MannKind Corporation recently accounced that it has encountered a disappointing setback in its efforts to bring Afrezza to market. The FDA, it turns out, wasn’t able to sign-off on the company’s new drug application for the ultra rapid-acting form of inhaled insulin by January 16, the date the FDA had previously set for itself as a deadline for making this decision.

Apparently, the FDA has not completed inspecting the insulin manufacturing facilities of N.V. Organon, a third-party supplier to MannKind.

The FDA “must complete this inspection before it can finalize its review of our NDA,” said Alfred Mann, Chairman and CEO of MannKind. “To our knowledge, all other FDA inspections are complete. There are no pending answers to any FDA questions or other deliverables due on MannKind’s part.”

The FDA did not set a new date for completing the NDA.

Just one week before the FDA’s surprising announcement, Mannkind had suggested that FDA approval was in the bag.

According to Pharmalot, Mann has bet nearly half of his $2 billion fortune on Afrezza. Many competitors have given up on inhaled insulin products since Pfizer’s fiasco with a similar product, Exubera.

Some analysts were skeptical about the prospects for Afrezza in light of the recent surprise. For example, Hapoalim Securities’ Jon LeCroy said, “the fact that there is now no definite time-line for approval (is) a major negative, as drugs that have a missed PDUFA often take months to years to receive a final decision.”

However, Simos Simeonidis at Rodman & Renshaw believes there is a 75% chance the FDA will approve the drug this year.

Afrezza achieves peak insulin levels within 12-14 minutes of administration, which mimics the release of meal-time insulin in healthy individuals.

For at least 9 months, Biotech has been buffeted by headwinds associated with the Great Economic Crisis. But now, a streak of positive trial results and some good-looking deals seems to have revivified the sector. At least a little.

The latest heartening development comes from Exelixis, which announced that it has licensed 2 experimental oncology drugs to Sanofi-Aventis in a deal notable for an upfront payment of $140 million to the South San Francisco-based company.

That followed last week’s announcement by MAP Pharmaceuticals that late stage results from a trial of its migraine drug were strongly positive.

In other news, Amgen agreed to exercise its option on Cytokinetics’ experimental heart-failure drug, a decision worth $50 million to the Biotech company, and J & J agreed to pay $900 million to Cougar Biotechnology for its experimental prostate-cancer drug.

That’s not even counting Dendreon, which raised $221 million in a secondary stock offering after astounding most observers with strongly positive results on Provenge, its prostate-cancer vaccine.

The uptick follows a prolonged slump prompted by the economic swoon which cut Biotech’s umbilical cord into the financial markets. Particularly hard hit were small, undercapitalized companies.

Many thought Big Pharma would snap up such companies, but what little M & A activity did transpire in recent months featured drug giants feasting on themselves instead, as exemplified by Pfizer’s acquisition of Wyeth and Merck’s merger with the Plough.

“The process we’ve been going through has been painful for the small companies,” Barclays Capital’s Jim Birchenough told the Wall Street Journal.  Maybe we’re seeing “the beginning of a better environment,” added the analyst, who recently upgraded his rating on the sector from neutral to positive.

What recession?

Clovis Pharmaceuticals, a Boulder-based start-up bred to acquire, develop and commercialize oncology products, has just raised $145 million, the largest such financing this year.

Clovis’ management team is the same one that grew Pharmion into a colossus that was snapped up by Celgene in 2008 for $2.9 billion.

Its financing comes from essentially the same VCs that backed Pharmion.
 
The timing of Clovis’ big raise is no accident. The Great Economic Crisis has left hundreds of Biotech companies in possession of promising molecules and not enough cash to develop them. Clovis, arguably, has its pick of the litter. 
 
“There’s a significant need for this type of company in almost any financial circumstance because the discovery abilities of our industry have really exceeded the development capacity of our industry,” Patrick Mahaffy, president and CEO of Clovis told BurrillReport.

“We (are) well capitalized…and many other companies are struggling…companies that may have wanted to be or had been an acquirer, or buyer, or partner of rights, have backed away,” he summarized.
 
Versant Ventures participated in the financing. For its managing director, Brian Atwood, the real appeal in the deal was Clovis’ management team, with which he worked as a Pharmion investor. “The guiding principle…for our firm is to find great management teams,” he confirmed.
 
Accompanying Versant in the round are Domain Associates, New Enterprise Associates, Aberdare Ventures, ProQuest Investments, Abingworth and Frazier Healthcare Ventures. All but the latter had invested in Pharmion.

Accompanying Mahaffy at Clovis will be CMO Andrew Allen, EVP of Regulatory Affairs and Technical Operations Gillian Ivers-Read, and CFO Erle Mast. All are reprising their roles at Pharmion, which Mahaffy founded 9 years ago. 

Biotech giant Genzyme has shuttered a drug production complex after discovering a virus in a bioreactor used to produce its best selling drugs, Cerezyme and Fabrazyme.

The virus, Vesivirus 2117, is not thought to harm humans, according to company officials. It does affect growth of the cells used to produce the drugs, however. The tainted plant will stay closed for at least 6 weeks while decontamination takes place.

For about 8,000 people worldwide, the drugs are life-savers, although the temporary interruption in production should not pose significant risks to them.

Cerezyme is used for Gaucher disease, a hereditary condition in which an inactive enzyme causes fats to accumulate in multiple organs. 

Fabrazyme is used to treat Fabry disease, another inherited enzyme deficiency that leads to fat build-ups in various organ systems as well.

As a result of the shutdown, Cerezyme patients could miss one or 2 treatments. Those taking Fabrazyme could miss up to 4 doses.

Patients usually receive IV infusions of the drugs every 2 weeks. Any missed doses will not result in significant health sequellae, since it takes more than a few missed treatments to result in significant reaccumulation of the fatty substances.

“It is not a life-and-death situation we’re dealing with here,’’ Henri Termeer, the company’s chief executive told the Boston Globe.

The production glitch will cost the company $200-$300 million in lost revenue, however. Last year, Cerezyme garnered $1.2 billion in revenue, about  a quarter of the company’s total. Fabrazyme generated $500 million.

“This is an unusual event, but they’ll solve it and go on,” Leerink Swann’s John Sullivan told the Globe. “Traditionally, in cases like these, you worry about a market share shift. With these products, that is not a consideration.’’

What a long, strange trip it’s been for Dendreon.

Three years ago, positive results from a trial of Provenge, its immune therapy drug for prostate cancer, prompted an FDA advisory panel to recommend that it be approved.

Instead, the FDA ordered another study.

Last fall, the company announced interim results of the second study which showed the treatment group had 22% fewer deaths, but the results were met with skepticism and the company was told to finish out the trial.

Well, final results are in and Dendreon shareholders are celebrating all the way to the bank.

Provenge extended survival in late-stage prostate cancer patients with no major side effects.

The company plans to seek FDA approval for the juice later this year.

Shares of the heavily shorted stock closed at $22.94, up 94% on the day of the announcement.

Just before that, there were 2 “sell” ratings and 5 “hold” ratings among the 7 analysts who follow the biotechnology company. One analyst had set a $1 price target.

Now the chatter is which company in Big Pharmaville will acquire Dendreon and for how much.

After all, the list of pharmaceutical companies facing declining sales, generic competition and withering pipelines is longer than the line outside the toilet in coach on a flight from Boston to San Fran.

“Provenge could be on the market by mid next year, (it) could be instantly accretive to earnings,” said Joe Pantginis, of Merriman Curhan Ford & Co.

And Dendreon maintains full worldwide distribution rights for Provenge, making it even more appealing as an acquisition target.

“There are very few unencumbered assets (like Dendreon) out there,” said a salivating Sven Borho.

He’s a portfolio manager for OrbiMed Advisors which holds a cool 2 million shares of Dendreon.

Valencia, California- based MannKind has submitted a New Drug Application to the FDA to market AFRESA, an inhaled insulin product for the treatment of adults with diabetes mellitus. 
 
MannKind’s actions come in the aftermath of a spectacular flame-out by Exubera, Pfizer’s inhaled insulin product that was once touted as a blockbuster but ended up being pulled from the market in 2007 after physicians rejected it as too costly and no better than injectible insulin. 

“If you have low impact needles and very good regimens that work in my clinic or my hospital, why should I change what I do?” Michael Schulman, an editor with ChangeWave Research told BurrillReport at the time.
 
Exubera was also saddled with safety concerns. Some worried the stuff diminished lung function. Then, about a year ago Pfizer alerted physicians that 6 of 4,740 Exubera users developed lung cancer. All had been cigarette smokers, but the fat lady sang after that.
 
MannKind has addressed the safety concerns with data showing that AFRESA doesn’t accumulate in pulmonary tissue as did its predecessor, and that it doesn’t affect lung function.

And MannKind intends to pitch AFRESA as having physiologic effects that mimic endogenously released insulin more closely than its injectible counterparts.  
 
AFRESA has a more rapid onset of action and is cleared more quickly than any other exogenously administered insulin.

It achieves peak effect 12-14 minutes after inhalation. If it’s taken at the right time, that pattern matches almost exactly the effects of endogenously released insulin release in response to a meal.
 
MannKind has begun discussions with potential distribution partners.

“There’s a lot of interest,” MannKind VP Matthew Pfeffer told Burrill. “The world changes when you have positive phase III data and you have filed an NDA.”

23.6 million people in the US and 246 million people worldwide have diabetes.

When Gilead Sciences agreed to acquire CV Therapeutics for $1.4 billion in cash, the prize was Ranexa, the first totally new anti-angina drug approved for first line therapy in 30 years.

Gilead believes Ranexa can boost its cardiovascular business as it gathers itself to launch its hypertension drug Darusentan, which looks solid late in Phase III.

But unlike other pharmaceutical players that are using acquisition as a primary growth strategy, Gilead also generates growth internally.

California-based Gilead has been on Fortune’s list of Fastest Growing Companies for 3 out of the last 4 years. Its stock has doubled since 2004, and it’s down only 10% since the Feds played Russian roulette with Lehman Brothers and the chamber turned out to be loaded.

The S&P has dropped 47% since then.

The secret to Gilead’s success is a trio of HIV treatments which drove nearly 90% of its $5.3 billion revenues in 2008.

These drugs all leverage Gilead’s proprietary compound, tenofovir, which is prescribed in one form or another for 80% of new HIV patients in the US, and nearly that many in the EU.

New HHS guidelines now list these drugs, and no others, as the preferred backbone therapy for HIV/AIDS.

Patients find Gilead’s one-a-day combo pills, Truvada and Atripla easier to manage, so they’re more likely to stick with the plan and that drives better outcomes.

Gilead also stands to benefit from evidence-driven public policy shifts towards earlier detection and treatment of HIV which will increase the size of the treated population and the duration of therapy.

“Gilead identified the importance of convenience, less frequent dosing, and combination pills earlier than anyone else,” said Geoffrey Porges, an analyst at Sanford Bernstein.

Last summer Swiss pharmaceutical giant Roche Holding couldn’t get Genentech to bite on its bid of $89 per share for the 44% of the South San Francisco biotech company it doesn’t already own, so last week it offered $86.

Genentech’s directors called that a “unilateral and opportunistic step” that takes “advantage of current market conditions,” according to the Wall Street Journal.

To which Roche responded it will present its offer directly to Genentech shareholders in “approximately two weeks,” and by the way it’s exercising its right to hold a majority of seats on Genentech’s board.

Roche thinks it can get Genentech on the cheap because some of its hedge fund shareholders have developed quite a hankering for cash these days.

Or as Roche Chairman Franz Humer said, “I think we all agree that the world has changed since (July).”

Right on cue, at its Q4 earnings announcement, Genentech lowered expectations for 2009 citing what else, market uncertainties and the economic mess.

But the trophy on the mantlepiece wouldn’t look quite so nice if Roche’s move hacks off Genentech scientists to the point where they bolt, which some have threatened to do.

Then again, where are they going? Biotech isn’t exactly teeming with job opportunities these days.

Larry Feinberg, president of Oracle Investment Management, didn’t seem inclined to post his million or so Genentech shares at $86. “It seems…Roche is trying to instill fear into the hearts of Genentech shareholders,” he told the Journal.

Besides, it’s far from clear in these economic times that Roche can secure adequate financing to close the deal anyway.

Anybody got a spare $30-35 billion lying around?

With cash burning holes in their pockets, withering prospects in their pipelines and Merck and Bristol Meyers Squibb recently having dipped into the BioTech trough, people expected more pharmaceutical companies to make moves in this space before long.

Sure enough, GlaxoSmithKline and Pfizer got BioTech deals done before the close of Q4.

GSK struck first, inking a global alliance with Dynavax to develop and commercialize toll-like receptor inhibitors for the treatment of autoimmune and inflammatory diseases.

TLRs are immune system receptors that activate inflammatory processes.

Terms of the deal call for GSK to give Dynavax $10 million up front in return for rights of first refusal on programs focusing on rheumatoid arthritis, psoriasis and lupus.

Dynavax carries out early R & D for these programs and can receive up to $200 million per program by hitting development milestones.

If GSK exercises its RFR to license the outputs of each program, it then assumes responsibility for ongoing development and commercialization. Dynavax would receive royalties on sales.

Pfizer bellied up to the bar too, signing a European marketing deal with Auxilium Pharmaceuticals for XIAFLEX , a first-of-its-kind, late-stage biologic used to treat Dupuytren’s contractures and Peyronie’s disease.

Auxillium gets $75 million upfront and can achieve $410 million more by hitting milestones, the first third of which are regulatory in nature, while the remaining are tied to sales.

The arms-length relationship in both cases is similar to the deal BMS cut with Exelixis a few weeks ago. More deals structured like them are sure to follow, as Big Pharma seeks arrangements that mitigate risk during the economic crisis.

The Great Economic Crisis of 2008 has cast a pall over public offerings in general, but in health care it’s been surreal. There have been 3 measly new stock offerings the whole year and that includes pharmaceutical, biotech and medical device companies combined.

That’s down from 38 in 2007 according to Dealogic.

And the ones that made it, MAKO Surgical Corp., CardioNet Inc, and Bioheart, Inc., went forward in QI. There hasn’t been a single health-care IPO since March.

“It’s very troubling,” says Steve Brozak, a medical devices and biotech expert and the president of WBB Securities LLC. “These companies are like the farm team for large pharmaceutical makers to buy novel technology and drug discoveries,” he added in the Wall Street Journal.

The famine represents a reversal of fortune for the sector which outpaced all others between 2004 and 2006 and finished second to tech offerings in 2007, according to Renaissance Capital’s IPOHome.com.

But the spigot did not close as suddenly is it appears. In the 6 months before MAKO went public in February, 13 health care deals were yanked before the big day. Twenty-four have been withdrawn since.

Maurice R. Ferré, MAKO’s CEO believes his company succeeded in part because its IPO made it out just before the roof collapsed.  “We faced a huge amount of headwind going into the deal,” he told the Journal.

No doubt they did, but it’s a Cat 5 hurricane out there now.

When Merck announced plans a few weeks back to open a BioTech production unit that would produce generic versions of protein-based drugs, some analysts worried that the new business model would be quite risky and expensive for the pharmaceutical giant.

Similar reasoning probably underlies Bristol-Meyers Squibb’s recent decision to pay Exelixis $240 million to develop 2 cancer drugs rather than acquire the troubled, mid-sized BioTech company.

In addition to the $240 million upfront, BMS forks over several hundred million dollars more if and when the compounds pass regulatory milestones and meet sales targets.

Last month Exelixis riffed 78 people—10% of its employees—and announced plans to focus exclusively on its most promising drug prospects including 2 known as  XL184 and XL281.

The arm’s length deal makes sense for BMS which was looking to make a splash in oncology ever since it lost ImClone Systems in a bidding war with Lilly (BMS co-markets ImClone’s cancer fighter Erbitux in the US, receiving 61% of US sales for the honor).

XL184 and XL281 are 2 of 16 compounds developed by Exelixis since 1994. None has received FDA approval and only XL184 has reached human testing.

XL184 is furthest down the regulatory road as a treatment for thyroid cancer, but human testing for that drug is also underway for cancers of the brain and lung.

The Great Economic Crisis of 2008 has blown the doors off every sector of the economy and the government has selectively bailed out insurers, bankers and auto makers, so no one can blame industry leaders in other sectors from giving it the old college try.

Take BioTech for example. The sector has been soundly thrashed, especially the little guys.  In fact BIO, a trade group reports that 33% of the 370 publicly traded US BioTech companies have less than 6 months’ cash on hand—twice as many as last year.

Whew, so last week BioTech executives had their day with Congress.

They proposed a deal: if you give us cash now, we won’t take our tax credits when we become profitable (when and if, they should say). And there’d be a cap, say $30 million, on the cash a single firm receives.

Ahem. How in the heck is Congress going to assess all that risk, or are are these people also proposing a built-in BioTech Czar?

Actually, it may be a good deal, but Congress has to weigh it against proposals from other sectors. And for all the bluster, BioTech is small. Only 200,000 people are at risk.

In its defense, CombinatoRx chief exec Alexis Borisy told the New York Times BioTech is “one of the few places where the US is the undisputed leader of the world.”

The plan has at least one ally in Rep. Allyson Schwartz (D-Penna.) who wants to include the proposal in the Big O’s stimulus package. “Innovation and technology are growth areas for American businesses and American workers and should be part of this package,” she told the Times.

Schwartz’ district is home to several BioTech and Big Pharma offices.

Just before Halloween, Merck CEO Richard Clark announced the pharmaceutical giant’s Q3 net income dropped 28% and it would cut 7,200 more jobs over 3 years.

“New business models have to be put in place for our industry to survive,” he said at the time.

Merck has now selected its costume for next year. It’s dressing up as a biotech generics manufacturer. That ought to scare people!

Like the folks at Amgen for example. Merck claims that out of the box it intends to come after Aranesp, Amgen’s anemia drug that currently does $3.6 billion in annual sales.

Merck wants to release a version in 2012, and have 5 other biotech generics on the market by 2017.

Merck intends to produce follow-on biologics which are similar to, but not identical to the original compound. They would be manufactured using yeast cells rather than mammalian cells which should enable the company to escape claims of patent infringement.

Merck acquired this capability by purchasing GlycoFi a few years ago.

Analysts had mixed feelings about the idea. Some liked the large market potential and Merck’s ability to fund the enterprise. Others worried that a confused regulatory-approval path for follow-on biologics might cause problems.

And there were questions about Merck’s business model. “What are the real returns on this?” Les Funtleyder of Miller Tabak wondered for the Wall Street Journal. “Are you going to become an early-stage biotech and burn through lots of cash before you get returns?”

Meanwhile Amgen said it supports efforts to regulate follow-on biologics and that it will dress up as a Zocor pill next Halloween.

Nine months after the FDA approved Genentech’s cancer-fighter Avastin for advanced breast cancer, scientists reported that it increases the risk of venous thromboembolism (VTE), a potentially serious side-effect.

Shobha Nalluri and her group at Stony Brook University combined results from 15 randomized controlled trials of 7,956 patients that were treated for advanced solid tumors. Overall, 7.3% of the patients developed VTE, and those treated with Avastin had a 33% higher risk.

The increased VTE risk was observed regardless of the site of the primary tumor and the Avastin dosing schedule.

Last year, an FDA advisory panel voted 5-4 against approving Avastin for advanced breast cancer because the drug’s beneficial effects in slowing disease progression did not, in its opinion, outweigh its potential for causing cardiovascular complications and VTE. Approval was granted anyway.

The FDA had approved Avastin for colon and lung cancer in 2004. The drug works by choking off the blood supply to a tumor rather than killing tumor cells directly. Scientists had hoped Avastin could replace traditional cancer drugs which are debilitating and increase the risk of serious infections, but this has not turned out to be the case. Avastin is typically used in conjunction with old-school cancer fighters.

Annual treatment costs for Avastin can exceed $50,000 per year. Its 2007 sales were $2.3 billion.

Previous studies were too small to detect the adverse effect found in the present study.

Avastin’s label already warns about the risk of VTE, but the Stony Brook scientists suggest in their publication that a tougher, “black box” warning should be affixed.

Cephalon has a great story. Founded 20 years ago, the Frazer, Pennsylvania-based biotech start-up has grown to become one of the top ten biopharmaceutical companies in the world. It has 9 products on the US market, a reputation for creativity, a prodigious pipeline, and revenues exceeding $1.4 billion.

And now that Provigil—the drug responsible for half its revenue is due to lose patent protection in 4 years—Cephalon has begun the next chapter in its story.

We’ve heard this one before. It’s about pricing schemes that wring every red cent out of Provigil and its long-acting offspring, Nuvigil.

Provigil has FDA approval for narcolepsy, obstructive sleep apnea and shift-work sleep disorder. It has also become a popular lifestyle drug that people use to stay sharp at work or wherever.

Twice already this year, Cephalon jacked-up the price of Provigil. It now costs 28% more than it did this spring and 74% more than 4 years ago.

It has done so in anticipation of the spring, 2009 launch of Nuvigil, which had received FDA approval 2 years ago but was shelved by Cephalon as part of its now-unfolding revenue-maximization strategy.

See, Nuvigil will come out cheaper than the now jacked Provigil, so everyone will switch to the new product which enjoys patent protection until 2023. Then, when the generics hit the market, patients and physicians will not be inclined to switch from the convenient long-acting drug to the short-acting generic.

Cephalon talks openly about its perfectly legal scheme. Its VP of investor relations Chip Merritt recently told those attending a conference last month, “you should expect that we will…raise Provigil prices to…create an incentive for the reimbursers to preferentially move to Nuvigil.”

Most insured patients taking Provigil for FDA-approved uses won’t be directly impacted by the price increase, but those who take the stuff for recreational purposes may be left out to dry.

That’s when we learn about price-elasticity for a wakefulness drug that you can’t order with extra foam, whipped cream and caramel drizzle.

Sixty years ago, Popeye the Sailor Man introduced the concept (incorrect though it might have been) that spinach can get you ripped.

Pretty much ever since, food bioengineering advocates have foretold a future in which hearty crops can not only fend off pests, thrive in parched soil and ward off frost, but the super foods they produce can fight human disease.

Just last week in fact, we came to learn that genetically engineered tomatoes, rendered purple by an abundance of antioxidants, protected mice against cancer.

Similar research is underway to increase the nutritional value of staples such as rice, bananas and cassava, and to add healthy omega-3 fatty acids to vegetable oil.  Food scientists are even trying to boost levels of the cancer-fighting antioxidant resveratrol in beer and wine.

Agricultural biotechnology has in fact had a huge positive impact on global crop yields by making plants more resistant to pests and weeds. The improvements have helped feed millions and represent one of the great scientific achievements since World War II.

But we’re a long way from the promised land when it comes to super foods and frankly, purple tomatoes won’t be on store shelves any time soon.

Minimally, years of testing in animals and humans lie ahead, and that’s assuming a company decides to assume the risk of developing, marketing and selling the freaky fruit. There’s not a lot of money available to support research in these areas, and there are technical difficulties and safety concerns associated with the multiple gene transfers required to produce the super foods.

Food expert Margaret Mellon, of the Union of Concerned Scientists is particularly unenthusiastic about super foods. “It doesn’t look exactly promising that we’ll get any of that kind of benefit anytime soon, if ever,” she recently told the Washington Post. “Genetically engineering fruits and vegetables for nutritional benefits has proven far more difficult than the industry expected.”