Included within this group of non-core assets were:
- 4 of its 5 buildings for $6M ~($1.3M net cash to Neurogen)
- chemical library for $3M

I try and not use cliches if at all possible but I’ll make an exception for Neurogen; desperate times call for… well, you know the rest.

Neurogen Corporation Announces Agreements for Sale of Non-Core Assets for Combined $9 Million
-(Via Business Wire Health News.)

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Pfizer Discontinues Development Program for Its Phase 3 Obesity Compound (CP-945,598)
-(Via Business Wire Health News.)

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This has to be the worst time in a decade to found a company.

Nobody told Michael Mullan and Fiona Crawford.

They’ve announced today that they have founded and incorporated Archer Pharmaceuticals to treat Alzheimer’s Disease.

Apparently, Archer has several compounds that are ready to enter clinical development, including ARC029 and ARC031. Both are targeted at the reduction of soluble amyloid proteins in the brain. In addition, Archer has several other agents in the preclinical stage, including Gamma Secretase Inhibitors and BACE Inhibitors.

These approaches are designed to attack the Alzheimer’s disease soluble amyloid in different ways, providing complementary approaches to the lead compounds. A strategy that so far, has yet to have a single success story (see Flurizan and Bapineuzumab for my opinion on this strategy in general).

A Phase I/IIA clinical trial, that is currently being conducted in Europe, was designed to evaluate the safety of Nilvadipine, the active ingredient of ARC029, in Alzheimer’s sufferers. The study has shown that the drug was well tolerated in Alzheimer’s patients.

While neither ARC029 nor ARC031 is currently available in the United States (U.S.), Archer Pharmaceuticals, Inc. is expecting to proceed with U.S. clinical studies within the next few months.

Archer Pharmaceuticals, Inc. intends to fast track ARC029 and ARC031, while continuing to work on other therapeutic approaches.

It’s a dicey time to start a company in general, let a lone a company with compounds having mechanisms of action with such a dismal record of success. Maybe they’re different. I say good luck to you.

New Pharmaceutical Company, to Target Alzheimer’s Disease
-(Via BioSpace.com Featured News and Stories.)

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I was on a plane all day, headed to the BIO-LES seminar and didn’t get a chance to read the wire, so there is really no need to throw in my two cents at this point but the WSJ reported that Pfizer may be interested in topping the Daichii bid for Ranbaxy.  

Though Ranbaxy seems to be saying the Daichii is done, I wouldn’t completely count out Pfizer yet.  For more info, check out the pros:

- WSJ Health Blog

- Forbes

- Business Standard

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I always felt a company marketing a date rape drug (GHB) and an antidote for antifreeze (ethylene glycol) poisoning was in for a world of hurt. 

The stock is down 62.5% ($6.75 from $18) from the IPO almost a year ago and today the company filed an S3 with the SEC allowing the sale of $100 million of its common or preferred stock, warrants or debt securities in addition to announcing layoff of 8% of its workforce and the delay of some developmental programs.

Buckle up.  It’s only gonna get bumpier.

PS: If you ever find yourself having just ingested antifreeze, don’t reach for the Antizol, just head to the pub and down some shots.  Cheaper and more fun!

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The Israeli generic drug maker, known for its aggressive tactics is getting a taste of its own medicine if Pittsburgh based, Mylan has anything to say about it (I can’t get enough of the: “taste of its own medicine line”).

TEVA markets a proprietary, branded drug for MS called glatiramer acetate (COPAXONE), sold $1.7B worth of the drug last year and is on pace to top $2B this year. The patent doesn’t expire until 2014 but Mylan (after signing an agreement with the India based NATCO) is threating sales in the US, EU, Canada and Japan, among others.

There is still a long road to market due to the whole pesky patent issue, but I’m sure we’ll soon see a challenge and some interesting fireworks.

In conclusion: TEVA gets a taste of its own medicine.

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Image by Getty Images via Daylife

GSK to shake-up research strategies (Financial Times)
UCSF, Pfizer sign collaborative research deal (San Fransisco Chronicle )

Both Via Pharmalot

It’s no secret that big pharma players have some work to do on their late-state pipeline and that they are collectively grasping at straws trying to bring in revenue.

Clearly, deciding to reorganize your entire R&D structure isn’t a small undertaking. Head of drug discover at GSK, Patrick Vallance, told a conference in London yesterday (from FT.com article):

GSK would increasingly try to become “more biotech-like” in its efforts to stimulate innovation.

He said drug discovery would be split into “smaller units with a very clear focus on single [disease] areas . . . and reward people based on successful value creation”, with “disincentives” against destroying value.

Wait, reward people based on value creation and discourage people against destroying value? What a crap line. Just say you are shaking things up. I commend GSK for at least making drastic changes to combat a vicious problem.

Pfizer, on the other hand, isn’t being so dramatic. Paying UCSF to do some research is hardly a novel idea; a baby step compared to GSK.

I think the problem isn’t with big pharma though, I think it’s with our expectation. These companies bring in tens of billions of dollars revenue. To sustain a 10% annual growth rate is like adding a blockbuster drug ever year at a minimum (not counting patent expirations). I hope I’m not the only one that thinks this standard might be a bit unreasonable.

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So how much does it cost for an EU pharmaceutical company to break into the North American market?  

Ipsen can answer that question in three deals and ~$450M.

First, Ipsen acquired the shares of Tercica they didn’t own.

 Second, they bought the US subsidiary of the UK based Vernalis and the rights to Apokyn (apomorphine)and  finally, they nabbed all OBI-1 (may the force be with them) assets from Octagen.  

You can find all the nitty gritty details here.

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Hat tip to Dealbreaker, via The Economist.

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“…the Company’s commercial operations generated over $80 million in adjusted EBITDA in 2007. It has long been our contention, however, that Enzon’s cost structure is inordinately high. Accordingly, we believe that there are at least $25 million of excess SG&A expenses that could be eliminated should the Company pursue a rationalization of its commercial operations. We note that the Company spent $31.9 million on selling and marketing expenses alone in its marketed products segment in 2007. As an additional data point, the following information detailing the Company’s five most highly-compensated executives was taken from page 21 of the Company’s 2008 Proxy Statement:

Name Principal Position Total 2007 Compensation

Jeffrey H. Buchalter Chairman, President, and CEO $5,181,117 Craig A. Tooman EVP, Finance and Chief Financial Officer $1,673,573 Ivan D. Horak, M.D. EVP, R&D and Chief Scientific Officer $1,820,115 Ralph del Campo EVP, Technical Operations $1,354,414 Paul S. Davit EVP, Human Resources $898,516

These compensation figures seem excessive when viewed in the context of a small-cap company that has a current market value of less than $400 million. Indeed, we believe that $25 million of potential cost reductions may be a conservative estimate.”

Glad to see I’m not the only person being critical of this plan of action. I salute you, Richard Mansouri, portfolio manager of DellaCamera Capital Management, LLC.

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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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BMS has some potential winners in late stage development like apixaban (a factor Xa antagonist as an anticoagulant), saxagliptin (DPP IV inhibitor for diabetes), ipilimumab (CTLA-4 mAb for cancer), pexacerfont (CRF-1 antagonist for anxiety), belatacept (CD28 antagonist for immunosuppression), dapagliflozin (SGLT-2 inhibitor for diabetes and MDX-1379 (Pmel17 based cancer vaccine). Out of these programs, only ipilimumab, pexacerfont and MDX-1379 don’t have a partner [apixaban is partnered with Pfizer, saxagliptin and dapagliflozin with AstraZeneca and belatacept with Novartis].

So who is the suitor? Any of the companies mentioned above would be a logical starting point and Sanofi-Aventis would be another good fit. There is already a relationship between the two companies through the co-marketing of Plavix and many of analysts have speculated Sanofi to be in the lead but ultimately, any of the big five could pull off the deal. BMS holds its annual shareholders meeting today, let’s see what news creeps out.

Which name sounds the best to you?

- Pfizer-Myers Squibb
- Bristol-Myers Zeneca
- Sanofi-Aventis Squibb
- GlaxoSmithKlineSquibb
- NovarSquibb

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Now, I don’t follow non-biopharma industries real closely so you can correct me if I’m wrong, but doesn’t this seem to be the anti-GE strategy (i.e.; divesting non-synergistic business units)?  I’m not sure what this means.  Maybe pharma is choosing potential growth rate over mitigating risk by diversification for a potential larger return? Or, contrary to my thesis, big pharma may just be trading a failed (or stagnant) asset for one with a brighter future by buying the next hot commodity. With licensing deals for in-demand, phase 2 compounds increasingly in the 100-200m upfront, $1b biodollar every dime helps (even if you have 11 figures of cash in the bank.

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