastic about the speakers he’s recruited to speak about biotech innovators and innovation at Xconomy’s Dec. 14 event in San Diego. The afternoon session includes talks by Caltech’s David Baltimore, the Nobel Laureate and a co-founder of Carlsbad, CA-based Helixis, and John Maraganore, the CEO of Cambridge, MA-based Alnylam Pharaceuticals (NASDAQ: ALNY). Check out the full list of speakers, and register online here. It will be a great networking opportunity and we want to see you there.

Comments | Reprints | Share:          

San Diego-based Santarus (NASDAQ: SNTS) got some good news late today. The company’s partner, the Schering-Plough unit of Merck, has gotten clearance from the FDA to start selling an over-the-counter version of Santarus’ fast-acting heartburn drug.

U.S. drug regulators gave the green light for capsules of omeprazole (Zegerid OTC) in a 20 milligram dose, a lower dose version of omerprazole that now sells only by prescription. This means Santarus can collect a $20 million milestone payment, be eligible for another $37.5 million in sales milestones, and be entitled to a “low double digit” percentage royalty on sales, Santarus said in a statement. The product is expected to hit retail store shelves in the first half of 2010.

Shares climbed 31 percent to $5.62 in after-hours trading following the announcement.

The market for prescription heartburn drugs is enormous. When I first profiled Santarus back in October 2008, I noted that competing drugs, sold as AstraZeneca’s Nexium, Takeda Pharmaceutical’s Prevacid, Wyeth’s Protonix, and others, generated a mind-boggling $14 billion in U.S. sales in the 12-month period that ended July 31, 2008, according to IMS Health data. Santarus had captured just a small slice of this market with omeprazole (Zegerid).

While offering a cheaper over-the-counter version of the same drug might sound like a good way to cannibalize the existing market for a higher-priced drug, Santarus CEO Gerry Proehl told me he saw it completely differently. Getting the marketing muscle of Schering-Plough (now Merck) into TV commercials and other marketing outlets is likely to build up much greater brand awareness of the Zegerid name, which could help boost sales of Santarus’ prescription product that goes by the same name (except without the OTC, or over the counter, suffix).

Proehl repeated that claim in a statement today. “We believe the consumer advertising and publicity associated with the launch of Zegerid OTC will increase awareness of the Zegerid brand.” Part of the reasoning is that while over-the-counter buyers will get the drug in a 20 milligram dose, people who need a stronger 40 milligram dose will still have to get a prescription. We’ll see how well this all translates into sales for Santarus, but it’s a sure thing that the brand name of its heartburn drug just got a lot more valuable.

Comments | Reprints | Share:          

Isis Pharmaceuticals CEO Stanley Crooke is a man who knows how to make a grand gesture. The market may have been underwhelmed by what Isis and its partner, Genzyme, had to say about their first-of-a-kind cholesterol-lowering drug back in May, but to him that just means they’re missing the point.

When I stopped by to visit Crooke at the company’s (NASDAQ: ISIS) Carlsbad, CA, headquarters a few weeks ago to ask about his lead drug in development, mipomersen, he didn’t just offer up the usual optimistic platitudes. He said it’s going to be historic.

“In 30-plus years in drug discovery and development, I’ve been involved with 19 drugs that have made it to the market and 200 to 300 that haven’t,” Crooke says. “I’ve encountered two in my career that were amazing.”

One was cisplatinum chemotherapy for cancer. The other was cimetidine (Tagamet) for heartburn, Crooke says. “Mipomersen is the third one that’s remarkable.”

That’s a strong statement given that investors drove down Isis shares by 10 percent on heavy volume on May 20, after seeing their first glimpse of data from a pivotal trial of mipomersen. Expectations have been sky-high for this drug for a couple years now, as the next big thing for cholesterol after the invention of multi-billion dollar statin drugs such as Pfizer’s atorvastatin (Lipitor). Cambridge, MA based Genzyme (NASDAQ: GENZ) was said to outmaneuver more than a dozen rivals that wanted to co-develop mipomersen. In January 2008 Genyzme paid the princely sum of $325 million in upfront cash, plus $1.9 billion in potential milestone payments, (and potentially much more in future profit-sharing), to get a piece of ownership in this drug.

Stanley Crooke

Mipomersen has generated so much interest for at least a couple big reasons—the need for more powerful cholesterol-lowering drugs for patients who can’t get those levels under control with conventional statins, and because it represents a potential standard-bearer for Isis’ antisense technology. It’s designed to use specially engineered strands of RNA drugs to block a problematic protein in the body, which often can’t be hit by conventional small-molecule drugs. In this case, mipomersen is engineered to block the production of a protein called apoB that carries the so-called “bad” LDL cholesterol in the bloodstream.

In May, Isis and Genzyme declared victory in a press release that announced the first pivotal clinical trial of mipomersen. The companies said that of 51 patients with a rare genetic abnormality called homozygous familial hypercholesterolemia that causes high cholesterol, the drug was a success. Patients on mipomersen had a 25 percent reduction in their LDL cholesterol counts, compared with a 3 percent drop for those on a placebo. The drug also reached its secondary goals, including showing an apoB protein reduction which correlated with the cholesterol-lowering—an important point for scientists and physicians.

But the market didn’t see it as reason to cheer. Patients with this genetic abnormality are seriously ill, with LDL cholesterol scores at an eye-popping 400 milligrams per deciliter of blood when they entered the study. (Anything below 200 is considered desirable, according to the Mayo Clinic).

So simple math says that a 25 percent reduction from 400 takes those patients down to about 300, which might be good, even unprecedented for such sick patients, but it’s still not what most patients and doctors would consider healthy. Plus, there were six patients who didn’t complete their course of treatment after they were enrolled in the study, which certainly didn’t help.

So why was Crooke so enthused? He walked me through some of the context around the data that will be presented next month at the American Heart Association’s scientific sessions in Orlando, FL.

What’s remarkable, Crooke says, is that mipomersen works in every animal, and in every … Next Page »

Comments (11) | Reprints | Share:          

Ascent Therapeutics is advancing several of its proprietary “pepducin” drugs through early testing, with a lead candidate emerging as a potential rival to Genzyme’s drug plerixafor (Mozobil) for patients with certain types of blood cancer. Cambridge, MA-based Ascent is touting some of its early research at a biotechnology conference in Zurich, Switzerland this week in hopes of attracting new pharmaceutical partners.

Rick Jones, CEO of Ascent, spoke with me from the Sachs Biotechnology in Europe Conference in Zurich yesterday about the startup’s research progress. Among other developments, the firm is saying that its drug was at least as effective as Genzyme’s plerixafor in spurring the movement of stem cells out of the bone marrow in animal tests. The potential drug could be used like plerixafor for patients with such blood cancers as non-Hodgkin’s lymphoma and multiple myeloma who need blood-forming stem cell transplants.

Ascent has enough cash in the bank from its $19 million Series A round to support its operations for about a year, Jones said. That’s not a long time in biotech, since it often takes a decade or longer to develop and garner approval for a new drug. The CEO wants to form two or more partnerships with large pharma companies not only to advance his company’s research funding and scope, but also to win more confidence from venture backers and attract future rounds of financing. Meantime, Jones is hoping that Swiss drug giant Novartis opts to exercise an option it has purchased from Ascent to gain certain rights to the drug candidates for undisclosed uses.

“With the current environment we just can’t go out and ask for $20 million or $30 million to get ourselves into the clinic without having some other proof that we’ve succeeded in building up this platform,” Jones said. “And the venture capitalists are basically telling me that what they’d like to see is another couple of [pharma] companies buy into the platform.”

In a sense, Ascent is fortunate to have closed its first round of venture capital—from blue chip VC outfits including … Next Page »

Comments | Reprints | Share:          

Medical device firm EndoGastric Solutions, based in Redmond, WA, and Redwood City, CA, has raised $7.5 million in funding, according to a regulatory filing. The company makes devices to combat heartburn and obesity, and previously raised $79 million in venture funding from the likes of MPM Capital, Advanced Technology Ventures, and DeNovo Ventures. EndoGastric was originally incubated at Scout Medical Technologies in Kirkland, WA.

Comments | Reprints | Share:          

San Diego specialty drug firm Santarus (NASDAQ:SNTS) says it has struck a deal with a unit of Italy-based Cosmo Pharmaceuticals (SIX:COPN) to commercialize two Cosmo drugs in the U.S. The drugs—which are extended-release versions of budesonide, a steroid, for ulcers and rifamycin, an antibiotic, for traveler’s diarrhea—are in clinical development in Europe and the U.S.

Santarus will pay Cosmo $2.5 million in cash and 6 million shares of Santarus common stock. Cosmo is also eligible for up to $72.5 million in clinical, regulatory and commercial milestone payments from Santarus. The company also will give Cosmo $2.8 million before the end of January 2009 to cover a portion of Cosmos’ expenses from developing budesonide in late-stage U.S. clinical trials through mid-November 2008. Santarus is now responsible for 50 percent of development costs for budesonide in the U.S. and all costs for U.S. development of rifamycin.

The deal has the potential to bring two more drugs to Santarus’ product portfiolio, which already includes drugs metformin hydrochloride (Glumetza) for type 2 diabetics and omeprazole (Zegerid) for heartburn. (Luke wrote about Santarus’ efforts to take on drug giant AstraZeneca in the market for chronic heartburn drugs in October.)

Comments | Reprints | Share:          

If you own a television, you’ve probably heard of the purple pill. It’s a marketing hit for chronic heartburn, sold under the name Nexium, brought to you by pharmaceutical giant AstraZeneca. Calling this a tough market to crack would be an understatement, but the folks at San Diego-based Santarus are willing to play the role of David against this particular Goliath.

Santarus (NASDAQ: SNTS), a specialty pharmaceutical company with 340 employees and a market capitalization of less than $100 million, sees itself grabbing more of the market than it already has for chronic heartburn meds with its product, Zegerid. CEO Gerry Proehl explained he intends to grab more market share with an alternative that goes to work faster than the others, and may last longer.

Chronic heartburn is one of the more common diseases in this pizza-and-fast-food-loving nation. The leading treatments for this condition are proton pump inhibitor drugs that work by stopping the secretion of excessive acids that can wash up the esophagus, causing the painful, burning sensation of heartburn. These drugs, sold as AstraZeneca’s Nexium, Takeda Pharmaceutical’s Prevacid, Wyeth’s Protonix, and Johnson & Johnson’s Aciphex, among others, generated a whopping $14 billion in U.S. sales in the preceding 12-month period through July, according to IMS Health. Zegerid, which came late to this party with FDA approval of its initial form in 2004, has captured just a tiny sliver of the market. Santarus expects total revenues this year of $115 million to $125 million, mostly driven by Zegerid.

“These drugs generally work fairly well,” Proehl says. Yet he adds, “We think we have a better mousetrap.”

How’s it different? That requires some explanation. The standard treatments all have a coating that protects them in the highly acidic environment of the stomach, which sheds off in the more neutral pH environment of the small intestine, where they get absorbed, Proehl says. One catch is that drugs in this class, like the now-generic Prilosec, can take as long as 90 minutes to three hours to get to their peak concentration in the blood, Proehl says.

Zegarid works like the other proton pump inhibitors, but it doesn’t have that protective coating. Instead, it’s combined in a capsule, or a powder form, with an antacid. That makes the environment in the stomach a lot friendlier for the drug to sneak on by for about 30 minutes without danger of being prematurely degraded, Proehl says. This way, Zegerid can get to peak blood concentration in 30 minutes, he says.

That sounds fine, but since most patients take these heartburn drugs every day instead of when they have an episode of heartburn, I wondered why that matters much. This is a key question, which a lot of doctors have as well, and Proehl made it clear they’ve been working hard to answer it. The answer is that the other drugs often go to work after a meal, but aren’t as good with treating heartburn at nighttime, on an empty stomach. Zegerid has been shown in clinical trials to control stomach acid better through the night when taken before bed, Proehl says. On an investor presentation slide, he sums it up: “Zegerid provides night and day continued acid control.”

Proehl also hopes to take advantage of an opportunity being created as these drugs switch to generic forms. The big drugmakers are spending less money promoting them than they once did, and are now sitting back reaping the profits. That’s fortunate for a small company trying to get in the door with busy doctors.

Still, the years of marketing proton pump inhibitors has helped cement physician habits over the years in writing prescriptions for the big guys, Proehl says. So Santarus hopes to sell its product to patients who don’t respond well to the other products, and to new patients. Santarus plans to counter the threat from cheap over-the-counter meds by emphasizing that its higher-dose prescription works better on tough cases of heartburn.

In a very interesting twist, Santarus has formed a partnership with pharma heavyweight Schering-Plough to market an over-the-counter form of Zegerid, and the FDA’s deadline to complete its review of the drug is set for January, Proehl says. Instead of cannibalizing sales of the higher-margin branded drug, Proehl says it will be a boost to his company’s bottom line. Santarus will get royalties on sales generated by Schering Plough, without any added expenses on its part. It hopes that the bigger company’s ad campaign raises awareness about over-the-counter version of Zegerid will rub off on its brand-name original product. “These guys are going to do significant marketing,” Proehl says.

It may not ever be as big a brand as Cheerios or the purple pill, but it sounds like Zegerid will soon be entering the public vocabulary and will see its opportunity grow. I suppose people might get off the couch and eat more vegetables, decreasing demand for these drugs, but I wouldn’t bet on it.

Comments (1) | Reprints | Share: