A little over a month ago, I wrote a post detailing how I thought the Bapineuzumab trial (which had just released phase 2 results) was a total loser.

It was, and still is, my contention that mAbs targeting APP, Tau, gamma secretase or the protein du jour in brain soup will not be effective or have an unacceptable risk/reward profile.

So it was of no surprise to me that the street, upon seeing the full results, was less than impressed and Wyeth and Elan took major hits in after hours trading.

The math is simple on this.

When a drug fails the primary endpoint, has tox/adverse event issues and the company begins data mining to find statistical significance…. SELL (or short, if that’s your game)!!!!

It couldn’t be simpler. Granted, trials like this don’t come along often. Especially ones with so much hype but when they do… there is a killing to be made. You don’t need an MD, MBA or PhD, just a little sense.

Personal investing aside, what does it say about Wyeth and Elan that they are totally comfortable continuing a few phase 3 trials after this result?

Wonder why drugs cost so much?
One reason: Big pharma has a gambling problem; they throw good money after bad and forget that the house always wins.

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As I’ve noted before (in multiple places), I’m not a fan of gamma-secretase modulators for AD. Every trial run so far has failed the main ADAS-cog endpoint and what good is an Alzhiemer’s treatment that doesn’t significantly increase cognition? This is simply math.

As for the deal, there was speculation that Lundbeck had seen some preliminary results that justified paying an un-godly $100M upfront for a drug that failed ADAS-cog in the phase 2 trial. This was obviously not the case and maybe some smart shareholders will punish them today, though I doubt few people will notice.

I hate to be that guy, but I told you so.

On the upside, I guess I can finish the Flurizan history timeline I started a few months ago:

FLURIZAN (rough) History

• 2003 - Begin pivotal II/III trial in prostate cancer
• 2003- Begin phase II Alzheimer’s study
• 2005 - Fails to meet primary endpoint in prostate cancer
• 2005 - Fails to meet primary endpoint in AD study (ADAS-cog)
• 2006 - Begin 2, long, phase III AD studies
• 2007 - Prostate Cancer indication officially scrapped
• May 22, 2008 - Sells Euro AD rights to Lundbeck for $100M upfront
• June 30, 2008 - Fails all endpoints and is discontinued in Alzheimer’s disease.

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• June 30, 2008 — Biopharm Closing Bell: 6.30.08 (0)
• June 17, 2008 — Bapineuzumab Fails Trial (2)

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For a drug expected to top $7B in annual sales, even a partial success looks like a failure to me.  I’ve talked about the efficacy in modulating APP for the treatment of Alzheimer’s a few times and Derek Lowe @ has some great articles, so if you’re not familiar, I‘d check them out to catch up. 

On to the news.  I’m going to try and summarize the press release from Elan and Wyeth without all the spin. Bapineuzumab failed to reach significance on the primary endpoint in a phase 2 trial. 

Simple, right? Maybe not.  The trial did show efficacy, though magnitude wasn’t released, in a small subgroup of patients (in non-carriers of the ApoE4 allele, estimated to be ~40% of Alzheimer’s patients).

So, right off the bat, this should cut analyst expectations by 60% right?

Interestingly, in trying to explain away not hitting the primary endpoint for the general population, the release mentions that the study wasn’t powered to detect changes in ADAS-cog.

Fantastic.  Let me just break down this flow and see if we can make more sense of it.

1.) Run a trial that is not powered to detect primary endpoint changes.

2.) Fail primary, ADAS-cog endpoint.

3.) Release that you succeeded in a subgroup of patients on many endpoints (that you admittedly aren’t powered to detect)

4.) Conclude with statements like, “bapineuzumab appeared to have clinical activity in treating Alzheimer’s disease“, and “…the Phase 2 study are a continued validation of the amyloid approach to Alzheimer’s disease”.

Fundamentally, I’m happy that there are companies with deep-pockets attempting to treat debilitating diseases in novel ways but doing things over and over, expecting different results is foolish.

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• June 30, 2008 — Myriad Cancels Flurizan Development (1)
• March 28, 2008 — Pharma Layoffs: And so it begins (0)

In the past year, many analysts have urged Pfizer to consider buying a midsized drug maker (+$10B deal) but pfizer has been reluctant to take the advice, preferring its many shots on goal strategy demonstrated by the acquisition of Coley ($164M), Encysive ($195M), Serenex and CovX (undisclosed amounts) in the last six months alone.

Is MediGene their next target? Not according to CEO, Peter Heinrich, who mentioned to Bloomberg in April that the company was looking for a strategic partner for their phase II, pancreatic cancer drug, EndoTAG-1. Of course, it’s been a whole month since he made that statement and we all know how opinions change when someone waves a giant wad of exit cash in your face.

EndoTAG-1, a projected blockbuster, is the well-known antineoplastic drug paclitaxel, surrounded by liposomes. There is little reason to suspect the modification of delivery will hinder the effectiveness of the drug but the jury is still out. This March the company released impressive interim results of its phase II trial in pancreatic carcinoma.

In the first stage of the 200-patient trial, subjects receive various doses of EndoTAG-1 twice-weekly for 7 weeks plus once-weekly gemcitabine or gemcitabine alone. In the second stage of the trial, patients continued to receive EndoTAG-1 if tumor response was seen. Patients treated with the highest EndoTAG-1 dose had a 30% increase in survival time, compared with the control group, which was sustained for 6 months. Patients who received EndoTAG-1 over a longer period of time also had substantially better survival time and survival rates.

EndoTAG-1 was also shown to have a positive safety profile and to increase patients’ quality of life. Patients on combination therapy of gemcitabine and EndoTAG-1 showed a dose-dependent increase in the median survival time of 8.1, 8.8 and 9.4 months, respectively, for three increasing EndoTAG-1 doses; this compared with 7.2 months median survival in patients on gemcitabine alone. The six-month survival rate also increased dose-dependently, from 63.3 % in patients on gemcitabine only, to 66.1 %, 72.4 %, and 80.7 %, respectively in the three EndoTAG-1plus gemcitabine groups. In the second half of the study, where patients had the option to continue receiving EndoTAG-1 treatment, pateints demonstrated a median survival time of up to 11.5 months.

Full data will be available by 4Q08 and we will know for sure if these results still stand for the larger group of patients and for the full trial duration.

Here comes the wild number speculation on my part. MediGene is currently trading around a market cap of $350M which is nearly what Pfizer paid for both Encysive and Coley combined. If you factor in a +50% premium (MediGene is a hot company, surely someone else is in the bidding), you are now pushing at least a $500M-$600M acquisition.

Ultimately, whether Pfizer buys MediGene or not, I don’t expect it to be the last deal Pfizer makes this year. With Lipitor sales already starting to soften and nothing in the pipeline to replace the revenue, the impending question is: how many <$1B market cap companies do you have to buy to replace $12B+ in sales every year??

(Photo from Redvers on Flickr under a Creative Commons license)

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Maybe I’m way off here but it seems to me in analyzing this deal that the NewCo gets all the goodies while Enzon is left with a manufacturing plant and a stable of marginal drugs (zero out of four therapies have over $50m a year in revenue). Now, I don’t mean to imply that I think Enzon is a bad company - hell, they’ve managed to make more profit this quarter, than any pharma company I’ve ever worked for - I’m just saying they are selling their future based on the advice of a man notorious for breaking up companies and wringing every last dime out of a shakeup. Just listen to the PR speak from their CEO and tell me if it makes strategic sense:

“By separating these unique businesses into two focused companies, the opportunities for both the specialty pharmaceutical business and the biotechnology business could be substantially enhanced and greater value could be created than under the current structure,” said Jeffrey H. Buchalter, Chairman, President and CEO. “Operating separately will allow each company to benefit from greater strategic and managerial focus and appeal to their own unique shareholders. The separation will enable the two businesses to compete more effectively in their respective markets and optimize their business goals, research initiatives and capital requirements. We look forward to creating this opportunity for the shareholders,” said Mr. Buchalter.

So… 1-x= more than 2, due to focus and appeal from unique shareholders? Interesting. I guess it would be wrong to beg for a quick exit strategy via big pharma acquisition for NewCo in the initial press release. But it doesn’t stop there, the bullshit continues:

“The specialty pharmaceutical business will continue its long-standing track record in providing life saving therapies for patients. The business has strong fundamentals, including stable revenue, cash flow, and strong assets,” said Mr. Buchalter. “Upon completion of the spin-off, Enzon will have the resources to better focus its strategy and compete more effectively in the specialty pharmaceutical market.”

Yes, without all that pesky preclinical discovery and development going on, the company can focus on its stable revenue and cash flow until the patents run out and they have to begin thinking about the future!

I don’t think I’m the only one with this opinion either. Even while releasing earnings for the quarter that showed a 20% increase in revenue over 1Q07 and netting the company a ~$2m profit, the stock was penalized ~8%. Is it a shock to learn I don’t think this is enough of a drop? I don’t generally think shareholders should reward the loss of the future earnings potential of the company and the give away the core company technology. But what do I know?

——

In other Enzon related news, I just found this press release about the pay of the CEO:

DellaCamera Capital Master Fund Ltd., a 5.8% stakeholder of Enzon Pharmaceuticals Inc. (ENZN), said Thursday that it’s troubled by the compensation granted Enzon Chairman and Chief Executive Jeffrey Buchalter and calls for the resignation of three directors.

DellaCamera sent a letter to Enzon’s board on Thursday, saying that it’s also reviewing its voting alternatives with respect to the three directors up for election at the company’s May 22 annual meeting of shareholders.

DellaCamera is calling for the resignation of Goran A. Ando, Rolf A. Classon and Victor P. Micati, who are the current members of Enzon’s compensation committee.

So I did a little research and it turns out, Jeff Buchalter made $773,558 base with $1,162,500 in bonuses for a total cash compensation of ~$2m. Add to that the just over $3.1m in equity granted to Jeff and he pulled in a total of ~$5.2m in compensation last year (almost 3X any other executive at the company). It’s good to be the king.

——

(photo of Icahn from samlustgarden under a creative commons license)

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After two days of the American College of Cardiology conference in Chicago a few things to note:
- Drug eluting stents actually do work better than bare-metal stents in MI… for now. (PRNewswire)
- TAPAS study shows aspirating from PCI site improves blood flow deep in heart (PRNewswire)
- BRAVE-3 shows no need for Abciximab in addition to Plavix for PCI in MI. (PRNewswire)
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Like the FDA needs more bad press. The beleaguered drug watchdog
has taken hits aplenty over the last few years for more reason that can
be counted. The etiology of which, stem mostly from the lack of
sufficient funding from congress and an increasing workload. A study
published today in the NEJM illustrates what happens when you approve
drugs on a deadline instead of on merit.

The study by Daniel Carpenter, Ph.D., Evan James Zucker, B.A., and Jerry Avorn, M.D.
shows that drugs approved in the last 2 months approaching the PDUFA
date, compared to all other approvals from 1993-2004 were 5.5 times as
likely to have a saftey-related withdrawral, 4.4 times as likely to
have a black box warning and 3.3 times as likely to have at least one
dosage-form discontinued.

These numbers are both telling and shocking. The FDA has released a
note saying the numbers used in the study do not match their internal
stats however, with news this last week that the FDA was granted
authority to start missing PDUFA deadlines, at least unofficially, they
seem to have noticed the same trend.

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