cafepharma’s detailpiece

Golden parachute, anyone?  Looks like the top execs at Wyeth will be getting a total of $22 million in cash payouts because of the pending Pfizer buyout. CEO Bernard Poussot tops the list with $10.25 million.

An unidentified whistleblower has filed a lawsuit accusing Amgen of illegal marketing practices in for the drugs Aranesp and Enbrel. Other defendants named in the lawsuit include co-promoter Wyeth, WebMD, and Amerisource Bergen.  Read the details at CNN Money.

CNN Money also has an interesting article on why Obama’s vision of an enhanced legal pathway for generic biologics will be tough to realize.

In earnings news, Endo profits met expectations, while Warner Chilcott reported a Q4 loss due to legal charges.

Drug stocks closed down today on Obama’s proposed budget plan.  Health insurance stocks were hurt as well. However, there was bright news for generics manufacturers; Obama seeks to open up a legal pathway to provide better access to generic biotech drugs.

CNBC reports that it was a “bloodbath” for biotech stocks in particular.

It was announced that Merck CEO Richard T. Clark received a 2008 compensation package worth $17.3 million. That’s up 20% over the previous year.  Most of the package was from stock options granted last year - stock options that are now underwater. 

Looks like some pharma companies are having some trouble with the Feds.  Yesterday, the FDA announced that it would halting reviews of drugs coming from Ranbaxy, after claiming that India’s largest drug company filed falsified information on more than 2 dozen generic drugs.  Read here in the WSJ on how this affects Daiichi-Sankyo.

The DOJ has filed a suit against Forest Labs, claiming that Forest offered physicians illegal kickbacks in order to promote two drugs for off-label use in children.

In other news, King Pharma posted a loss on the Alpharma acquisition, and Abbott is opening a new 300 million dollar infant formula plant in Singapore.

It is no secret that the pharma salesforce is in a period of major contraction.  Most major, and many smaller pharma companies have had rounds of layoffs lately.  So, what is in store for this new, smaller pharma sales force that survives?  A new report from PricewaterhouseCoopers indicates that this new pharma force model will provide better value for patients, while driving increased revenues to pharma companies via a target-market approach.  You can read the details in a press release on PharmaLive.

An interesting report at BNET Pharma found that current pharma sales productivity is either declining or flat versus last year. BNET ranked 20 companies on a number comprised of revenue over sales/admin expenses. Gilead came out on top, with Sepracor at the last position.  The rankings showed little relationship between sales force size and productivity - which may lend credence to the PricewaterhouseCoopers predictions cited above.

Cypress Bioscience will present today at the JMP Securities Healthcare Focus Conference at 2:30pm. The webcast will be available here: http://www.wsw.com/webcast/jmp7/cypb/. Presumably, the presentation will bring investors up to date on the company’s treatment for fibromyalgia, Milnacipran. The FDA accepted the NDA (new drug application) for Milnacipran in February, 08 and the target action date is the end of October 08.

Milnacipran has the potential to make waves in the fibromyalgia arena and likely in the larger chronic pain market. Milnacipran has been used for over a decade in over 50 countries and its stated mechanism of action is fairly well understood. Milnacipran is a dual serotonin [5-HT] – norepinephrine [NE] reuptake inhibitor [SNRI]. It effects mood by increasing available serotonin and can mediate pain that originates in the central nervous system by increasing available norepinephrine.

Though the drug has a track record in other countries, success is not assured. Milnacipran has been shown to preferentially inhibit reuptake of norepinephrine compared to serotonin, it can elevate both blood pressure and heart rate. Cypress conducted phase III ambulatory blood pressure studies to address potential concerns the FDA might raise over this issue. Additionally, one phase III study of 888 patients failed to show statically significant improvements over placebo. A second study of 1,196 patients considered a greater variety of symptoms and did exhibit statistically significant results.

Once on the market, Cypress will face significant competition from two strong sources. Pfizer’s Lyrica and Eli Lilly’s Cymbalta have both been approved for fibromyalgia. Lyrica is an anticonvulsant with pain relieving properties and Cymbalta is, like Milnacipran, a dual norepinephrine and serotonin reuptake inhibitor. Cypress has announced that when and if Milnacipran is approved, they will build a sales force and co-promote the drug with their partner Forrest.

While they face some significant hurdles, Cypress investors have the potential for significant reward. There are approximately 10 million patients in the fibromyalgia market alone. Since pain specialists are generally willing to use drugs off label to treat difficult chronic pain conditions, the drug will likely find a much larger arena as well.

It has apparently been confirmed that Eli Lilly is the “mystery” bidder offering $70 per share for ImClone. The Wall Street Journal is reporting (here) that Eli Lilly is the un-named large pharmaceutical company that Carl Icahn said was prepared to acquire the company.

 After our initial article on Osiris (NASDAQ:OSIR, company site) (found here) we were able to speak with Erica Elchin (who handles share holder and public relations inquiries for the company) about Osiris’s plans to commercialize Prochymal.

We were particularly interested in Osiris’s plans for partners or in-house sales efforts. Erica informed us that while Osiris is open to partnerships, they have not formed any at this point. The most likely initial indication for which Prochymal will be approved is for the treatment of acute graft versus host disease (GvHD). Since most of the physicians who treat GvHD are aware of Prochymal and are likely involved in centers where studies are taking place, Osiris feels that an in house sales force will be sufficient to market the therapy to this physician population. Other options are being considered for additional indications.

Prochymal is currently in phase III trials for steroid refractory GvHD, acute GvHD, and Crohn’s Disease.  It is in phase II trials for arthritis, type 1 diabetes, acute MI, and COPD.

The company believes that the treatment, which is administered by infusion and can be performed in an appropriately equipped physician’s office, will be classified as a pharmaceutical treatment and will be paid for as such. They are beginning to discuss Prochymal with third party payers. Since they do not anticipate that Prochymal will cost more than other currently covered biologics and since the anticipated patient populations are generally refractory to other treatments, Osiris believes the treatment will have few it any problems gaining acceptance and coverage.

The company is working closely with the FDA and they anticipate filing a rolling BLA by the end of this year. Ideally the submission will be finished by the middle of next year with a possible launch at the end of next year. Of course anyone familiar with the process knows to expect delays – particularly given the novelty of Prochymal.

While the first indication for Prochymal is expected to be for GvHD, it is likely that Prochymal will be used off label for a number of diseases once it is approved. With Prochymal’s potential to offer new treatment options for very sick patients, this will be a launch to watch closely.

Osiris Therapeutics (NASDAQ:OSIR, company site) Stock has been on the upswing lately as its stem cell therapy Prochymal is being evaluated in Phase III trials for three different indications. Given the potential stem cell therapy holds for making paradigm shifting changes in the way a number of chronic diseases are treated, the excitement around Osiris is understandable. However there are several important factors that investors must take into account when considering the company.

One big plus in Osiris’s favor is that it has phase III trials under way for three indications at a time when many stem cell companies have yet to begin any human trials. Another positive is that its Prochymal therapy is derived from mesenchymal stem cells that are derived from adult donors. This allows the company to side-step the controversy that surrounds stem cells from embryonic sources (more about Prochymal below).

Prochymal is in phase III trials for steroid refractory graft vs host disease (GvHD), Chron’s disease and acute GvHD. Additionally it is in phase II trials for Type 1 diabetes, Acute MI, and COPD. The huge patient populations that are included in these disease states, give Osiris enormous potential. However, there are plenty of obstacles in their way.

It will be imperative for the company to partner with a company that has an experienced sales force to educate physicians on a potential “game changing” treatment. Also, given the novelty of the product, FDA approval is likely to quite stringent. Though Prochymal is in three phase III trials, future launch dates will be very difficult to pin down at this point. There have also been a number of questions about management.

Osiris’s co-founder and chairman is Swiss Venture Capitalist, Peter Friedli, Friedli owns close to one third of the outstanding shares and a publicly traded Swiss investment company, New Venturetec, of which Friedli is president, owns more than 10%.

Friedli is the former chairman and CEO of Purus, a now defunct manufacturer of air pollution control systems. Friedli wound up paying $200,000 to settle shareholder claims that the company lied about the viability of its products. This payment was part of a $9.95 million settlement paid by the company.

Additionally, Friedli was a director of Think Tools. Think Tools is a swiss company that has been the subject of a criminal investigation surrounding its IPO.

Osiris’s ability to advance Prochymal to phase III trial gives it enormous potential. It will be interesting to hear more from the company about partnerships and marketing plans as Prochymal nears launch (our requests for an interview with the company went unanswered). Although the field will be crowded with competitors (with both stem cell derived treatments and other therapies) Osiris could be a big hit with both patients and investors. 

Prochymal
 
Prochymal is a novel drug currently undergoing Phase III clinical trials for three indications: steroid refractory acute Graft vs. Host Disease, newly diagnosed acute Graft vs. Host Disease, and Crohn’s Disese.  This medication is also being looked at for the prevention of type 1 diabetes mellitus as well as repairing lung tissue in patients with COPD and heart tissue in patients who had a myocardial infarction. Prochymal contains mesenchymal stem cells that are obtained from bone marrow in healthy adult donors. Mesenchymal stem cells are multipotent cells that differentiate into various cell types including osteoblasts, myocytes, adipocytes, and beta pancreatic islets cells. 
 

Graft vs. Host Disease, or GvHD, can occur when a patient undergoes allogenic bone marrow transplantation. The transplanted bone marrow will recognize the recipient as foreign and mounts an immune response to the hosts’ cells.  Studies have shown that mesenchymal stem cells are not only derived from bone marrow but also reside in certain organs, such as lungs, for many years. The stem cells that originate and reside in certain organs have been shown to be different from those that originate in bone marrow and could potentially be specific to that particular organ. Administration of stem cells that are specific to a tissue that is being transplanted could be a therapeutic option for a recipient that is rejecting the organ.
 
Mesenchymal stem cells, as previously mentioned, differentiate into other cell types such as myocytes. After a myocardial infarction, the heart muscle suffers much damage. Administration of stem cells from a healthy donor could potentially differentiate and release myocytes which will aid in the rebuilding of the muscle tissue. This same concept is expanded to the treatment of other disease states such as Crohn’s disease and COPD which are associated with tissue damage.
 
Prochymal has been granted orphan drug status as well as Fast Track status for all three indications being studied in Phase III trials.

Eli Lilly has become the first pharmaceutical company to announce that it will disclose payments to individual Drs. The announcement comes as some members of Congress push a disclosure bill that would require similar reporting from all drug companies.

Beginning next year, Eli Lilly will disclose payments of more than $500 to Drs for services they perform as advisors and speakers. In later years, the company will disclose payments for additional items such as travel, entertainment and gifts.

Eli Lilly was the first drug company to disclose its educational grants medical conferences and CEO John Lechleiter said that made good sense for the industry.

“We’ve learned that letting people see for themselves what we’re doing is a good way to restore trust,” Lechleiter said.

In the last two years, bills have been introduced in both houses of Congress that would require both drug and medical device manufacturers to disclose payments of $25 to Dr’s. The industry has understandably complained about that reporting threshold. Several states already have laws in place that require disclosure of payments to physicians by pharmaceutical companies. However, none of these laws require disclosure of payments by medical device manufacturers.

While this step seems to be a move in the right direction to help restore the public’s trust in the industry, it has not impressed all industry critics. Dr Peter Lurie, deputy director of Public Citizen was skeptical that Eli Lilly’s announcement would improve transparency in the area of drug company interaction with physicians. He also objected to the $500 threshold. Lurie is an advocate of the $25 reporting threshold.

While Sen. Charles Grassley, R-Iowa applauded the announcement, he said he would continue to push for legislation that would require disclosure of payments by drug companies and device manufacturers.

The trade group, Pharmaceutical Research and Manufacturers of America has expressed support for Grassley’s bill in the past.