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Insight & Intelligence™ : Jan 15, 2013 ( )
Biggest Biotech Trends of 2012
The world didn’t come to an end in 2012, but the biopharma world ended the year holding its breath, as President Obama and Congress struggled to craft a budget deal and avoid the “fiscal cliff” of across-the-board spending cuts. Below are some key biopharma developments of the past 12 months:
AstraZeneca: New CEO and More Deals
AstraZeneca hoped a new CEO would address long-standing problems with late-stage clinical trial setbacks for drug candidates expected to replace revenues lost to patent-cliff expirations. In Pascal Soriot, AZ found a pharma executive with experience integrating a biotech company and making deals; he was previously Roche’s pharmaceutical division CEO.
AZ started 2012 announcing plans to lay off 7,300 people, 2,200 of them in R&D. Three months later, Soriot’s predecessor David Brennan resigned, amid reports he was pushed out. The company scored with some new deals, notably a collaboration with Bristol-Myers Squibb (BMS) to commercialize Amylin Pharmaceuticals’ portfolio, in return for AZ paying BMS about $3.4 billion.
AZ ended 2012 with mixed news: Its Crestor patent was upheld by the U.S. Court of Appeals for the Federal Circuit (CAFC), protecting the company from generic competition until 2016. But fostamatinib, the oral rheumatoid arthritis drug AZ is co-developing with Rigel, failed to show superiority to Abbott’s injectable Humira.
Biosimilars: FDA Finally Speaks
FDA issued its long-awaited draft guidance February 9 on the development and approval of biosimilar drugs, required under President Obama’s Patient Protection and Affordable Care Act. FDA recommended a gradual or “stepwise” approach, which the agency said could include “a comparison of the proposed product and the reference product with respect to structure, function, animal toxicity, human pharmacokinetics and pharmacodynamics, clinical immunogenicity, and clinical safety and effectiveness.”
At a May 11 hearing, executives from a dozen biopharma companies urged greater flexibility in the definition of proteins, tighter standards in naming and labeling follow-on biologics, as well as more details on moving drugs through agency approvals.
Budget & User Fees: At Cliff’s Edge, and a Rare Agreement
The federal budget stood at the brink of the fiscal cliff as 2012 was ending. Budgets for NIH, FDA, NSF, and CDC face across-the-board 8.2% cuts unless President Obama and Congress agree to at least $1.2 trillion in cuts over 10 years as agreed in 2011. “No question there would be delays in research. Things would have to be slowed immensely. There would be practically no new proposals coming forward, and not a whole heck of a lot. There wouldn’t be money for that,” Jon Retzlaf, managing director of science policy and government affairs at the American Association for Cancer Research, told GEN.
Early in 2012, President Obama proposed freezing NIH’s budget at $30.702 billion, and cutting NSF program outlays 9%, despite a 4.8% rise in discretional budget authority. FDA was given a 17% hike in program spending, to $4.486 billion, almost entirely due to higher industry user fees. By June, the Senate Appropriations Committee approved an extra $100 million for NIH, though the following month, a House of Representatives subcommittee sides with President Obama in backing a flat NIH budget.
Also in July, President Obama enacted a fifth authorization of the Prescription Drug User Fee Act (PDUFA V), which over FY 2013–17 will collect a total $6.4 billion in biopharma user fees— including, for the first time, generic and biologic drugs—following rare bipartisan approval in Congress.
Drug Development: More Approvals, and Alternatives
Merck appeared poised to disrupt the $2 billion-a-year sleep disorder market, releasing in June promising results from two pivotal, three-month-long Phase III efficacy trials and additional results from daily dosing for at least a year for Suvorexant (MK-4305). The drug differs from current medicines by inhibiting wakefulness rather than enhancing sleepiness. This year also saw not one but two new obesity drugs approved by FDA, the first in more than a decade—Vivus’ Qsymia (phentermine and topiramate extended-release) and Belviq (lorcaserin hydrochloride), to be made by Arena Pharmaceuticals and distributed by Japan’s Eisai. The two obesity treatments were among 32 new drugs approved by FDA in 2012 as of December 10—one more than approved in 2011.
Genomic Privacy: Presidential Panel Offers Advice
The Presidential Commission for the Study of Bioethical Issues took a small step —not a giant leap—for genomic privacy with its release October 11 of Privacy and Progress in Whole Genome Sequencing. The report, which followed months of hearings, called for defining how whole-genome sequence data can be accessed and used, and ensuring data security. It said the promise held by whole-genome sequencing in aiding drug development cannot be realized absent widespread public participation and individual willingness to share genomic data and relevant medical information.
The report stopped short of hammering out protections for whole-genome sequence data regardless of how they were obtained, saying only that the federal and state governments develop a process based on individual consent.
M&A Deals: The Year Without a Blockbuster
The year saw no blockbuster like last year’s Sanofi $20.1 billion purchase of Genzyme. M&A activity fell 35% over 2011, according to the law firm Freshfields Bruckhaus Deringer ($146 billion vs. $225 billion). Yet 2012 still saw several significant if smaller deals as companies pursued more targeted deals. BMS expanded its reach in diabetes when it acquired Amylin for $7 billion in August. Weeks earlier, Amylin was in the crosshairs of its third-largest shareholder, Carl Icahn. He touched off a proxy war with Amylin’s board in March, after it rejected and failed to disclose an earlier BMS takeover offer.
Watson Pharmaceuticals snapped up Actavis in a roughly $5.9 billion marriage of generics powerhouses. Also looking to grow in generics was Sanofi, which bought Colombian-owned Genfar for an undisclosed price. In molecular diagnostics, the largest deal saw Hologic shell out about $3.7 billion for Gen-Probe.
Not all deals worked out: Roche tried but failed twice to buy Illumina, whose board rejected offers for the sequencing giant of $5.7 billion, then $6.7 billion. Finally, GlaxoSmithKline’s $3 billion acquisition of Human Genome Sciences followed an often-bitter courtship that ended soon after their once-weekly type 2 diabetes drug, injectable glucagon-like peptide 1 albiglutide, compared favorably to Merck’s Januvia (sitagliptin) in a Phase III trial.
Patent Cases: Prometheus Loses; Myriad on the Docket
Nestle’s Prometheus Laboratories subsidiary suffered a stinging legal defeat when a unanimous U.S. Supreme Court held as ineligible for patenting the company’s methods of dosage calibration for thiopurine drugs for gastrointestinal and nongastrointestinal autoimmune diseases. “A patent must do more than simply state the law of nature while adding the words ‘apply it.’ It must limit its reach to a particular, inventive application of the law,” the Court ruled in a decision written by Justice Stephen G. Breyer.
It was a victory for Mayo Collaborative Services, which Prometheus sued in 2004, alleging that a never-marketed Mayo diagnostic test infringed two Prometheus patents by measuring the same metabolites as Prometheus’ test. Last month, CAFC applied the Mayo decision in PerkinElmer, Inc. v. Intema, Ltd by invalidating all claims of Intema’s patent for a diagnostic method to gauge the likelihood of Down’s syndrome in babies before they are born.
“Right now, how to protect diagnostic methods is something that patent attorneys across the United States are struggling with. Whenever they think they have good language, a court somewhere rules in a different fashion,” Michael J. Belliveau, Ph.D., a partner in the Boston law firm Clark+Elbing, told GEN.
Still unresolved is whether breast cancer susceptibility genes BRCA 1 and 2—perhaps all genes—are legally patentable. CAFC in August reaffirmed the mixed ruling it rendered a year earlier on seven BRCA-related patents held by Myriad Genetics. That court found Myriad’s gene composition-of-matter claims and methods of screening for cancer compounds patent-eligible—but not Myriad’s claims for its method of analyzing the genes for breast-cancer mutations.
On December 1, the high court agreed to hear arguments in the nearly four-year case, in which 20 medical associations and individual doctors led by the Association for Molecular Pathology, and assisted by the American Civil Liberties Union and Public Patent Foundation, have sued the U.S. Patent & Trademark Office.
Research: Hair, Addiction, Gender, and Homosexuality
Researchers continued to stretch the bounds of knowledge in 2012. A super-active form of vitamin D enhanced the ability of stem cells to induce hair growth, a team of Japanese researchers found, perhaps striking a blow against male baldness. German investigators said they discovered a gene mutation linked to Internet addiction. Researchers from two City University of New York schools found that women can differentiate between colors better, while men show more sensitivity to detail and rapidly moving objects, which may explain why men and women see things differently—literally.
Speaking of men and women, a Yale University study revealed embarrassingly that professors favored a male job candidate over a female with identical qualifications for a fictitious science lab manager position. Women profs were just as likely as men to favor the male. And homosexuality may result from epigenetic influences on sexual development, a U.S.-Swedish team found. Sex-specific epi-marks, which normally do not pass between generations, can lead to homosexuality when they escape erasure and are transmitted from father to daughter or mother to son.
Venture Capital: Investors Remain Skittish
The quarterly MoneyTree Report by PwC and the National Venture Capital Association showed an 18.5% drop in VC funds during Q1–Q3 2012 vs. a year earlier (about $2.9 billion vs. $3.5 billion), and a 6.9% drop in the number of VC-funded biotech deals (325 vs. 349 deals) First-round funding cratered, with a 55% plunge in capital ($283.5 million vs. $624.7 million) and a nearly 40% drop in the number of deals (49 vs. 81). Investors blamed biopharma startups’ greater risk than other techs, and FDA’s post-Vioxx shift toward more risk-benefit analysis.
“We’re seeing policies and regulations started—primarily in the form of taxes—that are going to disincentivize investment. You couple that with the time lines in biotech, and there’s a real potential for significant decline there,” Thomas C. Meyers, a Boston-based partner in the IP practice of law firm Brown Rudnick.
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