Receptos, a San Diego-based biotech startup formed by a number of Biogen Idec veterans, has nailed down $25 million in venture capital to develop a vivid new way to look at certain protein structures on cells that it hopes will ultimately take a lot of the guesswork out of drug discovery.

The cash infusion is coming from Venrock Associates, Arch Venture Partners, Flagship Ventures, and Lilly Ventures. Bill Rastetter, a partner at Venrock who was the CEO of Idec Pharmaceuticals before it merged into Cambridge, MA-based Biogen Idec, has joined Receptos as CEO.

The big idea for the fledgling company comes from the labs of Ray Stevens and Hugh Rosen at The Scripps Research Institute in San Diego. The Scripps scientists have developed a process for capturing the first high-resolution crystal structure images of certain spaghetti-like targets on cells, known as G-protein coupled receptors. These are highly complex proteins that snake inside and outside of cells. This architecture, and the lack of great 3-D imaging to see them in their full glory, makes them especially tricky to develop specific drugs against. Even so, an estimated 30 to 40 percent of all pharmaceuticals worldwide hit these GPCR targets, including best-sellers for depression, allergies, and high blood pressure. Because the new method of capturing images of these proteins holds the potential for creating more specific new drugs against these targets, it was called one of the top 10 breakthroughs of the year in 2007 by Science magazine.

“It’s sort of like if you can’t look under the hood of a car, how can you know what’s wrong?” Stevens says. “What Receptos does is enable scientists to see the binding sites on the targets, to develop more effective new drugs against them.” He adds that this has implications far beyond any one drug, that this method will be applied over and over against a number of targets. “The potential is enormous,” Stevens says.

Ray Stevens

Rosen, a co-founder and former Merck executive director, called the new technique a “quantum leap” that will clear the way for more data-driven discovery of new drugs.

This isn’t meant to say any of this will be easy. Part of the challenge with characterizing GPCRs is that scientists using current methods are required to have the natural occurring, or synthetic, ligand that binds with the receptor. Receptos still has to operate within that limitation. But what the company has developed of value is a 15-step, reproducible process to make high-resolution crystal images of the known GPCRs, which gives scientists much more information about the target they are developing drugs against, Stevens says.

Once drug developers have the crystal structure figured out, then they have a solid template to design drugs with the desired ability to turn on or off a certain function related to disease. While this ability to capture crystal structures has eluded scientists looking at GPCRs in the past, it’s a standard part of the toolbox for researchers looking at tyrosine kinases—which have since become one of the hot targets in cancer biology.

So what does Receptos plan to do with this new platform for discovering drugs? A few things. It plans to form partnerships with other drug companies that want this same kind of information at their fingertips, says Marcus Boehm, a co-founder and vice president of chemistry. That will help pay the bills …Next Page »

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[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm …Next Page »

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Few doctors knew much about a rare brain infection called PML back in 2005, when two patients on a hot new multiple sclerosis drug from Biogen Idec and Elan died from the side effect. The infection, at the time, was generally considered a death sentence. But now with three years of data from more than 60,000 patients worldwide who have taken natalizumab (Tysabri) under strict monitoring by physicians, a new picture is emerging that shows PML is still very much a serious threat, but that it isn’t nearly as deadly as first feared.

While each and every confirmed case of PML, known formally as progressive multifocal leukoencephalopathy, scares investors in Cambridge, MA-based Biogen (NASDAQ: BIIB) and Ireland-based Elan (NYSE: ELN), I sought to assemble a big picture view of exactly how deadly PML really is when I interviewed Al Sandrock last week. He’s the senior vice president of neurology R&D at Biogen, and an assistant clinical professor of neurology at Harvard Medical School.

Before diving too far into the numbers about the risk of Tysabri, a little background is required. This drug, an antibody treatment designed to block certain white blood cells that cause MS when they attack nerves, has a history of also making patients vulnerable to infection. Biogen and Elan yanked it off the market in February 2005 after two cases of the brain disease were confirmed among patients taking the drug; a month later, a third case was confirmed. But legions of patients still demanded the drug, considered to be the most effective medicine on the market at reducing the disabling nerve damage from multiple sclerosis flare-ups. The FDA allowed the drug to return to the market in July 2006 after determining its benefits outweighed the risks, but it also forced doctors into a strict monitoring program to keep an eye out for the early signs of PML.

This matters not just for doctors and patients, but for Biogen’s and Elan’s financial futures. The drug, Biogen’s fastest-growing product, generated $560 million in sales in the first nine months of this year. (The importance of this drug is one reason why investors get so ticked at Biogen when it isn’t exactly forthcoming about every newly diagnosed case, but that’s a bone to pick another day.)

When the drug came back on the market, its FDA-approved prescribing information contained a prominent warning that about 1 out of every 1,000 patients on the drug were likely to get PML. But that was really just a forecast, and the actual risk-benefit balance for this drug is really a moving target that shifts over time when a new case is confirmed. So I sought to build a simple chart when I spoke to Sandrock that provides a snapshot of PML cases in February 2005, when the drug was pulled off the market because of the PML risk, versus those confirmed as of yesterday. Here’s what I gathered:

The February 2005 figures came from clinical trial data and formed the foundation for the FDA-required warning of the 1-in-1,000 chance of getting PML. The more recent figures include all the experience of patients who have gotten the drug since it was returned to the market in July 2006. The thing that jumped out at me was the fact that only five of the 27 confirmed patients with PML have died—meaning that the current survival rate stands at over 80 percent.

That curious fact has been buried under a rash of scary headlines …Next Page »

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The work leading to Brent Gaylord’s dissertation on using light-emitting polymers to detect bits of DNA was more far more than an academic exercise. His initial paper, and the intellectual property that was subsequently generated, directly lead to the creation of San Diego’s Sirigen.

Gaylord co-founded Sirigen six years ago to enter a business plan competition at UC Santa Barbara, where he earned his doctorate in materials science. Sirigen won the contest, and has been moving forward ever since. Today the venture-backed diagnostics technology startup has 15 employees and formal collaborations with five companies. Gaylord, the company’s chief scientific officer, says it is too soon to identify the collaborators but assures me that “they are names you’ve heard of.” The first product using Sirigen’s technology is expected to reach the marketplace sometime next year, he says.

Sirigen has no intention of producing its own line of complete diagnostic kits or detection devices. Instead the company is pursuing an “Intel Inside” strategy of getting its technology into diagnostic products made by others. Sirigen’s polymers use high-sensitivity fluorescence (HSF) to enhance the ability of conventional assays to detect specific antigens, proteins or bits of DNA. Gaylord says the technology can detect smaller quantities of target substances than conventional tests.

Also, the technology can offer improvements over conventional immunoassays—tests that commonly use an enzyme linked to an antibody to detect the presence of drugs or pathogens, such as the viruses that cause AIDS or hepatitis. Gaylord says existing immunoassays can detect just one target at a time, but an assay that alternatively incorporates Sirigen HSF technology can sense multiple targets with little loss in accuracy.

The result is faster, and potentially cheaper, testing.

Gaylord says the technology is generating interest because it has numerous applications, ranging from biological threat detection to drug discovery. With funding from the Army, for instance, Sirigen successfully demonstrated the ability of its technology to detect …Next Page »

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[Update: 10/23/09, 1:10 pm Eastern] Shares of Biogen Idec and its Irish partner Elan dropped this morning after European regulators said they are taking a new look at the risk and benefit of natalizumab (Tysabri) for multiple sclerosis, now that 23 patients on the drug have been diagnosed with a rare, potentially fatal brain infection called PML.

Cambridge, MA-based Biogen (NASDAQ: BIIB) fell 5.5 percent to $44.61 at 11 am Eastern time today, while Elan (NYSE: ELN) dropped 21 percent to $5.11. The European Medicines Agency said it has initiated the review to discuss any additional measures necessary to ensure the safety of natalizumab, according to a Reuters report.

The new report was bound to alarm some investors, because 23 cases of progressive multifocal encephalopathy, or PML, is significantly more than the tally of 13 cases the FDA counted last month. Cases of PML been adding up since the drug was re-introduced to the U.S. market in July 2006 after it was previously withdrawn because of the risk. Despite the chance of the infection, which the FDA pegged at about 1 in 1,000, patients have continued to seek out the treatment, which physicians say is the most effective therapy on the market for multiple sclerosis. (Natalizumab is also approved as a treatment for Crohn’s disease.) More than 46,200 people worldwide were taking the drug at the end of September, Biogen said earlier this week.

Biogen finance chief Paul Clancy told Dow Jones earlier this week that the company will discuss how to communicate the link between long-term use of the drug and increasing incidence of the dangerous side effect.

Regulators might choose to recommend that patients who take the drug for long periods of time take breaks, or “drug holidays,” said analyst Christopher Raymond of Robert W. Baird & Co., in a note to clients this morning. Since so many patients depend on the product to control their symptoms, it’s unlikely that regulators would force it off the market, he said.

“We deem it highly unlikely that either FDA or EMEA would pull Tysabri from the market,” Raymond said. “With PML risk well known, we think the most likely scenario would be additional labeling restrictions suggesting perhaps a drug holiday after an extended treatment period.”

[Updated comment from Biogen Idec.] There isn’t any data that suggests imposing a drug holiday would reduce the risk of patients getting PML, but there is data that shows symptoms of multiple sclerosis return quickly once patients quit taking natalizumab, says Biogen Idec spokeswoman Naomi Aoki. The company is talking with regulators about the best way to update the drug’s prescribing information to reflect the increased risk with extended usage, but even so, the incidence of PML still appears within the stated range of 1 in 1,000 patients, she says.

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One of the scientific co-founders of San Diego-based Fate Therapeutics, along with his team at The Scripps Research Institute, is reporting a major advance that will make it faster, cheaper, and potentially practical on an industrial scale to turn adult cells into stem cells that can morph into any type of cell in the human body.

Sheng Ding and his colleagues at Scripps have found a combination of three conventional small-molecule chemical compounds that can coax adult human cells into an embryonic-like state. The new technique is about twice as fast as existing methods, and produces 200 times more cells per batch. The research in how to efficiently make these so-called “induced pluripotent stem cells” was sponsored by Fate, and is being published online today in the journal Nature Methods.

The technology, which is exclusively licensed to Fate through its sponsored research agreement with Scripps, is a big feather in the cap for the startup company as it seeks to strike deals with pharmaceutical and biotech companies that are looking get into the stem cell game. Fate has been a leader in the field since its founding two years ago by a group of top stem cell scientists from Harvard University, the University of Washington, Stanford University, and Scripps. One of those co-founders was Ding, a young scientist who got his first faculty post in 2003 at Scripps.

“This is the first example in human cells of how reprogramming speed can be accelerated. I believe that the field will quickly adopt this method, accelerating [induced pluripotent stem cell] research significantly,” Ding said in a statement from Scripps.

The latest advance builds on the discoveries of Shinya Yamanaka of Kyoto University and James Thomson of the University of Wisconsin, who showed for the first time two years ago that scientists could transform adult human cells into a pluripotent state, like that of cells in an early embryo. That was important because it was a way to circumvent the political and ethical controversy over destroying embryos in order to harvest their stem cells for research.

Pioneering as that work was, it was nowhere near ready for prime-time use in the biotech and pharmaceutical industries. Yamanaka and Thomson used viruses to insert multiple copies of four genes into adult cells. Two of the genes are known to cause cancer. Given that risk, it’s almost impossible to imagine regulators ever allowing cells with that kind of genetic modification to be injected into people who want to, say, regenerate new pancreas cells to treat their diabetes. The other big problem with the original method was that it took four weeks from start to finish, and only worked in about one out of every 10,000 cells.

Today’s announcement is the second big stem cell paper this year from the Ding lab. In May, the Ding lab reported that it had essentially gotten around …Next Page »

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A quiet epilogue to last spring’s heated Amylin proxy battle was the lead story in an otherwise slow week for San Diego life sciences news.

—Eastbourne Capital, which won a partial victory in a proxy fight against Amylin Pharmaceuticals earlier this year, sold its entire stake in the San Diego diabetes company. The San Rafael, CA-investment firm owned 12.5 percent of Amylin (NASDAQ: [[ticker: AMLN]]) during the proxy contest. One of its three nominees, Kathleen Behrens, was elected to the Amylin board.

—San Diego ranked second last year to Cambridge, MA, in total venture capital investment in medical technology firms, according to a report from Ernst & Young. San Diego saw $151 million invested in 15 deals, compared to $169 million in nine deals for Cambridge. E&Y said 2008 was tough for medical device companies, in part because of the economy and concerns about health care reform. Southern California, which E&Y defines as San Diego and Orange County, has 82 venture-backed and 41 public medical technology companies, one of the highest concentrations in the country.

—Illumina (NASDAQ: ILMN) acquired worldwide rights to commercially develop Orchid Cellmark’s (NASDAQ: [[ticker: ORCH]]) single base nucleotide extension technology for forensics and diagnostics. Under the deal, Illumina paid Princeton, N.J.-based Orchid $850,000 up front and agreed to pay $150,000 in milestone payments.

—Avanir (NASDAQ: AVNR), which is located just across the San Diego border in Orange County, said its experimental drug for treating unprovoked emotional outbursts reached secondary endpoints in a clinical trial of people who had either multiple sclerosis or amyotrophic lateral sclerosis. Data presented at the annual meeting of the American Neurological Association in Baltimore showed that patients diagnosed with pseudobulbar affect experienced a statistically significant improvement in their mental states. Avanir previously announced that the drug dextromethorphan/quinidine, or DMQ, met the primary endpoint of reducing PBA symptoms—episodes of uncontrollable laughter or crying—by a clinically meaningful 30 percent. The drug could receive FDA approval during the second half of 2010.

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Cambridge, MA, biotech standout Sirtris has been a quieter operation since it became a subsidiary of drug giant GlaxoSmithKline last summer. But the firm’s drugs, heralded for their potential anti-aging effects, appear to be advancing through the clinic without a hitch.

Brian Gallagher, senior director of corporate development at Sirtris, disclosed during a recent meeting at Harvard Medical School that Sirtris has begun to recruit patients for a mid-stage clinical trial of its lead drug candidate, SRT-2104, for Type 2 diabetes. I don’t typically deem the initiation of a Phase II clinical trial all that newsworthy, but this one is interesting, in part because London-based Glaxo paid $720 million for Sirtris before the startup had accumulated very much human clinical data. Data from this sort of trial could provide an indication of whether Glaxo’s bet is likely to pay off.

Sirtris is developing drugs that have the potential to have a huge impact on the treatment of diseases of aging such as diabetes, cancer, and Alzheimer’s. And in the space of about five years, the firm has grown from a startup founded around Harvard professor David Sinclair’s discovery about the anti-aging effects of so-called sirtuin enzymes (which are activated by the red-wine chemical resveratrol) to a subsidiary of a major pharma company with the therapeutic assets and resources to significantly impact human health.

In the new trial, Sirtris will test its SRT-2104 drug candidate in about 200 patients with Type 2 diabetes in the UK and Eastern Europe. Like in most mid-stage clinical trials, the primary aim of the study is to show whether the drug is safe and tolerable in those patients. Yet the secondary goals of the study are to show whether the drug reduces blood sugar levels and to measure the drug’s effect on patients’ insulin levels. The large trial isn’t expected to yield any data before late …Next Page »

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Dendreon watchers got all hyped up in anticipation of the company’s analyst day in New York, but there really wasn’t much in the way of news. So I dug up some other stuff for your reading enjoyment.

—The biggest piece of news out of Seattle-based Dendreon’s analyst day was that the company says it plans to file its application by mid-November to seek approval from the FDA to start selling Provenge in the U.S. Dendreon (NASDAQ: DNDN) had already said this was coming in the fourth quarter, so this added specificity is nice, but not exactly big breaking news. But the company is still hiring quite a bit, which you can read about how much here in case you missed it.

—Dendreon’s former CEO Christopher Henney has moved on to other endeavors, one of which involves being the chairman of AVI Biopharma (NASDAQ: AVII). So it shouldn’t have been a big surprise when this developer of RNA-based therapies recently moved headquarters from Portland, OR to Bothell, WA, under Henney’s watch. I checked out the company’s new digs in person with AVI Biopharma CEO Les Hudson, who’s enjoying his new surroundings, even while he’s trying to find out how to run the building’s HVAC system.

—ZymoGenetics (NASDAQ: ZGEN) released some bad news first thing Monday morning in an SEC filing, in which it said its partner, Merck KGaA, pulled the plug on a couple of trials for an experimental drug for multiple sclerosis called atacicept. This is just the latest in a string of setbacks for this drug, which was once the shining star in the Zymo pipeline.

—Charlotte Hubbert, a Kauffman Fellow at Seattle-based Accelerator, wrote a downright funny and insightful guest editorial for the Xconomist Forum on her journey from academic science to the supposed “dark side” of biotech and venture capital. I can only imagine what her parents think about the remark she made about hosiery.

—Fate Therapeutics, the La Jolla, CA-based company that counts Xconomist and University of Washington stem cell scientist Randall Moon as one of its big-name co-founders, has been on a growth spurt over the past year, as I discovered on an in-depth tour of the company’s labs.

—Redmond, WA-based Spiration, the maker of a minimally invasive device for treating chronic lung diseases, raised another $7 million in debt financing to keep supporting its work to commercialize the device in Europe and complete a pivotal trial in the U.S.

—Larry Corey, a scientist at the Fred Hutchinson Cancer Research Center and world leader in the quest to develop an HIV vaccine (he’s also an Xconomist), weighed in this week with an editorial about why he’s encouraged by findings of a clinical trial of a vaccine that protected about one out of every three people tested.

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More bad news out of ZymoGenetics (NASDAQ: ZGEN) this morning. The Seattle-based biotech company disclosed in a regulatory filing today that its partner, Germany-based pharmaceutical giant Merck KGaA, has halted studies of their atacicept drug candidate for multiple sclerosis after concluding the drug’s benefit wasn’t worth the risk.

One trial showed that multiple sclerosis patients actually had more flare-ups and brain lesions when they were given atacicept, compared with a placebo. Two studies are still ongoing of atacicept, one for rheumatoid arthritis and one for lupus, and no comparable issues have been seen in those studies, ZymoGenetics said.

The multiple sclerosis failure is the third big flop of the past year for the atacicept (pronounced Uh-TACK-ee-sept) program, once one of the shining stars in ZymoGenetics’ pipeline. The drug failed to control rheumatoid arthritis in a pair of mid-stage clinical trials last month. Last October, ZymoGenetics said a trial of the drug for patients with lupus of the kidneys was halted after it appeared to raise the risk of severe infections.

ZymoGenetics had been developing the product jointly with Merck KGaA until a year ago, when it decided to conserve cash by handing over full responsibility for development costs, and settled for a smaller share of future royalties from the product. That move was designed to save ZymoGenetics $200 million in development costs as atacicept was scheduled to move into the final, most expensive phases of clinical trials.

The ZymoGenetics drug was largely forgotten by many analysts at that point, but it got some renewed attention in July, when Rockville, MD-based Human Genome Sciences (NASDAQ: HGSI) delivered the first convincing proof that doctors can successfully treat lupus by blocking a specific inflammatory protein known as BLyS (pronounced bliss). This caused Human Genome Sciences’ stock to quadruple, and gave ZymoGenetics a smaller boost, because its drug is made to block not just BLyS, but another inflammatory protein called APRIL, that the Human Genome Sciences drug doesn’t hit. Since multiple sclerosis is an autoimmune disease, in which the immune system goes haywire and starts attacking the normal fatty coating around nerve cells, researchers hoped that atacicept’s ability to dampen the inflammation would help patients with that condition like with other autoimmune diseases.

Since last September, when ZymoGenetics handed over atacicpet rights to Merck KGaA, it has concentrated more of its efforts on a new pipeline project, pegylated interferon lambda for hepatitis C, which is the subject of a new partnership with Bristol-Myers Squibb that’s potentially worth more than $1 billion.

ZymoGenetics stock fell 8 cents to $6.07 after the opening bell on the news.

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Ambrx has ginned up yet another potentially lucrative Big Pharma deal. The San Diego-based biotech company has struck a worldwide partnership with Madison, NJ-based Wyeth to create new engineered antibody drugs against multiple diseases.

Financial terms aren’t being disclosed, but Ambrx says it is raking in an upfront payment, research funding, milestone payments based on progress developing drug candidates, as well as royalties on sales of work that translates into marketed products. This deal, combined with Ambrx’s partnerships with three other major drugmakers, means that Ambrx now has enough cash in the bank to operate “multiple years” without seeking additional financing, according to CEO Steve Kaldor.

“We have no lack of interest in the company,” says Kaldor, who adds that he had talks with five different prospective partners before settling on Wyeth in the latest alliance. “We’ve actually been turning down deals.”

The Ambrx story began back in 2003. That’s when Peter Schultz, director of the Genomics Institute of the Novartis Research Foundation (and the founder of eight biotech companies) had a new idea for creating new amino acid building blocks for a different class of biotech drugs. These drugs could potentially do whatever you wanted, like last longer in the body, or carry potent cell-killing agents. That work has enabled Ambrx to raise about $106 million in venture capital, build a scientific team of about 80 people, and score five different partnerships with three other major drugmakers to date—Merck, Eli Lilly, and Merck KGaA of Germany.

Ambrx’s two best-known drug candidates are designed to be longer-lasting versions of protein drugs that treat growth deficiencies and multiple sclerosis. But Wyeth, a major drug maker that’s in the process of being acquired by Pfizer (NYSE: PFE), was interested in something new that emerged at Ambrx …Next Page »

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ZymoGenetics (NASDAQ: ZGEN), the Seattle-based biotech company, said today in a regulatory filing that the atacicept drug it developed and licensed to Merck KGaA has failed to reach its goal of controlling rheumatoid arthritis in a pair of mid-stage clinical trials. The study confirmed the biological effect of atacicept, and researchers saw no unexpected side effects. Studies are still ongoing of atacicept for two other autoimmune diseases—lupus and multiple sclerosis, the company said.

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Facet Biotech (NASDAQ: FACT), the Redwood City, CA-based biotech company, said today that its board has rejected Biogen Idec’s hostile takeover offer of $14.50 a share, or about $355 million. The two companies are partners in developing daclizumab, an antibody for multiple sclerosis. Facet says Biogen is seeking to buy full rights to the drug after it passed a key hurdle in development which increased its value. Investors are wagering that Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have to raise its bid to buy Facet, as they drove shares up to more than $16 today.

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Biogen Idec isn’t sitting around waiting to get acquired—it wants to be the acquirer. The Cambridge, MA-based biotech company said today it is making an unsolicited bid worth more than $350 million to acquire Redwood City, CA-based Facet Biotech, its partner in developing a new antibody drug for multiple sclerosis.

Biogen Idec (NASDAQ: BIIB) is offering $14.50 a share in cash for Facet Biotech (NASDAQ: FACT), which is 64 percent more than Facet’s closing price yesterday. Since Facet has 24.56 million shares outstanding, according to data compiled by Yahoo Finance, the offer values Facet at about $350 million. Biogen indicated in a statement today that it is willing to get tough to close this transaction. Any deal is not subject to approval of Biogen’s shareholders, and the company said it is “prepared to commit all necessary resources to complete a transaction expeditiously.”

James Mullen, Biogen’s CEO, first showed his interest in making an acquisition when he contacted Facet CEO Faheem Hasnain on Aug. 17, according to a Biogen statement. Four days later, the company made a formal offer for $15 a share in a letter to Hasnain, and said that it was important that Facet not do any other deals before agreeing to Biogen’s proposal. But one week later, Facet ignored the warning, and formed a collaboration with Seattle-based Trubion Pharmaceuticals (NASDAQ: TRBN), which caused Facet’s stock price to drop 22 percent.

Facet, which controls assets formerly owned by PDL Biopharma, has been a partner of Biogen’s since 2005 in developing daclizumab for multiple sclerosis. Biogen, the world’s largest maker of multiple sclerosis drugs, said it believes merging the companies will increase the odds of making that drug a success.

“The timing of the Trubion collaboration follows a sequence of events that suggest you have no interest in having a bona fide discussion with us about a combination of our two companies,” Mullen wrote in a letter to the Facet board. “As we have stated, we believe such a combination makes compelling business sense for both of our companies and is in the best interests of our respective shareholders.”

Biogen has hired investment bank Leerink Swann and Wachtell, Lipton, Rosen & Katz as legal counsel in connection with the proposed deal.

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Irish drugmaker Elan breached its multiple sclerosis drug partnership with Biogen Idec when it tried to cut a separate deal to collaborate with Johnson & Johnson, according to a federal judge.

Elan, which made the announcement last night, said it respects the decision of the U.S. District Court for the Southern District of New York. Elan didn’t say whether it plans to appeal the judge’s decision, although it said it is still committed to working with J&J to close that deal in a way that’s consistent with its partnership with Cambridge, MA-based Biogen Idec (NASDAQ: BIIB), which has operations in San Diego.

The heart of the dispute is about who owns and controls the most effective multiple sclerosis drug on the market, natalizumab (Tysabri), co-marketed by Elan and Biogen. Elan’s proposed agreement with J&J would have given J&J an option to acquire Biogen’s 50 percent stake in the multiple sclerosis treatment if some other company acquires Biogen. Since a takeover at Biogen is what billionaire investor Carl Icahn has been pushing for over the past two years, and he now has gained two seats on the company’s board, the odds of this happening have to look a little better now than when Elan and Biogen struck their original partnership. The stakes are high, as Biogen’s rights to Tysabri would factor into any buyout discussions, and Tysabri is Biogen’s fastest-growing product, generating $588.6 million in revenue a year ago.

Jennifer Neiman, a spokeswoman for Biogen Idec, said Biogen would have the right to end the partnership with Elan if Elan doesn’t change its deal with J&J, according to a report by the Associated Press. Elan didn’t immediately return the AP’s calls seeking comment.

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The price of shares in Avanir Pharmaceuticals climbed by almost 30 percent today after the onetime San Diego biotech said a late-stage clinical trial shows its drug for treating an unusual neurological disorder can substantially reduce involuntary emotional outbursts and is “generally safe and well tolerated.”

Avanir (NASDAQ: AVNR), which is now based just across the Orange County border, in Aliso Viejo, CA, announced the positive Phase III study results of its reformulated drug dextromethorphan/quinidine, or DMQ, before the market opened today. Wall Street responded with an outburst of its own, sending Avanir shares nearly 80 percent higher. That fell back later, and the stock closed in regular trading at $2.84 a share, a gain of 65 cents, or nearly 30 percent. Trading volume was almost 29.6 million shares, 35 times Avanir’s recent daily average of 845,091 shares.

As Denise reported, Avanir developed the drug, to be marketed as Zenvia, to treat unpredictable episodes of crying, laughing, and other emotional outbursts, which the company calls pseudobulbar affect, or PBA. The random outbursts often accompany brain injury or neurologic disease such as multiple sclerosis, Lou Gehrig’s Disease, or Parkinson’s.

Avanir agreed to develop and test a new formulation of the drug after the FDA raised concerns about possible cardiac side effects from quinidine, which helps metabolize the key ingredient, dextromethorphan. So the latest trial was intended to test whether the drug would still be effective with a smaller amount of quinidine.

The company said it plans to submit the phase III findings to the FDA in the first half of 2010.

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Health care reform took a turn for the better when members of key committees in both the U.S. Senate and House of Representatives recently recommended an approval pathway for biosimilars—products that attempt to be similar to an innovator biologic drug—while also preserving the hope for future medical treatments. Specifically, the committees agreed that to preserve medical innovation, biotech medicines should receive a reasonable 12 years of exclusive rights to their research data (also called “data exclusivity”) before a biosimilar may reference it for their own abbreviated approval. This period of time will act to preserve the research and development of breakthrough therapies for diseases like cancer, Alzheimer’s, and multiple sclerosis.

This is not simply a technical policy matter, but an important aspect of health care reform that is vital to the future development of new and better medicines. Amgen recognizes and supports a responsible, science-based regulatory pathway for biosimilars that ensures patient safety, follows sound science, demonstrates comparable efficacy — and as currently recognized by the Senate Health, Education, Labor and Pensions (HELP) Committee and House Energy and Commerce Committee — provides fair incentives for continued development of treatments for serious diseases.

We believe that a reasonable approval pathway for biosimilars will have a positive impact on our local and national economies. Washington state is a leader in biotechnology, and a biosimilar policy that preserves incentives for innovation will help ensure that our state can continue to be a leader in breakthrough medical innovation. Amgen is the largest private biotech employer in the region, providing approximately 900 jobs. The workforce we employ is highly educated, passionate about our mission to help patients, and dedicated to enriching the communities in which we live and work. Amgen’s Seattle-area laboratories are the largest commercial biotech facilities in the Pacific Northwest, representing a more than $600 million investment in biotechnology infrastructure.

The recent Senate and House committee decisions are also positive news for patients suffering from many types of crippling and life-threatening conditions who depend on the scientific breakthroughs that can only come from continued biotechnology research. As we frame changes to our health care policies, we must take care to preserve the innovation in biotechnology that holds the promise for future treatments for these patients.

Congress must also be mindful of the patient safety issues that are also at the heart of the biosimilars debate. It is essential that a scientifically-sound process is in place at the FDA to approve drugs that are similar, but not identical, to existing biotechnology medicines. Biologics are large, complex molecules, much larger and more complex than chemical molecules found in pills. You might visualize …Next Page »

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Phillip Sharp, the MIT biologist and geneticist who co-founded Biogen Idec (NASDAQ:BIIB) in 1978, has retired from the biotech powerhouse’s board of directors, according to a company statement issued this morning.

Sharp, 65, has served as a director of Biogen since 1982. During his tenure on the Cambridge, MA-based company’s board, Biogen has evolved from a research and development shop to an international company with more than $4 billion in annual revenue and one of the largest franchises for multiple sclerosis drugs in the world.

Sharp’s unexpected retirement follows a shakeup on the board last month when two new directors—Alex Denner and Richard Mulligan—were elected from a slate endorsed by activist investor Carl Icahn. It’s unclear how Sharp’s departure from the board will impact the balance of power at Biogen, as the company’s top brass has been at odds with Icahn over the billionaire investor’s vocal criticisms of management and his past efforts to push for a sale of the company. Icahn’s past actions also indicate that he would like to gain greater influence on the board of directors. Sharp had not responded to an e-mail query about his decision by the time we posted this article.

Sharp won the Nobel Prize in Medicine in 1993 for his co-discovery of gene splicing, and he garnered the prestigious National Medal of Science in 2004. A luminary in the fields of cancer biology and genetics, he also holds the prestigious title of Institute Professor at MIT. He is also an Xconomist.

“Dr. Sharp has been a pioneering force in this company and this industry for more than three decades, contributing enormously to both our scientific and business achievements,” said Bruce R. Ross, chairman of Biogen, in a statement. “His work in the laboratory has led to major medical advances, and his business judgment in the boardroom has helped foster the growth of one of the world’s most successful biotechnology companies.”

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Seattle-based Kineta doesn’t want to grow up to be the next Amgen. It has seen plenty of biotech companies go up in flames when they try to do everything from drug discovery to development, and manufacturing to marketing. Instead, the company sees opportunity in carving out one piece of that product development continuum, doing it well, and hopefully making some money.

Sound odd? It’s all part of an unusual business plan at Kineta, a company formed last year by CEO Charles Magness and chief scientist Shawn Iadonato, who worked together at Seattle-based Illumigen before that company was sold to Lexington, MA-based Cubist Pharmaceuticals. I sat down with them last week at their new offices in Seattle’s South Lake Union neighborhood to hear about the company strategy and its initial case-study—drug candidates it acquired for autoimmune diseases like multiple sclerosis and Type 1 diabetes.

The company was founded on the basic idea that there is a great supply of drug candidates in the biotech and pharmaceutical industries in the preclinical (animal testing) phase, but little demand for those products until someone generates evidence they work in human trials, Iadonato says. On the other end of the spectrum, there’s great demand from patients for new therapies, but a slim supply of really promising drugs in the late stages of development to meet the demand. The Kineta group, through work at Illumigen and other companies, showed they were skilled at taking relatively untested drugs through the late preclinical and early-stage clinical trials—steps that often trip up larger companies, and take a lot longer than they think.

So the Kineta concept is to cast about for promising drug candidates in animal tests, acquire licenses for pretty modest terms, run them through early-stage clinical trials on a strict budget of time and money, and then form a partnership with a bigger drugmaker who has the money and manpower to run bigger trials needed to win FDA approval for a new drug. If all goes as planned, Kineta will collect the usual upfront payments on these deals, milestones from success in later development, and royalties on product sales if they ever become marketed products. And they’ll repeat the cycle many times over. Essentially, they plan to do a couple of essential drug development steps well, and let other people try to be the next Amgen or Genentech.

“A lot of biotechs are built on ill-defined timelines, and ill-defined amounts of investment, …Next Page »

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Cambridge, MA drug giant Biogen Idec (NASDAQ:BIIB) and Hawthorne, NY-based Acorda Therapeutics (NASDAQ:ACOR) announced today that Biogen Idec has acquired the rights to develop and commercialize Acorda’s multiple sclerosis drug, Fampridine-SR, in markets outside the U.S. Acorda will receive an upfront payment of $110 million and additional payments of up to $400 million, and retains commercialization rights to Fampridine-SR in U.S. markets. The deal increases the Cambridge company’s MS drug footprint, which already includes Biogen drugs Avonex and Tysabri. The latter drug has come under scrutiny recently for its link to a severe brain infection called progressive multifocal leukoencephalopathy, or PML.

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