The Rapid Reporter: April 2007

THE RAPID REPORTER

BIO (Biotechnology Industry Organization) CEO & Investor Conference Recap

February 11-14, 2007

New York, NY

%u25BA Safety, Patent Disputes to Dominate Government’s Biologic Policies

FDA to Review Safety of Biologic Oncology Drugs on May 10th; PDUFA Deadline Brings Biologic “Follow-On” Drugs to The Fore

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he safety of biologic drugs and the manufacture of ‘generic’ biologics−called follow-on biologics−will be subjects of great political debate for the rest of the year, according to public and private industry experts.

The issues have taken on added emphasis as the deadline to pass the Food and Drug Administration’s (FDA’s) Prescription Drug User Fee Act, or PDUFA, approaches. The Act, which comes before Congress every five years, determines how fees collected by the FDA from drug makers will be spent. The Act expires on September 30th.

“If time runs out [on PDUFA] by the end of the fiscal year, FDA reviewers must be let go,” Nick Littlefield, a partner with the Washington-based law firm Foley Hoag. Mr. Littlefield was part of a Feb. 12th panel discussion during the “BIO CEO & Investor Conference 2007” in New York called “The New Congress: Implications for the LifeSciences Industry.” The panel included James Greenwood, President and CEO of the Biotechnology Industry Organization (BIO); Alex Azar; former Deputy Secretary,

Department of Health and Human Services; Steve Usdin, Washington Editor, BioCentury Publications Inc.; and Thomas A. Scully, J.D., Senior Counsel, General Partner, Alston & Bird LLP, Welsh, Carson, Anderson & Stowe.

Two bills in particular, one by New York Democratic Senators Hillary Clinton and Charles Schumer, the other by Senators Edward Kennedy (D-MA) and Mike Enzi (R-WY), address biologics and may delay the passage of PDUFA this year. (See our accompanying story in “Politics & Policy” for more.)

The Clinton-Schumer bill, called “The Access to Life-Saving Medicine Act” would grant FDA the authority to approve follow-on biologics and “create a new statutory pathway for approval of ‘generic’ versions of biotech drugs.” This will speed lower-cost follow-on biologics to market and relive financial burdens on patients, the Medicare system, and private insurers alike, say supporters.

But the “Access” Act is being vigorously contested by BIO, which represents more than 1,000 biotech companies and their partners.

“Attaching follow-on biologics legislation to PDUFA would potentially jeopardize reauthorization of the user fee program to the detriment of patients waiting for new therapies, FDA’s internal scientific capabilities, and biomedical innovation,” Mr. Greenwood told the Senate’s Health, Education, Labor and Pensions Committee on March 8th.

BIO favors the Kennedy-Enzi bill, “The Enhancing Drug Safety and Innovation Act”, which they say takes patient safety into consideration while “providing incentives [to biologic drug developers] for the innovations that will bring the medical miracles of tomorrow,” according to Sen. Kennedy.

Participants in the New Congress panel agreed that passing either bill before PDUFA expires will be difficult. Part of the difficulty will be explaining the difference between the manufacture of traditional drugs and biologics—let alone ‘generic’ versions of each—to lawmakers.

“The most congressional leaders know about biologics,” Mr. Azar said, “has been over the ‘food fight’ between Amgen’s Aranesp® (darbepoetin alfa) and Johnson & Johnson’s/Ortho Biotech’s Procrit® (epoetin alfa).”

Both Aranesp and Procrit, erythropoiesis-stimulating agents (ESAs), treat chemotherapy-induced anemia by stimulating the bone marrow to make more red blood cells. J&J sued Amgen late last year for what they allege were unfair sales practices meant to force Procrit offthe market. “The biggest amount of spending the government does has been over the fight between Aranesp and Procrit,” added Mr. Azar.

On March 9th, the FDA ordered both companies to provide stronger warnings for both Aranesp and Procrit in light of the higher number of life-threatening side effects and deaths among patients receiving either therapy. The FDA is planning to review the safety and efficacy of ESAs at the FDA’s Oncologic Drugs Advisory Committee (ODAC) on May 10, 2007.

%u25BA Hazy Predictions from Preclinical/Early Clinical Trials Hamper Investment in Biologic Cancer Research and Development

Are preclinical trials actually valuable predictors?

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he inability to predict whether a new biologic cancer therapy will reap financial returns in the early stages of its development is a vexing hurdle between drug developers and would-be investors.

“We analysts need to decide where to invest,” William Ho, a senior research analyst with Bank of America asked the heads of several biologic drug companies. “[But] it is estimated that only 5% of compounds in development for oncology ever make it to the market compared to an 11% average across all therapeutics areas; early preclinical studies do not appear to reduce the attrition rate as there remains a less than 40% success rate in phase III. Are preclinical trials actually valuable predictors?”

As a moderator, Mr. Ho posed the question during a workshop titled “Attacking Cancer’s Achilles Heel — Hot Targets in the Pipeline for Oncology Treatment.”

It’s not a perfect system, but it’s what we got, according to researchers. “We don’t have better testing systems other than mice,” Dr. Julian Adams, president and chief scientific officer of Infinity Pharmaceuticals said.

Dr. Kevin Koch of Array BioPharma agreed. “The dirty little secret is that mice are pretty robust little creatures. So there’s no good way of predicting human toxicology.” Testing in higher species, he suggested, may have to be considered.

In the meantime, mice will have to suffice. ”We need some way to discern that the drug is getting absorbed and hitting the target. Simply shrinking tumors leads to mispredictions.” Infinity has partnered with MedImmune, Inc., the sixth-largest investor in biologic drug research and development (R&D) in 2005, according to a Top 50 Biotech Report from PharmaLive.com, in the development of IPI-504 to treat cancers resistant to other therapies. By targeting and shutting down a protein called Hsp90,

IPI-504 causes cancer cells to die.

Clinical site testing bias, the panelists also agreed, color predictions on whether a drug will go on to succeed.

“The most important [determining] factor is performance data,” Dr. Robert Fine, associate professor of medicine, division of hematology & medical oncology at New York’s Columbia-Presbyterian Medical Center said. Phase II trials usually take place at top cancer-treatment centers, like Memorial Sloan-Kettering, and usually include upper-middle class patients “who will do better no matter what you do,” Dr. Fine said. Broader phase III studies include “lower-middle class patients who don’t do as well.”

“I believe biomarkers will play an increasingly important role in the future,” Mr. Ho told Oncology & Biotechnology News. “As we continue to see a movement towards more targeted therapies, biomarkers will be helpful indicators of whether a desired target is being met or if the intended effect is occurring. Biomarkers could potentially be used to select for patient populations that are more likely to respond to treatment; this ‘enrichment’ could potentially lead towards higher rates of success in the future.”

%u25BA A Place for Biotechs in a Developing World

"We can find a creative way for them to participate."

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he creation of a financial “safety net” for biotech companies may be one way to encourage their investment in developing countries.

“We don’t expect a young biotech that is pre-IPO to make a large investment, but that doesn’t mean we can’t find a creative way for them to participate,” Julie Klim, vice president of business development for BIO Ventures for Global Health (BVGH) told Oncology & Biotechnology News. One of those ways, suggested by Mark Kessel, managing director of Symphony Capital, a panelist at the “Assessing a Global Health Investment Fund” plenary session Ms. Klim moderated, might be the creation of a

financial safety net — a fund which guarantees a return on investment down the road.

OSI Pharmaceuticals CEO Colin Goddard was one of the panelists at Ms. Klim’s seminar. OSI manufactures biopharmaceuticals Tarceva® (erlotinib) and Novantrone® (mitoxantrone) for the treatment of cancer and has two other in development—OSI-930 and OSI-817. OSI Pharmaceuticals is one of the top-20 biotech companies based on dollars spent on research and development.

BVGH is a non-profit spin-offof the Biotechnology Industry Organization (BIO) and is supported by the Bill and Melinda Gates Foundation, the Rockefeller Foundation, and leaders in the biotechnology field. BVGH estimates up to 85% of the world’s population is underserved by the biopharmaceutical industry, including areas of high economic growth and established established health care programs. Ms. Klim hopes biotech companies will be inspired by the $1.5 billion recently contributed to

the Advance Market Committeemen (AMC) fund by seven countries and the Gates Foundation for the creation of pneumococcal vaccines in developing countries.

%u25BA Biologic Drugs Are "Changing the Landscape" of Leukemia Treatment

Leading Leukemia Society Actively Seeking to Invest in Promising Biologic Treatments to Clear "Bottleneck" In Early Discovery Efforts

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new crop of emerging biologic therapies is causing excitement among leukemia researchers who are anxious to get them in the pipeline.

In the therapeutic workshop entitled “Blood-Borne Cancers − The Alphabet Soup of Leukemias,” it was discovered that identification of certain genetic markers unique to each of the four types of leukemia has given researchers the ability to predict who is most likely to respond to a specific treatment regimen.

The Leukemia and Lymphoma Society developed an aggressive funding program plan to encourage continued research among biologic drug makers, called the Therapy and Acceleration Program (TAP). The Society says they will not only continue to “invest in research at the early states of discovery, but drive development and regulatory approval of new blood cancer therapies at the critical clinical stage.”

“There has been a bottleneck at the drug discovery phase,” Dr. Louis DeGennaro, senior vice president of research at the Leukemia and Lymphoma Society said. “We know biotech companies are looking at compounds to address blood cancers, and we want Society resources to develop these compounds, either by directly dealing with pharmaceutical companies or interacting with biologic/pharmaceutical partnerships. The goal is to bring more therapies to more patients.”

%u25BA Venture Capitalists & Bad Timing Impact Biotech IPO Success

"Make sure you understand the agreements you've made or [they] will come back to bite you."

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escribing his company as “one of those rare and gifted biotechs that went public twice”, Acorda Therapeutics CEO Ron Cohen warned colleagues at small and mid-sized biotechs to do their homework before entertaining thoughts of an initial public offering.

“Amid much fanfare and delight we went on the road and came back with a deal for $150 million in pre-valuation IPO money,” Mr. Cohen told colleagues at the roundtable titled “IPOs and Alternative Exit Strategies — Is the Glass Half Full, or Half Empty?”

“But to our surprise, several venture capitalists were displeased with the price and opted not to take part in the deal.” The resistance of a small but powerful minority of venture capitalists, Mr. Cohen said, torpedoed the IPO. The company attempted another IPO in February of 2006 that did go through. “This time we came in with a stunning $90 million pre-valuation IPO,” he said, laughing. Acorda makes Zanaflex® (tizanidine hydrochloride) to treat spasticity and has several drugs in development to treat multiple sclerosis and spinal cord injury.

The lesson learned? “Make sure your IPO expectations are aligned with the board and your key shareholders,” Mr. Cohen warned. “Make sure you understand the agreements you’ve made or [they] will come back to bite you. You don’t want to be the IPO that pulled out, because people will remember and they’ll be a bigger hole to climb out of next time.”

Newer alternatives to traditional IPOs and mergers and acquisitions include offering an IPO on the London-operated AIM instead of the US-based Nasdaq, or the creation of a Special Purpose Acquisition Company (SPAC), which raises money from investors for an unspecified merger in a particular target industry. SPACs have sometimes been called “reverse IPOs” because money is raised to go public first before a private company is identified to buy.

Some 20 deals totaling $800 million occurred among biotech companies in 2006, according to Kevin T. Collins, shareholder, HellerEhrman LLP. Mr. Collins moderated the IPO seminar.

%u25BA New Therapies, New Hope for Advanced Prostate Cancer Patients

Catching Disease Early, Before Bone Metastatis, Key to Survival

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lthough the gold standard to treating and curing prostate cancer continues to be early detection and treatment, a new crop of biopharmaceuticals may offer hope to patients who have advanced, refractory, or recurrent disease.

The newest drug positioned to be on the market, perhaps as early as May, is Provenge® (sipuleucel-T) from the Dendreon Corporation. The Food and Drug Administration’s Office of Cellular, Tissue and Gene Therapies Advisory Committee was set to give priority review to the Biologics License Application (BLA) for the drug in late March.

Provenge is an active cellular immunotherapy (ACI) that works by stimulating a patient’s own immune system to fight metastatic, hormone-refractory prostate cancer.

“Immunotherapies work differently than chemotherapy,” Dr. Mitchell Gold, president and CEO of Dendreon said. “But once it works, it has the potential to be durable.”

Currently, the best hope for patients with resistant or recurring prostate cancer is combination chemotherapy of Taxotere® (docetaxel) and Emcyt® (estramustine), according to Dr. Daniel Petrylak, associate professor of medicine at New York’s Columbia Presbyterian Medical Center.

Another biopharmaceutical coming down the pike is Acapodene® (toremifene citrate) from GTx, Inc. The drug is meant to treat osteoporosis and bone fractures, a serious side effect of androgen deprivation therapy (ADT) in advanced prostate cancer. The phase III trial is scheduled to be completed late this year; the company will file for FDA approval next year if it stays on track.

One drug in development uses a mutated cold virus as a cloak of sorts to attack and kill cancer cells by stimulating the patient’s immune system. Patients receiving GVAX® immunotherapy from Cell Genesys demonstrated PSA declines of greater than 50% in a small subset of phase I patients, with one patient maintaining the decrease for more than a year.

Another drug, Quadramet® (samarium Sm-153 lexidronam injection), already approved for another indication, is showing promise as a possible combination therapy for hard-to-treat prostate cancer. (See this month’s “Bio-Buzz” for more.) “Quadramet selects part of the skeleton invaded by the metastatic tumor,” Michael Becker, CEO of Cytogen Corp. said. “It was originally intended to treat bone pain, but we saw a reduction in primary tumor size and PSA levels in prostate cancer patients. So we’re interested in combining Quadramet with doxorubicin (an antibiotic-based chemotherapy drug) to improve progressionfree survival.” Cytogen is also working with the National Institutes of Health on the prostate cancer vaccine PSA-TRICOM.

Asentar™ (DN-101/calcitriol), a drug in the Novacea, Inc. pipeline, has shown promise in increased survival time of up to six to eight months for advanced prostate cancer patients on Taxotere. “A surprise in this trial was a statistically significant reduction in adverse advents,” Dr. John Curd, chief medical officer for Novacea added. The results of the phase II trial were part of the AIPC Study of Calcitriol Enhancing Taxotere (ASCENT) and recently published in the Journal of Clinical Oncology.

%u25BA Oncology Drugs Attract Attention from Leading Biotech Companies

More Cancer Therapies, Some Accidentally, are Showing Up in Biotech Pipelines

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ome of the world’s top biopharmaceutical makers have, or plan to have, more treatments for cancer and cancer-related side effects in their pipelines.

Amgen leads the pack based on 2005 research and development spending, according to a 2006 PharmaLive report, Top 50 Biotechnology Company Pipelines. A pioneer in the biotech industry, Amgen introduced two more biopharma-oncology drugs to the market within the past year—Aranesp® (darbepoetin alfa) for the treatment of chemotherapy-induced anemia, and Vectibix™ (panitumumab), for the treatment of metastatic colorectal cancer. Kepivance® (palifermin), to treat painful oral side effects of radiation therapy, was approved in last 2004. Amgen is currently in final clinical studies for denosumab, a treatment for bone loss associated with chemotherapy for breast and prostate cancer, bone metastases, and multiple myeloma.

Genentech, which is working with Amgen on a number of biopharmaceuticals, is the second-largest biotechnology company based on R&D spending. The company makes advanced colorectal cancer treatment Avastin® (bevacizumab) and breast cancer drug Herceptin® (trastuzumab). Avastin is currently in late-stage clinical trials as a possible treatment for kidney, breast, pancreatic, non-small cell lung, prostate, and ovarian cancers. Amgen and Genentech are also working together on the development of AMG-951, which shows promise in targeting solid tumors and may also treat hematologic cancers, according to early clinical trial results.

Biogen came in third in R&D spending. Biogen, in partnership with Genentech and Roche, gained priority approval for Rituxan® (rituximab) last year as a first-line treatment for diffuse large B-cell Non-Hodgkin’s lymphoma and as a treatment for lymphocytic leukemia.

Other biotech companies with an eye on oncology include Millennium and Gilead. Millennium received fast-track FDA approval for its first oncology treatment, Velcade® (bortezomib) in conjunction with Johnson & Johnson, in 2003. More recently, Gilead Sciences entered the oncology arena with development of GS 9219 as a potential cancer treatment.

“While Gilead’s R&D program is not currently focused on oncology, GS 9219 emerged from our efforts in an antiviral nucleotide chemistry and cellular targeting, and was advanced based on its promising preclinical profile,” Norbert Bischofberger, chief science officer for Gilead said recently. “The early data have formed the basis for our decision to initiate phase I clinical studies later this year.”

Several biotech companies are seeking to expand indications for cancer drugs already on the market, such as Genzyme’s Clolar® (clofarabine). Approved for the treatment of pediatric leukemia, the drug is now in phase III trials for the treatment of leukemia in adults.

Top Five Biotech Companies per Research and Development Dollars

R&D — 2005

R&D — 2004

Oncology Portfolio and/or Pipeline

Amgen Inc.

$2,140,000,000

$2,028,000,000

Aranesp, Kepivance, *denosumab

Genentech Inc.

1,261,824,000

947,510,000

Avastin, Herceptin

(fi rst line and adjuvant)

Biogen Idec Inc.

747,671,000

68,700,000

Rituxan (rituximab)

Serono SA

59,567,000

594,802,000

*zanolimumab,

*adecatumumab, *R763,

*IKK2 Inhibitor

Genzyme Corp.

502,657,000

91,802,000

Campath (alemtuzumab), Clofarabine,

Clolar (clofarabine), *DENSPM,

*GC1008, *Tasidotin, *TEMs Antibodies

* = in development; not yet approved by FDA for any indication

For more on the BIO CEO & Investor Conference, please visit http://www.ceo.bio.org/opencms/ceo/2007/index.jsp.