The Great Economic Crisis of 2008 has pounded the biotech industry, and it is a matter of time before many smaller firms in the space will be announcing layoffs, cancelling drug trials, getting acquired at bargain basement prices, or filing for bankruptcy.

Early-stage biotech companies are at risk because they tend to have tiny revenues and large cash flow requirements. In fact, the Biotechnology Industry Organization estimates that 38% of small biotech companies have less than one year’s worth of cash on hand.

Large biotech companies like Genentech and Amgen have experienced steep declines in their stock prices, but strong revenues should keep them afloat.

If left unchecked, the carnage in small biotech will eventually catch up with the global pharmaceutical companies since they tend to be short on innovation and have relied increasingly on the acquisition of these firms in order to shore up their pipelines.

But don’t expect big pharma to sit on the sidelines in this buyer’s market. GlaxoSmithKline for example, indicated it might soon ramp up acquisitions now that good values can be had. Novartis indicated it was watching the situation with interest.

No company wants to be acquired with a gun at its head, so the small biotechs are exploring other options—unpalatable though they may be. For example, Oramed Pharmaceuticals wants to raise cash from investors in exchange for a cut of their drug’s future revenues. Other companies are pulling out of certain fields to focus on areas with more promising short term prospects.

No doubt though, times are tough for the little guys.

British scientists reported last week that genetically engineered tomatoes, rendered purple by an abundance of cancer-fighting chemicals normally found in dark berries, helped prevent cancer in mice.

In the British study, a special breed of cancer prone mice lived an average of 182 days on a diet containing the purple tomatoes, whereas the same breed of mice lived only 142 days on a standard diet.

Cathie Martin and her team carried out the research at the John Innes Center in the UK, and published their findings in Nature Biotechnology. The study supports the theory that vegetables can be genetically modified to enhance their health promoting characteristics.

“The effect was much bigger than we expected,” Martin told Reuters.

The cancer preventing ingredients in the purple tomatoes are anthocyanins which are normally found in blueberries, blackberries, raspberries, cranberries and concord grapes. The antioxidant compounds have been shown to reduce the risk of cancer, heart disease and certain neurological diseases.

For this study, Martin’s team spliced anthocyanin-producing genes from a snapdragon flower (pictured) into the DNA of a tomato. The resulting phenotype was a purple tomato that contained three times the antioxidant capacity of red tomatoes.

While the results are exciting, Dr. Lara Bennett, a science information officer at Cancer Research UK told Reuters, “It’s too early to say whether anthocyanins obtained through diet could help reduce the risk of cancer” in humans.

It’s also too early to say whether the world is ready for purple pizza.

What can the financial collapse in Iceland teach us about health care start-ups close to home? Plenty, it turns out.

The north-Atlantic island nation is home to two innovative health care companies, DeCode Genetics and Actavis, and although they are not to blame, both have been staggered by Iceland’s economic catastrophe.

DeCode Genetics pioneered personal genomics by perfecting DNA-sequencing processes and leveraging its access to Iceland’s unique national genetic database. It made breakthroughs in the last 2 years that leave no doubt it is a player. For example, it identified genes associated with basal cell carcinoma and possibly causative gene mutations for schizophrenia.

DeCode cut its burn rate by half earlier this year to guard against financial hard times, but it wasn’t nearly enough. Like many early-stage biotech companies, DeCode has tiny revenues and large cash flow needs. It is now encountering severe difficulties accessing credit. Worse, Lehman Brothers tied up $30m of DeCode’s reserves in risky US auction-rate securities before it went bust a month ago. There are no buyers for the securities right now.

Actavis, Iceland’s other health care jewel had risen to become the world’s fifth-largest generic drug maker through a series of smart acquisitions. The company had diversified product offerings and built a global distribution system which should have insulated it from financial hard times.

Not so. Actavis’ problem is that Thor Bjorgolfsson, a billionaire who controls the company had a large stake in an Icelandic bank and that money vaporized when the bank was nationalized 3 weeks ago. Now many speculate that Bjorgolfsson will sell Actavis to recoup some cash.

Both companies are likely to survive since they demonstrably create value for shareholders, but not without a good deal of hand wringing, soul searching and tumult. US biotech companies take notice.

Few cases of ovarian cancer are detected at an early stage, and late-stage disease responds poorly to treatment. The situation begs for an inexpensive, noninvasive screening test.

Last February, Yale scientists published the results of a blood test for ovarian cancer. Assaying for six disease-related proteins, the test correctly identified ovarian cancer in 95% of samples and it had a low false positive rate, 0.6%.

These results encouraged many. The Yale group and others launched follow-up studies. Others raised concerns that routine use of the test would trigger a flood of expensive follow-up testing and risky surgeries including the removal of non-cancerous ovaries.

Ovarian cancer screening was, alas, still a work-in-progress.

LabCorp had another idea. It began marketing Yale’s blood test in June for $220, believing it could side-step routine FDA review on a technicality that exempts tests developed at a single laboratory.

“Not so fast,” was the FDA’s response in a recent letter to the Burlington, North Carolina firm. Yale researchers developed the test it is true, but parts for the test were manufactured elsewhere. The test will have to go through a routine approval process which might take a year or more.

So for now we’re left advising women to be aware of symptoms which might be caused by ovarian cancer: pain or swelling in the pelvic or abdominal area, changes in bowel habits, weight loss and fatigue.  Perhaps though, we have reason for hope.

Just about everybody is getting shelled in the market these days, but Dendreon Corporation shareholders just hit a gusher. Dendreon’s stock soared 36% Monday on positive news from an interim analysis of its prostate cancer immune therapy drug, Provenge.

Two years after randomization, the trial shows that the vaccine-treated group had 22% fewer deaths than the placebo group. In addition, safety concerns have not surfaced. Although favorable, these results did not compel scientists to halt the trial and trigger an amended FDA filing.

The study should conclude in mid 2009. From that point, the FDA has 6 months to review the results.

These interim findings are similar to those observed in a previous trial of Provenge which prompted an FDA advisory panel to report that Provenge had proven to be safe and effective. Rather than accepting the panel’s recommendation, the FDA ordered another study.

Many analysts doubt the positive interim findings will stand up.  Bank of America analyst William Ho for example, said “considering the totality of the data available, we are skeptical of a positive outcome of the final analysis of the…trial.”

Dendreon wants Provenge approved for asymptomatic men with advanced prostate cancer that is no longer responsive to hormone therapy.

Provenge is the first immune therapy drug to achieve positive results so late in the approval process. Other cancer vaccine companies are IDM Pharma, Progenics Pharmaceuticals and Antigenics.

Last week, the US Postal Service and its major labor union tentatively approved HHS Secretary Mike Leavitt’s proposal to have mailmen distribute doxycycline to all homes along their routes in the event of an anthrax attack.

“We have found letter carriers to be the federal government’s quickest and surest way of getting pills to whole communities,” Leavitt told the Washington Post.

Mail carriers would not be required to participate in the distribution scheme. Volunteer mail carriers would be accompanied by police officers during any handout.

HHS has conducted trials of the proposed strategy in Seattle, Boston and Philadelphia. In one trial, 50 carriers delivered antibiotics to 55,000 homes in less than 8 hours. Now the plan is to run a more extensive trial in the Minneapolis area.

One small problem is that the FDA has not approved doxycycline for the treatment of anthrax. Leavitt requested an expedited review last Friday. Take a number, Mike.

Emergent BioSolutions of Rockville, Maryland has been the government’s only provider of anthrax vaccine ever since it secured a half billion dollar sole source deal several years ago to stockpile 19 million doses of its version, known as BioThrax.

BioThrax has limitations though. It must be refrigerated for example. Inoculated conscripts have reported serious complications, and 6 injections over 18 months are needed to produce a sufficient immune response.

The US government has thus just awarded development contracts to two companies, Emergent and its rival PharmAthene, to create improved vaccines.

Emergent Biosystems secured $29.7 million to develop an improved version of BioThrax that will require fewer injections. It will still require refrigeration, however.

The government’s decision was a coup for PharmAthene. It received $83.9 million to create a vaccine that requires only 1 or 2 injections and can be stored at room temperature.

The split decision heightens anticipation for the announcement later this fall of the big prize, a contract (or contracts) to supply 25 million doses of recombinant (genetically engineered) anthrax vaccine to the US Strategic National Stockpile. 

The agency that awarded the two contracts is the Biomedical Advanced Research and Development Authority (BARDA). It sits within the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services. According to the HHS web site, BARDA’s mission is “to provide an integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies.”

Global pharmaceutical companies tend to be long on cash and short on innovation. To fix the latter, they strike deals with biotech firms including license arrangements, alliances and small acquisitions. Until recently however, Big Pharma shied away from large biotech acquisitions.

That has changed. Bristol-Meyers Squibb recently offered $4.5 billion for the 83% of ImClone that it doesn’t already own, and Roche recently offered $44 billion for the 44% of Genentech that it doesn’t own. These proposals come on the heels of large biotech acquisitions by Astra-Zeneca and Takeda.

Many factors feed the frenzy. Patents for key drugs (such as Pfizer’s Lipitor) will soon expire and when they do, Big Pharma will lose billions in revenue. Drugs from biotech goliaths can buffer these losses because they are selling well and are hard for generics manufacturers to copy. As well, the regulatory environment has turned nasty after safety scandals involving Glaxo-SmithKline’s Avandia and Merck’s Vioxx. In this environment, big biotech firms with safe, efficacious drugs on the market are safer bets than early stage firms who still must navigate the approval process.

(more…)

Already backpedaling amid concerns about the safety of its anemia drug Aranesp, Amgen has announced it will curtail certain pricing practices that may have fostered overutilization of the drug.

Until the change, Amgen gave rebates to oncology practices that were heavy users of Aranesp, and gave Aranesp-prescribing doctors discounts toward the purchase of related drugs in Amgen’s quiver.

Pricing policies like this and the perverse prescribing incentives they create are common in the industry. Still, something had to give when Aranesp and similar drugs were found to accelerate progression of some cancers, cause cardiovascular problems, and shorten survival.

Although Amgen stock is up 35% for the year, things can’t be honky-dory in Thousand Oaks these days. Congress is investgating Amgen for its pricing practices and Medicare has cut reimbursement for Aranesp. To make matters worse, a batallion of blogospherists has seized on the news, turning the Amgen brand into a full blown populist cause.

Amgen management is running a gauntlet between its need to increase shareholder value and its need to do right by those who use its products. Everyone wants them to succeed, it’s just not everyone agrees on what constitutes success.