A Biotech Entrepreneur's Musings


Genzyme Adds Whitworth to Board, WSJ Says

From Xconomy. Interesting board politics!

Genzyme Adds Whitworth to Board, WSJ Says

Biotech, people, Life Sciences
Genzyme Logo New Luke Timmerman wrote:

Genzyme (NASDAQ: GENZ), the Cambridge, MA-based biotech giant, has agreed to add Ralph Whitworth, the prominent San Diego activist investor, to its board of directors immediately, according to a report this evening on the Wall Street Journal’s website, which cited a person familiar with the matter. Adding Whitworth could make things more difficult for another activist shareholder, billionaire Carl Icahn, who is calling for significant change at Genzyme in the wake of its manufacturing troubles of the past year. Relational Investors, Whitworth’s firm, has a 4 percent stake in Genzyme.

Whitworth reached a “mutual cooperation” agreement with the company in January. That deal said he would support the biotech’s nominees for the board at the 2010 annual meeting scheduled for June 16, but if Whitworth wasn’t satisfied with the nominees, Genzyme would name him to the board in the fall. Whitworth, who is based in San Diego, talked about his goals for fixing things at Genzyme in this interview in January with my colleague in San Diego, Bruce Bigelow.

A Genzyme spokesman didn’t immediately respond to an e-mailed request for comment late Wednesday night.

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Michael S. Koeris


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There you have it 12 years!

Another post in Xconomy. How much protection do get before biosimilars breathe down your neck? 12 years

March 24, 2010 2:00
by Richard Gayle

Healthcare Reform Gave Biotech Everything It Wanted, and More

Biotech, Politics, healthcare
Richard Gayle wrote:

And so we embark on a new era of healthcare—one that may take many years to fully reach its potential for good or ill. But there are two small bits in the Patient Protection and Affordable Care Act that are immediately relevant and timely for the biotechnology industry. One provides tax breaks for smaller biotechnology companies, while the other simplifies some aspects of the regulatory landscape and adds some complicated wrinkles.

The Therapeutic Discovery Project Credit provides “an amount equal to 50 percent of the qualified investment for such taxable year with respect to any qualifying therapeutic discovery project,” permitting some of the costs for pre-clinical research, clinical trials and other research protocols to be reduced. It appears that it will be limited to organizations with fewer than 250 employees. The total amount of the credit is $1 billion.

A billion dollars is not chump change but could disappear pretty rapidly when clinical trials are included. This credit will be helpful for the right companies but it seems to be a one-time shot in the arm.

The noteworthy part of the legislation, Approval Pathway For Biosimilar Biological Products, provides real clarity on an important regulatory issue. This section permits biologics—the complex therapeutics produced by most biotechnology companies—to maintain 12 years of market exclusivity after FDA approval of the product.

The biotechnology industry breathed a sigh of relief with this section’s passage because this clearly delineated time frame could have been much different.

The Federal Trade Commission had felt that no additional period of exclusivity was required. The Generic Pharmaceutical Association (GPhA) wanted only a five year period. President Obama wanted seven years. The Biotechnology Industry Organization (BIO) wanted at least 12 years. In the end, BIO got exactly what it wanted.

This uncertainty has been eliminated. Biotechnology companies now have a known period of market exclusivity post-approval, one that is independent of patent time frames. This will provide investors with the predictability they crave when they project product sales far into the future for biotech drugs in development.

The generic companies may be happier with another part of this section, though. As the title suggests, it describes the approval process for follow-on biologics—biological copycat molecules that have similar activities to innovative therapeutics already on the market. Until this legislation, there was no practical way for a generic company to make a “biosimilar” drug without incurring many of the same costs as the original innovative biologic. This new route to the market could be very helpful to the generic makers, but only if they can navigate the treacherous pathway …Next Page »

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Michael S. Koeris

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No Time for the Academic Entrepreneur

Great read in Xconomy for reasons why there’re so “few” academic startups.

March 30, 2010 6:20
by Anthony Rodriguez

No Time for the Academic Entrepreneur

startups, people, Biotech
Anthony Rodriguez wrote:

The recurring question I hear from so many people in business is: “Why aren’t more startups generated by the university system?” It’s not an easy question, certainly not one to be solved in a single blog post. As I considered the many facets of academia that influence the actions of its researchers such as government policies, university culture, funding agency metrics and so forth, I realized that the obstacles and challenges faced by professors are similar to those of most any startup.

Academic scientists must in fact be entrepreneurial minded in order to maintain the funding they need to not only survive, but thrive in academia. The outsider would be mistaken, however, if they consider the lack commercialization from academia as a sign of a lack of entrepreneurial muster. Considering an academic lab as a startup in its own right, most researcher professors make a wise entrepreneurial decision by remaining focused and not spinning out one of their ideas into a new company.

Scientists are primarily motivated by the excitement of discovery and unveiling of new understanding of the world. In both academia and industry, you can find similar types of scientific minds who either probe the boundaries of understanding, seek to improve a current technology, or even invent new ones. They all share the passion to solve difficult problems and questions through scientific discovery and innovation. In industry, the direction of their intellectual pursuits is decided by the business minded individuals who identify interesting problems through market opportunities and customer needs or wants. Larger companies can afford to allow some of their research staff to perform exploratory work, but many define the research goals for their scientist and place blinders on them to increase their speed and efficiency. In academia, however, the direction of the ship is steered the scientist themselves, allowing them to pursue any question at the whim of their curiosity. For the same reasons an entrepreneur leaves a major corporation, a scientist will avoid industry for the freedom to explore or tinker or create whatever they desire in academia.

Universities are equipped with the infrastructure and funding support to feed the curiosity and need for independence of academic scientists. The modern research university owes its existence to World War II and President Franklin Roosevelt’s recognition of the critical role of the U.S. science and engineering understanding to its military success. His awareness, along with the famous report by Vannevar Bush called “Science-The Endless Frontier,” drove the development of several funding agencies during and after the war. These agencies where founded on the idea that the nation’s healthcare, economy and national defense will dramatically and rapidly improve from continuous, organized funding of university research to expand our scientific understanding. Under that mandate, professors who receive government funding are bound to a mission of creating and disseminating intellectual capital to provide society with a return on their investment in the form of knowledge. The expansion of knowledge by academia works in tandem with industry to increase commercialization and innovation by creating more opportunities for new scientific products.

Like a CEO, securing funding is the No. 1 responsibility of a research professor. If a professor loses their funding, they can potentially lose their lab and, if not tenured, their faculty position. Much like the early-stage entrepreneur looking for seed funding, a professor must prove …Next Page »

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Michael S. Koeris

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From the WSJ.com’s Health Blog: ‘Gold Rush Is Over’ for Simple Gene Discoveries

A federal judge’s ruling earlier this week that some patents on human genes are invalid because they were related to isolated DNA “found in nature” is being watched closely by other holders of such patents of human genes. (Read more from the WSJ about the case.)

The genes in dispute involve BRCA1 and BRCA2, two genes that many geneticists say are particularly important because they are such powerful markers for diagnosing risk of a hereditary form of breast cancer.

But how many discoveries of other single gene mutations that powerful are likely to come in the future?

Probably pretty rare, according to Misha Angrist, a professor at the Duke Institute for Genome Sciences and Policy. “The gold rush is over largely,” he told the Health Blog.

Instead, science is pointing increasingly to the importance of combinations of multiple genes in predicting and potentially combating disease, say geneticists.

I personally think IP is hugely important but there needs to be added value – if you can discern a pattern, then yes that should be patentable in my opinion, but simply saying “found it!” doesn’t cut it.

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The Global War for Talent (in the Biotech Industry) – Quick Gains, Quick Losses

This months’ issue of Nature Biotech offers a fascinating perspective of the facts and myths of skilled-labor immigration and retention, particularly with respect to a topic that is near and dear to my hear: biotech entrepreneurship. Without stealing the thunder of the article (whose reading requires a subscription) suffice it to say that the initial premise “foreign-born entrepreneurs contribute disproportionally to the economy and economic growth”, is false in the eyes of the authors. However, the cause for the high contribution of foreign-born entrepreneurs lies in the higher rate of Ph.D.’s awarded to that group. A modest 29% of Ph.D.s awarded in the life sciences, but reaching as high as a staggering 60% for Engineering, leads to a contribution of 31% of biotech startup founders coming from those 29% of life science Ph.D.s – a proportional amount, resulting form the underlying disproportionate number of Ph.D.s awarded to foreign-born people.

Apparently the real problem is not attracting talent – America does well – but in keeping with the analogy for the war on talent, the quick gains America makes by attracting talent are not solidified, but rather lost again after the Ph.D. is awarded.

Link to the article can be found here: “America’s got talent—can it keep it?”; Nature Biotechnology 28, 181 (2010) doi:10.1038/nbt0310-181

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Pfizer and Ratiopharm?

Interesting – Ratiopharm invested in by Pfizer. Didn’t see that coming. Seems like Pfizer threw out a LOT of it’s R&D and wants to grab more generic market share… signs of the coming crunch in reimbursement for brand name drugs in my opinion.

Read more on www.fiercebiotech.com

Begin forwarded message from Fiercebiotech

Today’s Top Stories

1. Pfizer pledges big investment in Ratiopharm

By Tracy Staton comment_ico.gif Comment | email_ico.jpg Forward

Pfizer is pushing hard for a Ratiopharm buy, with top execs traveling to Germany over the weekend to press their case. Some news reports say the drugmaker even boosted its offer for the German generics maker. Either way, CEO Jeff Kindler led his executive group in presenting an acquisition proposal at Ratiopharm’s Ulm HQ.

Pfizer is said to be bidding as much as $4.08 billion for the generics maker, which has been on the block now for several months. Pfizer is competing with Teva Pharmaceutical Industries and Iceland’s Actavis Group for the buy. Like its Big Pharma rivals, Pfizer is trying to build a bigger generics business to capture its share of that fast-growing market. But why would Ratiopharm choose Pfizer? That’s the question Kindler & Co. were trying to answer in Ulm.

In short, Ratiopharm would get to expand exponentially because it would have access to Pfizer’s enormous sales network and, of course, the multinational company’s financial resources. The acquisition plan would put Ratiopharm in charge of Pfizer’s new Established Products (a.k.a. “generics) unit, Bloomberg reports. Plus, Pfizer management pledged to invest heavily in Ratiopharm’s growth, with plans to extend the company’s European generics business and boost production capacity.

– see the Bloomberg story
– read the news from Reuters
– get the Wall Street Journal piece

Related Articles:
Pfizer rejoins Ratiopharm race with $4B bid
Actavis lining up Ratiopharm financing
Teva, Actavis remain in contest for Ratiopharm

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FDA creates partnership to boost regulatory science

The L.A. Times (http://www.latimes.com/news/nation-and-world/la-na-fda25-2010feb25,0,4964690.story) reports that the FDA plans to collaborate with the National Institutes of Health in an effort to more quickly rule on the safety and effectiveness of new products and procedures. Its about high time I say! Let the billions of dollars spent on basic research help with bringing those discoveries actually to market.

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China as a Legitimate Pharma/Biotech Market

Take what you want from the tone of the headline, many people would agree with me that up to now, noone was willing to tag China as THE pharma/biotech market. That distinction belongs to the US, the larges (by sales) market in the world. The reasons for those are commonly known, just to iterate: wealthy consumers, decent reimbursement (for those that have health insurance) all make for subsequently high prices in pharma. The reason those prices stay high for a long time is of course patent protection.

That’s the main reason China has so far lagged behind because of a less affluent albeit it gigantic customer base and limited or nonexistent IP protection. Now BusinessWeek reports (tip o’ the hat to my friend CK) on Roche expecting to account sales in China for more than 50% of their revenue from the Asia-Pacific region within three years, spurred by higher incomes and the nation’s health reforms. These data are supported by surges in sales in China, more than 20% to about 800 million Swiss francs ($743 million) in 2009.

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Biotech Startup Investing

Is investing trending up or down? Unscientific poll. Reply in comment section.

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Friends and Families Investing in Your Company – What Does it Take?

I came accross a very intersting post in the blog VentureBeat (http://entrepreneur.venturebeat.com/2010/01/11/ask-the-attorney-securities-laws/) and want to both recapitulate and opine a little.

The issue of family investing is an interesting one and the question at first is: can family and friends invest in a startup. The answer is yes, BUT the securities laws apply, and the best way to comply with them is to sell stock only to friends who are “accredited investors”.  Whenever a company offers or sells its securities – whether it be to founders, friends and family, angel investors, whomever – federal and state securities laws must be addressed. Like many laws, these are complex and not properly filing and complying with them has dire cosequences. Moreover, in light of the Madoff affair and other external pressures, the SEC and State securities law commissions are significantly stepping-up enforcement of the securities law

The basic rule is that a company may not offer or sell its securities unless the securities have been registered with the SEC and registered/qualified with applicable State securities commissions. Just having a company and a founders agreement in place does NOT qualify. Second there is a possibility for exemption from registration. The most common exemption used by start-up companies is the so-called “private placement” exemption. As the term implies, a private placement is a private offering to a small number of investors – like a few friends; however, there are different rules depending upon whether the investors are accredited or non-accredited.

In general, unless you really can’t get other funding, or conversely you think things are going well, keep friends and especially family out of the investment loop.

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